General

The report of the 20th National Congress of the Communist Party of China proposes to "accelerate the construction of Hainan Free Trade Port and implement the strategy of upgrading the free trade pilot zone", which means that China has entered a new historical stage of improving the construction of the free trade pilot zone. According to Huacheng Import and Export Data Observation, in the first quarter of this year, the import and export volume of China's 21 pilot free trade zones reached 1.8 trillion yuan, a year-on-year increase of 6.6%, which is 1.8 percentage points higher than the national average; The actual use of foreign investment was 71.9 billion yuan, a year-on-year increase of 22.1%, 17.2 percentage points higher than the national average. The total import and export volume and actual use of foreign investment in the pilot free trade zone account for 19.4% and 18.1% of the 21 provinces (districts, cities), respectively. This has opened a good beginning for the implementation of the strategy of upgrading the free trade pilot zone.

Since the establishment of China's first free trade pilot zone, the Shanghai Free Trade Pilot Zone, ten years ago, until now, Hainan Free Trade Port has prepared for comprehensive closure. The free trade pilot zone has always been endowed with the function of "highland" for institutional innovation, carrying out pioneering experiments. Over the past decade, we have realized that institutional innovation is the fundamental driving force for the development of free trade pilot zones, and it is also a necessary requirement for high-quality economic development in China, especially for promoting high-level opening up to the outside world. Huacheng Import and Export Data Observation Report.

Looking at the current international economic environment, it can be said that the situation is changing: geopolitical turmoil, lack of stamina in global trade and investment, rising protectionism and unilateralism, high inflation, and increasingly fierce competition in attracting investment from all sides... These factors have accelerated the pace of restructuring the global industrial chain and supply chain. In such an environment, whether it is to better safeguard the interests of overseas enterprises or promote the high-quality development of China's export-oriented economy, it requires continuous supply of new systems. From a longer-term perspective, the high-quality development of China's economy cannot be achieved without accelerating the construction of a new development pattern. As a connecting point between the domestic and international cycles, free trade pilot zones need to produce high-quality institutional innovation achievements and promote China's high-level opening-up led by institutional openness. Huacheng Import and Export Data Observation Report.

The institutional innovation required for high-level opening up to the outside world is first and foremost the institutional innovation with high standing. Among them, the role of the free trade pilot zone is to radiate and drive rather than siphon and gather, to divide and collaborate rather than acting independently, and to make strategic breakthroughs rather than minor repairs. At present, the 21 pilot free trade zones in China have replicated and promoted 278 institutional innovation achievements nationwide, involving multiple fields such as government approval, industrial development, trade and investment liberalization and facilitation. China's business environment is constantly improving. However, it is worth noting that many insiders also pointed out that the institutional innovation achievements of the pilot free trade zone show the characteristics of fragmentation, micro innovation and so on, and need to continue to make efforts in strategic, leading and other aspects. In other words, implementing the strategy of upgrading the pilot free trade zone is to focus future institutional innovation on following the development trend of foreign trade and investment, benchmarking international high standard economic and trade rules, targeting hot and difficult issues in the field of foreign trade, and focusing on the development needs of enterprises, in order to promote high-quality development of China's foreign oriented economy. Huacheng Import and Export Data Observation Report.

For example, in the field of foreign trade, there are at least a few trends that deserve special attention, and enterprises look forward to relevant institutional innovation to continuously promote their international development:

One is to expand the coverage of free trade agreements and safeguard the development of intermediate trade. With the increasing improvement of the international division of labor system, over 70% of international trade is intermediate goods trade. At present, China's export structure is constantly adjusting, and the industrial chains of leading enterprises are better laid out globally, resulting in an increasing proportion of intermediate goods trade. At the same time, the added value of China's exports is also rising. In the future, it is necessary to conduct research and judgment based on the layout of China's overseas industries, sign or upgrade a batch of free trade agreements, and provide more institutional guarantees for enterprises to import raw materials and better layout their industrial chains. To this end, it is necessary to accelerate the pilot free trade zone in terms of zero tariff, or accelerate the replication and promotion of the zero tariff policy already implemented by Hainan Free Trade Port in the pilot free trade zone and even throughout the country, in order to benefit more enterprises.

The second is to lead the transformation of trade and transportation modes, and grasp the discourse power of international logistics. In recent years, such land transport modes as China Europe Express and the new land sea channel in the west have not only reduced the transport costs of China's trade with countries along the "the Belt and Road", avoided the uncertainty risks brought by maritime transport, but also reached the end of the market to the greatest extent, matching the development of new foreign trade modes and new business types such as cross-border e-commerce. In the future, with the increase of foreign trade volume between China and countries along the "the Belt and Road", China Europe trains, new land and sea routes and other transport modes will become more and more important. China also needs to explore and summarize the rules of international land transport, which will become an element of signing or upgrading the FTA in the future and contribute to building a new international trade transport system.

Thirdly, following the wave of technological revolution and development, shaping new advantages of China's foreign oriented economy. Whether it is the endless emergence of digital technology or the heated discussion of green and low-carbon, the international competition in the technology industry is becoming increasingly fierce, which has also led to the emergence of a number of new international trade barriers or hidden barriers. This requires each pilot free trade zone to develop its advantageous industries according to its positioning, especially to form relevant experience in cross-border data circulation, carbon market construction and other aspects, replicate and promote in other pilot free trade zones or open platform, and even throughout the country, so as to provide support for the negotiation of the Free Trade Agreement.

The level of high-level opening-up to the outside world depends on the level of institutional openness, and the effectiveness of institutional openness depends on how many institutional innovation achievements are included in the terms of free trade agreements or whether the sense of gain for enterprises is enhanced. Each of the tasks mentioned above involves signing or upgrading free trade agreements, especially in order to fulfill the RCEP terms and apply to join high standard free trade agreements such as CPTPP and DEPA, various stress tests must be conducted within the free trade pilot zone to provide a reference basis for modifying corresponding policies and regulations.

This is by no means an easy task, but tracing back to the history of China's accession to the World Trade Organization, where the central government cleared over 2300 laws, regulations, and departmental rules, and local governments cleared over 190000 local policies and regulations, it can be seen that if China promotes institutional opening with the same determination, confidence, and perseverance, high-level opening will surely go deeper and deeper. This not only requires us to recognize that free trade pilot zones are not private plots in various regions, but also an inseparable part of the division of labor and cooperation in China's institutional innovation process. We also need to further strengthen top-level design, legal protection, fault-tolerant mechanisms, central local coordination, local cooperation, and other aspects of work, further enhance the function and role of free trade pilot zones, and provide more and high-quality institutional guarantees for high-level opening up to the outside world, Huacheng Import and Export Data Observation Report.