As a mainland port nearest to Taiwan, the Pingtan free trade area naturally plays a significant role in deepening the economic cooperation between Fujian province and Taiwan. A sino-us.com reporter visited the Pingtan Area of the Fujian Pilot Free Trade Zone, which was officially inaugurated on April 21.
Innovation drives Fujian-Taiwan cooperation
The CPC Central Committee and the State Council, China's cabinet, have always attached great importance to the development and opening up of Pingtan. In his last year's inspection tour of the Pingtan free trade area, Chinese President Xi Jinping stressed that Pingtan is not only the key for Fujian-Taiwan collaboration but also a window of China's opening-up.
Lin Jiangling, vice director of the management committee of the Pingtan Comprehensive Pilot Zone, told sino-us.com that the Pingtan free trade area is committed to "providing policies and measures that can promote liberalization of investment, trade and personnel exchanges between Fujian province and Taiwan".
A ferry terminal of Pingtan. Photo: Ding Yi/Sino-US.com
Learning from the successful experience of the Shanghai Pilot Free Trade Zone, China's first free trade zone established in September 2013, the Pingtan free trade area is conducting innovative reforms in four aspects in a bid to deepen Fujian-Taiwan cooperation.
Firstly, in order to create a fair business environment, the Pingtan free trade area adopts the pre-establishment national treatment plus negative list approach, which eases market access for foreign companies (including Taiwanese companies), especially for those in shipping, commerce and trade, cultural services as well as social services sectors.
In April, China's State Council released a new free trade zone negative list, which details a total of 122 items, 18 less than a 2014 negative list put in place for the Shanghai Pilot Free Trade Zone, an indication that there will be greater openness and transparency in Chinese free trade zones. The new version of the negative list will surely cover the Fujian Pilot Free Trade Zone.
Secondly, the Pingtan Customs follows the principle of "releasing the goods before customs declaration". In principle, import and export goods between Pingtan and Taiwan do not need to be inspected at Pingtan Customs. What's more, based on the Economic Cooperation Framework Agreement (ECFA), a trade pact signed by the Chinese mainland and Taiwan in 2010 to reduce tariffs and commercial barriers between the two sides, Pingtan and Taiwan will try to achieve mutual recognition of customs clearance documents, goods inspection results, digital certificate of origin and customs seals.
Thirdly, the Pingtan free trade area deepens cross-strait financial cooperation by encouraging Taiwanese financial institutions to set up branches in Pingtan, launching pilot projects for cross-border, two-way yuan lending between Pingtan and Taiwan, and allowing firms registered in Pingtan to accept yuan-denominated loans issued by Taiwanese banks.
Fourthly, Pingtan will take advantage of its rich tourism resources to build an international tourism island, which will provide duty-free shopping, extreme sports and theme parks. In addition, eligible Taiwanese travel agencies and tour guides will also be allowed to do business in Pingtan.
A Taiwanese car is going through the Pingtan customs. Photo: Ding Yi/Sino-US.com
According to statistics from the leading group office of the Pingtan free trade area, helped by the innovative policies and measures, Pingtan imported $28.84 million worth of goods from Taiwan in the January-April period. Pingtan's exports to Taiwan increased 17.21 percent to $5.74 million in the same period. Since last June, the sales volume of the Pingtan-Taiwan Duty-free Commodity Market has reached a total of 240 million yuan, said the leading group office.
In addition, the Pingtan free trade area will put the Taiwan Pioneer Park into operation later this month. As of now, more than 120 enterprises from the Chinese mainland and Taiwan have registered in the park. If needed, the enterprises can obtain financing from the Eaglet Fund and Eagle Fund.
Achievements and challenges
Analysts said that the establishment of the Fujian Pilot Free Trade Zone enhances foreign firms' optimism about the investment environment in Fujian province.
In recent years, more than 70 government agencies and state-owned companies have rolled out many support policies that are beneficial to the construction of the Western Taiwan Straits Economic Zone and the deepening of the Fujian-Taiwan economic cooperation. The preferential policies and geographic advantage make the economic and trade exchanges between Fujian province's coastal cities and Taiwan more convenient. Currently, Fujian province has six international-level investment zones for Taiwanese businesses, six national-level pioneer gardens for Taiwanese farmers and Chinese mainland's biggest cross-strait agricultural cooperation pilot zone.
Statistics from China Customs show that trade between Fujian province and Taiwan reached 76.41 billion yuan in 2014. Compared with 2013, Fujian province's imports from Taiwan dropped 11.5 percent to 52.94 billion yuan in 2014, and the province's exports to the island grew 17.4 percent to 23.47 billion yuan in the same year. The increase in Fujian province's exports to Taiwan was partly helped by the support policies adopted by the central and local governments.
However, the amount of capital from Taiwan invested in Fujian province is not remarkable. In the first quarter of 2015, Fujian province approved 111 Taiwanese investment projects, an increase of 70.8 percent from the same period of last year, with actual utilized investment from the island amounting to $187 million, according to statistics released by the province's commerce department in April. The commerce department said that Fujian province's actual utilization of Hong Kong and Macau investment was valued at $4.56 billion in 2014. The province approved 395 investment projects from Hong Kong and Macau in 2014, an increase of 17.6 percent from 2013.
Moreover, Fujian province failed to become a favorite destination for Taiwanese investment during the first two rounds of Taiwan's mainland-targeting investment fever, in which most Taiwanese capital went to Guangdong province's Dongguan and Shenzhen, Jiangsu province's Kunshan and Wuxi, and economically developed Shanghai.
The monitoring center of the Pingtan free trade area. Photo: Ding Yi/Sino-US.com
In general, Fujian province is not as attractive as expected to Taiwan. Fortunately, the establishment of the pilot free trade zone offers a good opportunity for Fujian province to change the situation.
Ding Changfa, an economic researcher at Xiamen University, said in an interview that Fujian province has "potential advantages" in promoting economic ties with Taiwan, but pointed out that the province still needs to further conduct institutional innovation, enhance administrative efficiency and improve commercial environment to attract more Taiwanese investment.
Fujian province has set a goal to surpass Taiwan's GDP by 2020.
Serving China's 'One Belt, One Road' strategy
"The current goal of the Pingtan free trade area is to deepen economic exchanges with Taiwan. But we will look at the whole world with the development of the free trade area," Fang Ming, vice director of the foreign and overseas Chinese affairs office of the management committee of the Pingtan Comprehensive Pilot Zone, told sino-us.com.
As Fujian province is one of the core areas of the 21st Century Maritime Silk Road, the Fujian Pilot Free Trade Zone will certainly play a part in promoting the implementation of China's strategy of building the Silk Road Economic Belt and the 21st Century Maritime Silk Road ("One Belt, One Road" strategy). In fact, the four free trade zones respectively located in Tianjin, Shanghai, Fujian province and Guangdong province have already been included in the ambitious strategy that China proposed to realize common prosperity in the region. As China's developed coastal provinces and cities, Shanghai, Fujian province and Guangdong province are closely linked to the 21st Century Maritime Silk Road. Tianjin, a major northern business hub which is a component of the Beijing-Tianjin-Hebei Coordinated Development Program and a new starting point of the Eurasian Continental Bridge, will shoulder the responsibility of strengthening ties with Chinese provinces and countries and regions along the Silk Road Economic Belt.
The innovative reforms being undertaken by the Pingtan free trade area in developing Fujian-Taiwan economic ties and the successful experience of the Shanghai Pilot Free Trade Zone in managing negative list, facilitating trade and innovating financial system can be applied to the construction of the free trade zones between China and countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
Currently, China is negotiating with a number of countries on establishing free trade zones, with some pacts signed and implemented. At the summit of the Asia-Pacific Economic Cooperation (APEC) held in Beijing last November, Chinese President Xi called for the APEC member countries to reach a consensus on creating a Pacific-wide free trade zone called the Free Trade Area of the Asia-Pacific (FTAAP). At last year's summit, the leaders of the APEC member countries endorsed the China-backed Beijing Roadmap for APEC's Contribution to the Realization of the FTAAP, a move Xi described as a historic milestone in bringing regional economic integration to a new and higher level, benefiting economies at various development stages across the Pacific Ocean and injecting new energy into the growth of the region and APEC member countries.
Under the "One Belt, One Road" initiative, the linkages between the domestic free trade zones and the free trade agreements China has signed with foreign countries will contribute to the Asia-Pacific connectivity and the common prosperity in the region.
In terms of how the Fujian Pilot Free Trade Zone can serve the "One Belt, One Road" strategy, Zheng Shanjie, vice governor of Fujian province, said that the free trade zone can help Fujian province and countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road to take steps to promote two-way investment, cooperation in supply chain, connectivity of infrastructure, and information, personnel and cultural exchanges.
It is reported that the provinces of Shandong, Henan, Hubei, Shaanxi and Gansu and the Xinjiang Uygur Autonomous Region have been included into China's next batch of pilot free trade zones, which is undoubtedly an indispensable supplement to the "One Belt, One Road" strategy.