Mainland Free Trade Zones (FTZ) Developing at a Rapid Pace

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Recently, the leaders of Shenzhen city government visited Hong Kong. They met various trade organizations and invited them to consider Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone(Qianhai FTZ)  as a place worthy of investment. Qianhai, a special economic zone in Shenzhen, is being used as a testing ground for RMB liberalization and other related financial reforms. The business community in Hong Kong has long been concerned at the rapid progress made by Qianhai.

The China (Shanghai) Pilot Free Trade Zone (SHFTZ) covers an area of 29 square kilometers. It serves as a pilot zone for the future liberalization of service industries. The central government is exploring practical ways to integrate this zone with the international economy. This will not only benefit Shanghai - but other mainland cities.

Qianhai, on the other hand, is a district in a special economic zone, adjacent to Hong Kong and Macao, situated on the shores of the South China Sea. Qianhai covers an area of approximately 15 square kilometers and is about half the size of SHFTZ. As a pilot zone for trans-boundary cooperation between Guangdong and Hong Kong, it has a similar taxation and legal system to that of Hong Kong. Upon completion of its railway network, Qianhai will be just 10 minutes away from Hong Kong International Airport, seven minutes from Shenzhen's airport and half an hour from Hong Kong's Central district by train.

Mainland free trade zones developing at a rapid pace.Last year, for the first time on the mainland, the proportion of GDP from tertiary industries surpassed that of secondary industries; accounting for 46 percent of the nation's total GDP.

The finance sector is a case in point. Last September, the Bank for International Settlements survey revealed that the daily trading volume of RMB had reached $120 billion. This was $34 billion more than the amount reported in same survey three years earlier. This performance pushed RMB to the position of the ninth most actively traded currency in the world. This also demonstrates that the currency is becoming increasingly internationalized.

The extent of further liberalization of SHFTZ and Qianhai remains subject to future policy reviews by the central government. But already Qianhai and SHFTZ have made enormous gains, both in terms of economic development and the increasing sophistication of their service industries. 

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