Re-expansion of Shanghai FTZ: Creating a New Hub of Global Economic Network

The launch of Shanghai Free Trade Zone's new port-vicinity area is by no means a simple expansion of space or a simple policy shift, but a new system, new functions, new industries and new economy for opening up and a new hub for building a global economic network.

Recently, the State Council issued the Overall Plan for New Port-Linking Zones of China (Shanghai) Free Trade Pilot Zone (hereinafter referred to as the "Plan") and issued the "State Council's Approval for the Establishment of New Port-Linking Zones of China (Shanghai) Free Trade Pilot Zone". So far, the new area of Shanghai Free Trade Zone, which covers an area of nearly 120 square kilometers, has officially appeared.

The Program points out that by 2025, the new area will establish a more mature system of investment and trade liberalization and facilitation, and build a number of functional platforms with higher openness; by 2035, it will build a special economic functional zone with stronger international market influence and competitiveness, and form more mature and stereotyped institutional results. To build the core function of global high-end resource allocation and become an important carrier for China's deep integration into economic globalization. Undoubtedly, this is another important measure of China's opening up, which is of great strategic significance for the formation of a new pattern of opening up under the new situation. Since its establishment in September 2013, China (Shanghai) Free Trade Pilot Zone has grown rapidly into a leader in the pilot test of China's regional and regional free trade zones in less than six years, and has also become another important window for China's opening up to the outside world. However, due to geographical constraints, the effectiveness of FTA has not yet been fully exerted, and its radiation and demonstration functions still have room for further improvement, which is the direct reason for the repeated expansion of FTA.

As early as December 2014, the Shanghai Free Trade Zone implemented its first expansion, covering an area of 120.72 square kilometers from the original 28.78 square kilometers. After the first expansion of FTA, the number of new enterprises increased rapidly. According to statistics, as of the end of June this year, more than 55,000 new enterprises have been set up in Shanghai Free Trade Zone, which is 1.5 times the number of enterprises set up in the same region in the previous 20 years. Among newly established enterprises, the proportion of foreign-funded enterprises has increased from 5% at the initial stage of listing to about 20% at present. According to the plan, the Gross Regional Product of Lingang New Area will exceed 1 trillion yuan by 2035, which is equivalent to rebuilding a current Pudong New Area. It can be seen from this that the economic agglomeration effect of the expansion of FTA is very significant.

In terms of construction criteria, it aims at free trade parks with the strongest international competitiveness and implements open policies and systems with stronger international market competitiveness, so as to better serve the overall strategic layout of China's opening up. It is noteworthy that the expansion of Shanghai FTA was formally launched under the circumstances of the rising international trade protectionism and the uncertainties in China's foreign trade situation. This is seen as a practical measure to further emphasize China's determination to open up to the outside world and to form a new pattern of comprehensive opening up as soon as possible.

It is reasonable to believe that the new port-vicinity zone of Shanghai Free Trade Zone will not only further enhance foreign investment's confidence in China's reform and opening up, but also provide more and more rich experience in policy innovation for other free trade zones, so as to add new impetus to the realization of higher-quality development of China's economy.