Shanghai pilot to steer growth of free trade zones

Test results to determine fate of other projects, says NDRC official

Ongoing experiments at the pilot free trade zone in Shanghai will determine whether China will extend the FTZ experiment to other regions, a top official of the country's top economic planner said on Tuesday.

"Many Chinese cities have proposed free trade zones, but whether or not they will get the nod depends on the findings from the Shanghai project. The FTZ in Shanghai is an experiment ... we need to see and assess its test results," said Fan Hengshan, vice-general secretary of the National Development and Reform Commission.

At least 28 local governments have reportedly submitted proposals or plans for similar zones, after the Shanghai FTZ got the central government nod in September.

"Full assessment is needed before establishing new pilots, and it will be done in an orderly fashion," said Fan, in response to questions on whether China has suspended approval for its second free trade zone.

The Shanghai FTZ, with specific initiatives in service trade and financial openness, is one of the most significant steps since the reform and opening up. "It's natural that all regions want to join the race and gain a higher starting point in future development," said Wei Houkai, a researcher at the Chinese Academy of Social Sciences.

"The Shanghai FTZ can only play a limited role in spurring economic development. Personally, I think more FTZs should be considered and built in an orderly way to rebalance the economy in different regions," he said.

According to media reports, a number of regions such as Tianjin and Chongqing have also lobbied the central government for FTZ approvals. Guangdong is charting plans for a new integrated free trade zone along with Macao and Hong Kong.

Fan said the NDRC, the Ministry of Foreign Affairs and the Ministry of Commerce will jointly design the overall plan for the proposed "Silk Road Economic Belt".

The belt was proposed by President Xi Jinping in September. It will be a free trade zone that includes China and Eurasian countries, which have a combined population of 3 billion.

Experts said it would play a significant role in boosting cooperation between China and Eurasian countries and economic development of the regions along the road.

More regional policies are in the pipeline. A detailed plan for the coordinated development of Beijing, Tianjin and Hebei province is in the making, Fan said last month.

The Beijing-Tianjin-Hebei area had a combined GDP of over 6 trillion yuan ($980 billion) in 2013 and a total population of more than 100 million.

The NDRC is also working on plans for an economic belt along the Yangtze River, which will involve 11 regions: Shanghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Hubei, Hunan, Sichuan, Chongqing, Yunnan and Guizhou.

Wei said the belt will be a new pillar for China's economic development in the long run and achieve a balance between the central and western regions, which are expected to drive China's future economic growth.

Development across regions is becoming more coordinated, and regional gaps are narrowing. All policies are designed after taking regional individual competitiveness and strengths into account, Fan said.