China’s State Council issued a circular on October 31st, approving the establishment of the China (Xinjiang) Pilot Free Trade Zone (FTZ). This development marks a strategic step towards harnessing the potential of the Xinjiang region in the broader context of China’s economic development. The circular outlines ambitious goals for the FTZ, aiming to make it a model of high-quality development for the central and western regions of the country.
Strategic Importance of Xinjiang
The circular underscores the strategic importance of Xinjiang in the overall development of China. Xinjiang, due to its geographical location and connectivity, is positioned to play a pivotal role in the domestic and international “dual circulation” strategy, a core component of China’s economic policies. It is expected to serve as a key element in the construction of core areas related to the Belt and Road Initiative (BRI), support the vital channel connecting Asia and Europe, and drive the opening-up of the western regions of China.
Objectives and Progress
The FTZ’s objectives are ambitious, with a clear timeline in mind. Over the course of three to five years, significant progress is expected in terms of improving the business environment, enhancing the ease of investment and trade, and fostering the growth of advantageous industries with shared resources and effective management coordination.
Geographical Coverage and Key Focus Areas
The FTZ encompasses parts of Urumqi, Kashgar, and Khorgos, spanning an area of 179.66 square kilometers. Its primary focus areas include emerging industries, labor-intensive industries, and modern service industries.
Government Functions and Investment
In a bid to expedite the transformation of government functions, the circular emphasizes the need to create a top-notch business environment. Furthermore, the FTZ aims to enhance international cooperation and service capacity in the fields of science and technology. This holistic approach includes a commitment to ecological protection and low-carbon growth.
The circular outlines the delegation of dual economic and social management authorities to the FTZ, in accordance with the law, involving both the Xinjiang Uyghur autonomous region and the Xinjiang Production and Construction Corps.
Reforms in investment will be deepened, with measures taken to promote investment facilitation and enhance the level of overseas investment and cooperation. This reflects the government’s dedication to creating a more conducive investment environment and encouraging collaboration with foreign entities.
Trade Facilitation and Innovation
The FTZ is set to play a vital role in trade facilitation, fostering new patterns in foreign trade and promoting the integrated development of domestic and foreign trade. Innovation in the sector is also a key priority.
Industry Development and Financial Services
The FTZ will establish an open and special industry system, with a focus on boosting traditional advantageous industries and promoting the upgrading of the manufacturing sector. Innovative growth in the digital economy is another noteworthy objective.
Additionally, the circular underscores the need to strengthen financial services within the FTZ. It aims to expand the cross-border use of the Chinese currency, RMB, with a comprehensive risk control and prevention system in place.
Logistics, International Cooperation, and Cultural Exchange
One of the ambitious goals outlined in the circular is the establishment of comprehensive logistics hubs that connect Asia and Europe. The FTZ aims to strengthen cooperation with neighboring countries, foster communication in culture and education, and enhance international medical service capacities.
The establishment of the China (Xinjiang) Pilot Free Trade Zone represents a significant step in the nation’s economic development strategy. With a clear focus on innovation, industry development, and international cooperation, this FTZ is poised to become a dynamic hub of economic activity and a model for high-quality development in the central and western regions of China. The goals set forth in the circular reflect the government’s commitment to leveraging the strategic importance of Xinjiang in its broader economic plans.