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State Council approved plans to set up three more free-trade zones in an executive meeting chaired by Premier Li Keqiang. Photo: Xinhua

State Council approves free-trade zones for Tianjin, Fujian and Guangdong

State Council gives green light for projects in coastal powerhouses

Angela Meng

Tianjin, Fujian and Guangdong will follow Shanghai's lead and establish free-trade zones in their jurisdictions.

In an executive meeting chaired by Premier Li Keqiang yesterday, the State Council approved plans to set up three more free-trade zones a little over a year after it gave the green light to the Shanghai venture.

The new zones would be based on the same model as Shanghai's but each would have its own "local characteristics", the State Council said.

The Shanghai zone, launched in September 2013, was touted as a laboratory for economic reform, a playground for foreign companies and state-owned enterprises alike.

Overseas firms expected to thrive under its zero tariffs; and international-standard protection of intellectual property rights and the environment. The zone was also to foster economic and regulatory transparency, with no subsidies for state-owned enterprises; and liberalised financial services to pave the way for currency convertibility.

The zone was to be a proving ground for SOEs to see if they could survive the competition before similar liberalisation measures were applied in other parts of the mainland.

But, more than a year after the Shanghai experiment's inception, some analysts are sceptical of the concept's future.

Li Weiguang, a professor of public finance at Tianjin University of Finance and Economics, said he had doubts about the prospects for a similar zone in Tianjin. "Shanghai faces a lot of difficulties developing its free-trade zone and it's an open secret that its plan to make it a free territory to attract foreign investment and technology wasn't well received by the state-level authorities," Li said.

All three new zones are destined for high-performing coastal economic centres, particularly the Guangdong zone, which will encompass Hong Kong and Macau. Its backers hope the zone can help the Pearl River Delta make the transition from low-end manufacturing to high-end industries.

Many companies have expressed disappointment about the continued lengthy approval processes in Shanghai, saying its free-trade zone failed to live up to the promise of giving full play to market forces.

"All eyes are on the relevant ministries that make the free-trade zone policies," Li said. "If they are reluctant to fully liberalise the market, it will be only a numbers game as the State Council expands the free-trade zone scheme to other areas."

This article appeared in the South China Morning Post print edition as: Go-ahead for three more free-trade zones
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