The recent executive meeting of the State Council studied and deployed the pilot experience of promoting the Shanghai Pilot Free Trade Zone, and agreed to set up three more free trade zones in specific areas of Guangdong, Tianjin and Fujian.
The expansion of the free trade zone reflects the wisdom of China's reform. As early as the beginning of the establishment of the Shanghai Free Trade Zone, the central government clearly required it to form a "replicable and generalizable experience", and this top-down and bottom-up combination of "first pilot, then roll out" innovative diffusion path fully explains a series of success factors such as the smallness, experimentality, cumulativeness and demonstration of China's gradual reform.
At present, the Shanghai Free Trade Zone has initially formed four major institutional innovation achievements that can be copied and promoted, specifically: the investment management system with negative list management as the core has been established; the trade supervision system focusing on trade facilitation has been smoothly operated; the financial innovation system with the goal of capital account convertibility and the opening up of the financial services industry has been basically established; and the ex post facto supervision system oriented by the transformation of government functions has basically taken shape. After the expansion of these innovations in the free trade zone, it should be able to make the institutional dividend better and faster spill over to China's larger space.
First, institutional innovation, like other innovations, is a dynamic cyclical process. That is to say, the above-mentioned achievements that have been formed in the Shanghai Free Trade Zone are not only the "results" of the early innovation, but also the "causes" of the later innovation, and the expansion of the free trade zone will make the above achievements form a more diverse combination of innovation premises under different environmental conditions. For example, the combination of the results of the investment management system and the construction of the Guangdong-Hong Kong-Macao Free Trade Zone, and the combination of the results of the trade facilitation system and the process of cross-strait economic and trade liberalization, such a new combination of prerequisites will greatly expand the possible boundaries of subsequent innovation, and the institutional innovation focused on by the construction of the free trade zone will obtain a continuous source of power in the cyclical process of "accumulation of achievements - innovation - accumulation of results again - innovation again".
Second, institutional innovation differs from other innovations in that its effectiveness is often difficult to reflect in the short term (which is actually why since the establishment of the Shanghai Free Trade Zone for more than a year, although the overall evaluation of the outside world is quite positive, there is no lack of doubt, that there has not been much substantive progress), so it is possible that some officials with limited tenure will either gradually weaken or simply turn around and return to the old path of preferential policies. The expansion of the free trade zone can at least partially reverse the congenital deficiency of the incentive mechanism that is not conducive to the continuous promotion of institutional innovation by introducing a benign competition mechanism and a relatively clear comparison object.
Third, institutional innovation in certain specific areas must be adopted at a higher level and in a wider range of fields in order to observe the results of the test more clearly. Take institutional innovation in the financial sector as an example: on the one hand, the preconditions required are often not provided by one city and one domain, such as a high-level regulatory system and diversified market demand; on the other hand, the deferred effect caused by it also naturally has a high degree of liquidity and derivatives that break through the effective boundaries of supervision, and it is more difficult to be strictly confined within the scope of one city and one region. The expansion of the free trade zone can geometrically improve the feasibility and universality of financial innovation experiments on the basis of existing experiments.
Therefore, the expansion of the FTZ is not simply one plus three or one multiplied by three. We hope and believe that through the expansion of this free trade zone, "one branch alone" will be promoted as quickly as possible and as well as possible.
Source: China Economic Weekly