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Why does Sichuan set up pilot free trade zones and pilot areas for coordinated reform? What are the supporting policies?
Updated:2019.09.19

The head of Sichuan provincial free trade office said that many official delegations beyond Sichuan had come to inspect the pilot free trade zones and pilot areas for coordinated reform. The reason is simple--this move is original and is also a path of differentiated trial that Sichuan takes the lead in exploring in China.

After pilot free trade zones have been established, why does Sichuan set up seven pilot areas for coordinated reform? What are the functions of these areas? What are the supporting policies aiming at them? Regarding these questions, the reporter interviewed the head of Sichuan provincial free trade office and relevant experts.

After pilot free trade zones have been established, why does Sichuan still set up pilot areas for coordinated reform?

One is the national "experimental field", and the other is the "experimental field" featuring independent exploration in Sichuan

What is the relationship between the pilot free trade zones and the pilot areas for coordinated reform?

The head of the provincial free trade office made an analogy, saying that if the former is the "experimental field" entrusted by the state with the task of reform, then the latter is the "experimental field" featuring independent exploration in Sichuan. "To put it simply, apart from the reform involving the authority of the central government that we need to report it to the relevant ministries and commissions for approval, all other matters are conducted in parallel with the pilot free trade zones."

In order to further promote the transformation of opening-up in Sichuan, so as to drive high-quality economic development, the head said when asked why Sichuan still sets up pilot areas for coordinated reform after pilot free trade zones have been established.

"In the past, investment attraction relied on preferential policies, however, now it hinges on institutional environment", Sheng Yi, a researcher from the Sichuan Academy of Social Sciences (SASS), said Sichuan is shifting to a more rule-oriented opening-up. And the head of the provincial free trade office noted that the pilot areas for coordinated reform are just like the single spark that could start a prairie fire. We hope through the establishment of these areas internationally-accepted economic and trade rules and new ideas of opening-up will be spread more widely, so that more regions can reflect on their gaps from others and "pain points".

Deng Fuhua, Assistant to the Dean of Sichuan Institute for Free Trade Research Zone of Southwestern University of Finance and Economics, noted that the pilot areas for coordinated reform will serve more for the regional development of Sichuan. "After all, the pilot free trade zones in Sichuan only cover a small part of regions. How to make full use of the system dividend and combine it with the industrial advantages of various regions? The pilot areas provide very good carrier platforms."

What are the main tasks of the pilot areas for coordinated reform?

The core is to carry out institutional innovation, while the characteristic is to pay more attention to industry system innovation

What are the main tasks of the pilot areas for coordinated reform?

In the Implementation Plan for China (Sichuan) Pilot Free Trade Zones and Pilot Areas for Coordinated Reform, eight key tasks were identified, including working together to promote innovation in core institutions, taking the lead in replicating the experience of promoting reform, granting greater autonomy for reform, building a platform for opening up, creating a new pattern of all-round opening up,  developing an open economy at a higher level, establishing a characteristic modern industry system and improving regional connectivity.

The eight tasks may seem complicated, but the head of the provincial free trade office said that the core is same as that in the pilot free trade zones -- carrying out institutional innovation and exploring new ways and experience to comprehensively deepen reform and expand opening-up.

However, the institutional innovation of pilot areas for coordinated reform has its own characteristics. "In terms of industrial system innovation, the pilot free trade zones are less involved in this task, while the pilot areas for coordinated reform will pay more attention to it." The latter, on the one hand, should focus on similar system trials such as the transformation of financial and government functions, and on the other hand, they should focus on local resource endowments and development potential to break institutional bottlenecks hindering industrial development, according to the head.

Citing the example of Wenjiang Pilot Area for Coordinated Reform, he said that the overall plan mentioned the need to explore clinical trials of foreign drug review and approval and allow the establishment of foreign-funded medical institutions. "The pilot areas for coordinated reform will actively take the lead in carry out trials with the authorization of the central government, so as to provide institutional advantages for the development of local pharmaceutical industry."   

What are the supporting policies?

In parallel with the pilot free trade zones, provincial management authorities will be granted to the pilot areas for coordinated reform and special campaign "free trade zone dividend is introduced into industrial parks" will be launched

To complete the tasks, what supporting policies will be given to the pilot areas for coordinated reform?

All 142 provincial-level administrative authorities that have been delegated to the pilot free trade zones in Sichuan will also be delegated to the pilot areas for coordinated reform, said the head of the provincial free trade office. Later, provincial management authorities will be granted to the pilot areas for coordinated reform in parallel with the pilot free trade zones. "For example, in the past, some approvals had to be completed by provincial departments. After the power delegation, the pilot areas for coordinated reform can make decisions on their own, thus gaining space and vitality in institutional innovation exploration."

In addition, in order to encourage trials, Sichuan will also establish mechanisms to allow for and rectify errors to encourage innovation and tolerate failure.

The head revealed that next Sichuan will also implement the special campaign "free trade zone dividend is introduced into industrial parks", supporting the pilot areas for coordinated reform to fully enjoy the institutional achievements of the reform in the pilot free trade zones. Relevant provincial departments will strengthen work guidance and, in combination with several measures taken by the central government to support the reform and innovation of the pilot free trade zones, study and introduce policies and measures to support the reform and innovation of pilot free trade zones and pilot areas for coordinated reform.

Why are these seven places selected as the pilot areas for coordinated reform?

Voluntary application of local regions and consistency with the strategy of CPC Sichuan Provincial Committee are two indispensable essential conditions. If the comprehensive evaluation of the pilot area for coordinated reform ranks bottom for three consecutive years, it will be revoked.

"Voluntary application is the prerequisite", the head said. First of all, the local governments of these seven regions apply for the establishment of pilot areas for coordinated reform voluntarily.

On this basis, the head said that the selection of the seven regions mainly lies in the high degree of consistency with the CPC Sichuan Provincial Committee's major decision-making and deployment, such as "One Stem and Multiple Branches, Five Districts in Coordination", which is conducive to the overall promotion of Sichuan's comprehensive competitiveness and influence in opening up through collaborative reform and innovation.

According to the head, a dynamic management mechanism of "positive incentives and negative constraints" will be established in the pilot areas for coordinated reform. This requirement includes the moves to strengthen the evaluation and regularly prepare and issue the Report on the Establishment of Sichuan Pilot Free Trade Zones and Pilot Areas for Coordinated Reform (Blue Paper), an establish a dynamic elimination mechanism. "Those who rank bottom in the comprehensive evaluation for three consecutive years will be revoked."

"So far local regions can still apply for the establishment of pilot areas for coordinated reform", the head said. Application can still be submitted. Sichuan will strive to cultivate and create 15 pilot areas for coordinated reform by 2020.


 
 
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