Free trade zone has become a popular concept in the contemporary economic scenario. The history of free trade zone can be traced to the Foreign Trade Zone Act, 1934. Realizing the benefits of a free trade zone that offers a free and liberalized trading set up, many of the countries took a cue and set up such zones. China too, followed it up with the launch of free trade zones as part of its economic expansion drive that began in the 1970s. However, the real history of free trade zones in China can be seen in the early 1990s when a number of such zones were set up.
The emergence and growth of China as one of the top economies in the world has been a story of continuous and sustained growth. The measure for economic reforms initiated in the early 1970s by China certainly did play a role. Backed up with growth oriented innovative policies and setting up of a number of free trade zones and globalization, helped China to move ahead on the growth trajectory. The entry of China into the World Trade Organization further emboldened China to push ahead with the free trade zones.
As a major economic power and member of the World Trade Organization, China has had to adjust to the changing times. From reshaping and modifying its economic policies in tune with the expectations of the global trade, the entry of China into the World Trade Organization (WTO) all have had their share. The country has followed up with a policy of setting up a number of free trade zones offering trade incentives and tax. Consequently, a good number of foreign companies have launched their operations into Chinese free trade zones. The trade norms too have been liberalized and incentives for the promotion of R&D activities have come from the Chinese government and the local authorities.
In the free trading zones in China which add up to 12, it has made a number of changes in policies and regulations. The customs and tariff rates have been simplified and made rational in many cases. The foreign investment has been encouraged in areas where the Chinese traditionally are not strong. Manufacturing, logistics and specialized sectors in particular have been given a huge impetus. Above all, the exports have been encouraged in a big way, providing a bug cushion to the Chinese economy to avert any sorts of financial crisis. In fact, free trade zones have acted as a major contribution in the efforts of the country to have the largest foreign exchange reserves currently.
In keeping with the Chinese aspirations of using advantages of being the member of WTO, China has encouraged the global companies to make investments in the national economy. Consequently, it has witnessed one of the most impressive economic successes ever seen. A consistent growth rate in the spheres of 9-11% over a period of time, has ensured that China becomes one of the most attractive destinations for foreign investment for long. From agriculture, foodstuff and beverages to paper making, printing, packaging, medicines and healthcare, chemicals, real estate to automobiles, transportation, logistics, textiles, light industry, electronics, electrical and home appliances all have recorded impressive growth in China.
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