China’s Free Trade Zones (FTZs) have emerged as pivotal hubs for international trade, seamlessly connecting regions within and beyond China. These zones have significantly enhanced trade efficiency and bolstered the country’s standing as a global trade powerhouse. In this article, we explore the impact of FTZs on China’s trade dynamics, citing examples from the Yunnan and Guangxi provinces.
In the heart of southwest China’s Yunnan Province, near the bustling cargo terminal in Kunming, a remarkable transformation in the transportation of goods is taking place. Porters are busily handling boxes of imported durians, unloading them from a cold-chain container, and preparing them for onward delivery by road to Chongqing Municipality. The striking feature of this operation? The entire journey from the Laotian capital, Vientiane, to Kunming, was completed in just 26 hours, thanks to the China-Laos Railway.
Kunming’s cargo terminal, operated by China United International Rail Containers Co., Ltd. (CRIntermodal), is strategically located within the China (Yunnan) Pilot Free Trade Zone (FTZ). Since the inauguration of the China-Laos Railway in December 2021, this terminal has handled more than 224,000 tonnes of cargo bound for Laos and received 312,600 tonnes from Laos as of August 31.
Xu Chao, Deputy General Manager of CRIntermodal’s Kunming branch, underscores the advantages of rail transport, emphasizing its cost-effectiveness and swiftness, which translates into valuable time savings for the transportation of seasonal fruits and other goods.
Yunnan Province’s geographical proximity to Myanmar, Laos, and Vietnam positions it as a critical trade crossroads. Established in 2019, the Yunnan pilot FTZ is actively working to enhance connectivity between the Belt and Road Initiative and the Yangtze River Economic Belt. It aspires to become a pivotal node in the major corridor connecting South Asia and Southeast Asia.
China’s journey with FTZs began in 2013 with the establishment of the first pilot FTZ in Shanghai, followed by the Hainan Free Trade Port and 20 additional Free Trade Zones across the country. Each Free Trade Zone is designed with unique strategic positioning and development goals, harnessing its distinctive strengths to contribute to China’s high-quality development.
Shanghai’s FTZ, as an illustrative example, has continually reduced its negative list for foreign investment, expanding market access for international investors. Over seven rounds of modifications, the list has shrunk from 190 to just 27 items by 2021, demonstrating a commitment to attracting foreign capital and fostering a more favorable investment climate.
In China’s southern Guangxi Zhuang Autonomous Region, the Guangxi FTZ is rapidly evolving into a vital corridor for international land-sea trade with ASEAN countries. It also serves as a pivotal gateway linking the 21st Century Maritime Silk Road and the Silk Road Economic Belt.
Liang Tong, an official with the Qinzhou Port area of the Guangxi FTZ, reports impressive growth, with a 79.3 percent increase in the number of twenty-foot units (TEUs) handled by the port in 2022 compared to 2019. The introduction of sea-rail intermodal train trips has been instrumental in this growth, with 8,820 trips delivering 442,000 containers in the last year, a nearly four-fold increase from 2019.
Lin Jiatian, a manager with the Container Business Center of Qinzhou Area of Sinotrans Guangxi Co., Ltd., highlights the significant reduction in transportation time. Goods that used to be shipped from Chongqing to Singapore via Shanghai, taking almost 20 days, can now reach their destination in just 9 days through rail-sea intermodal trains. This efficiency not only accelerates capital returns but also eases financial pressure.
Over the past decade, more than 300 institutional innovations have been implemented in Free Trade Zones, spanning investment facilitation, trade liberalization, financial opening-up, and other critical areas. The Ministry of Commerce is committed to further enhancing Free Trade Zones and promoting their high-quality development, underlining their pivotal role in China’s trade ecosystem.
China’s Free Trade Zones are pivotal engines of growth, fostering enhanced connectivity, efficiency, and economic development. As exemplified by Yunnan and Guangxi, these zones are instrumental in facilitating the flow of goods, driving economic prosperity, and contributing to China’s global trade leadership.