3 new Chinese FTZs created as economy rebounds

Beijing FTZThree new pilot Chinese FTZs got the go ahead on Monday, just as the European Central Bank (ECB) reported that the Chinese economy had made a relatively swift recovery from the ravages of the COVID-19 pandemic. According to the development bank, the Chinese economy rose from a low point of 20% of normal levels of activity in February to 90% three months later. The manufacturing and construction sectors returned to almost full capacity during the course of May, but the outlook was not so good for services sectors such as tourism, business travel, cultural sporting and other activities where social distancing remains a challenge.
The government’s State Council was meanwhile unveiling plans for three new Chinese FTZs, one each in Beijing, Hunan and Anhui as part of President Xi’s strategy of further opening up the country to inward investment. The Beijing zone will have separate areas for science and technology, digital trade and big data exchange, international business services, and high-end industries. At the same time, authorities in the capital  will begin to deregulate the financial sector and issue more permits to foreign banks seeking  to conduct custody services for securities investment funds, while qualified domestic banks will simultaneously be encouraged to develop cross-border financial services. The new zone is expected to make a significant contribution to wider attempts to develop the Beijing-Tianjin-Hebei region as set out in the 2018  Integration Plan.
AnhuiThe development of China’s interior provinces has been a pressing economic imperative for Beijing for well over a decade, and the second FTZ given the green light this week is being seen as a blueprint for the development of other inland regions. Located in the eastern  province of Anhui, its focus will be on coordinating and integrating scientific and technological innovation with the development of the province’s ‘real’ economy by accelerating the pace of its pioneering role in scientific and technological innovation and the cluster development of advanced manufacturing and strategic emerging industries.This too is part of a bigger picture, this time the integrated development of the Yangtze River Delta. With Shanghai at its commercial heart the delta is an important international gateway and one of the major engines of China’s economy, responsible for around 20% of the country’s GDP. Traditionally made up of the provinces of Jiangsu and Zhejiang, it now officially also includes Anhui whose addition has increased its size to over 210,000 km2 – more than twice that of South Korea.
The third Chinese FTZ unveiled this week will be in the southern province of Hunan where Mao Zedong spent his early years. Its inclusion in the State Council’s announcement came as no surprise after last week’s visit by Pearl River Delta/Greater Bay AreaPresident Xi who took the occasion to urge his audience to create a hub of advanced manufacturing industry and technological innovation. The new FTZ is intended to create an international investment and trade corridor linking the Yangtze River Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area, and between China and Africa.
The three new FTZs bring the total number of such zones to 21 six of which – those in Shandong, Jiangsu, Guangxi, Hebei, Yunnan Heilongjiang and  Lingang – attracted almost $2bn of foreign investment in the first seven months of 2020, according to the Ministry of Commerce.