"The State Council has recently approved all seven applications
to open pilot zone-port areas," said Dai Bin, an official with the
Xiamen Xiangyu Bonded Zone.
The approval given to?the seven bonded zones -- nearly half
of the nation's 15 -- to establish pilot zone-port interactive
areas (ZPIAs) means that China is moving steadily toward creating
its first group of free trade zones.
The decision eliminated early worries that only two or three
applications would be approved.
Xiamen Xiangyu Bonded Zone was one applicant. The others are
located in Qingdao, Dalian, Zhangjiagang, Tianjin, Shenzhen and
Ningbo.
Upon approval, the area of China's ZPIAs will reach 9.2 square
kilometers.
The State's green light follows the successful establishment of
the Shanghai Waigaoqiao ZPIA, selected as a pilot late last year
and completed in April.
A ZPIA is a combination of bonded land and a nearby
international port. A bonded logistics zone will usually be set up
in the port area. According to Dai, the combination will benefit
enterprises in the former bonded zone by offering better logistics
services, helping to solve the bottlenecks currently affecting
China's bonded zones.
"The ZPIA can be seen as an enlarged bonded zone that includes a
sea port," he said. "All preferential policies will be extended
from the former bonded area to the whole coverage of the ZPIA."
Updated tax rebate mechanisms will also be adopted. Rebates will
be granted on the entry of domestic goods flowing into zone-port
areas, rather than the current practice of providing refunds after
those goods leave China. This is one of the zones' biggest
attractions to many investors.
Goods circulated within the zone are exempted from value-added
taxes and consumption duties, and companies will also benefit from
more relaxed foreign exchange controls.
Customs procedures and clearance will be speeded up, helping to
pare delivery delays and ultimately slashing costs.
Processing trade activities will remain in the former bonded
areas.
The ZPIA will be conducive to the establishment of China's first
free-trade areas, according to Zhang Xiaoji, a senior researcher
with the State Council Development and Research Center. Zhang was
one of the initiators of the ZPIA plan.
"We are committed to turning bonded zones into free-trade areas,
although the process may be long and laborious," said Zhang. All
seven of the ZPIAs-to-be concur.
China plans to have two or three world-class free trade zones on
the mainland by 2015 if the transformation of the bonded zones is
successful.
The bonded zones have been losing their luster as the nation
reduces tariffs and opens up markets as part of its World Trade
Organization commitments. Once magnets for foreign funds, these
zones have been complaining that their attraction is diminishing as
they suffer space shortages and shrinking tariff advantages.
(China Daily August 26, 2004)