Share on facebook
Share on twitter
Share on telegram
Share on whatsapp
Share on linkedin
Share on print
Share on email

Risk vs. Opportunity: Xi Jinping Seeks to Reform Free-trade Zones, Create Free-trade Ports

◎ If Xi can make the free-trade ports genuinely free zones, they would pose a challenge to the CCP dictatorship.

During the 2017 APEC CEO Summit in Vietnam on Nov. 10, Xi Jinping promised to treat equally all businesses registered in China. He also discussed the need to give free-trade zones greater autonomy to implement reform, and raised the possibility of establishing “free-trade ports.”

On the same day, vice premier Wang Yang echoed Xi’s points in an article for the People’s Daily on the topic of “comprehensively opening up” China.

Why it matters: In the past five years, Xi Jinping and Li Keqiang were unable to implement substantial economic reform due to interference from Jiang Zemin’s faction and Party princelings. Xi could only advance his anti-corruption campaign and reshuffle personnel, but this allowed him to more fully consolidate control over the Chinese Communist Party (CCP) at the 19th Party Congress.

Xi’s ability to push through financial reforms such as those proposed by Wang over the next five years will benchmark the degree of his power consolidation and the obedience of local officials to his commands.

The backdrop: Xi and Li faced severe resistance to their economic liberalization plans during their first term in office. For instance, Li’s efforts to establish a free trade zone in Shanghai, a stronghold of the Jiang faction, was continually hampered by local officials, according to the Hong Kong press. Li was so furious with Shanghai officials that he reportedly pounded his desk during a State Council meeting and later boycotted the opening ceremony of the Shanghai Free-trade Zone. In 2015, former Shanghai Free-trade Zone head Dai Haibo and Shanghai vice mayor Ai Baojun were arrested on corruption charges.

The Xi administration still hasn’t given up on financial reform. On Nov. 10, Chinese vice finance minister Zhu Guangyao announced that foreign firms could hold majority stakes in local banks, securities, futures, asset management and insurance. On the same day, Xi talked about giving free-trade zones more freedom to implement reforms and creating free-trade ports at the APEC summit.

Our take:

  1. Wang Yang’s information-packed People’s Daily article echoes the direction of economic reform as laid out by Xi Jinping in his 19th Party Congress report.
  2. The free-trade ports as outlined by Wang are special hubs that will see little intervention from the Chinese authorities and customs, and where most goods or commodities will be exempt from tariffs. Wang singled out Hong Kong, Singapore, Rotterdam, and Dubai as examples of free-trade ports. We believe that some free-trade zones along China’s southern coast could become free-trade ports in the future.
  3. The Shanghai Free-trade Zone was supposed to offer offshore financial services, liberalized interest rates, full Renminbi convertibility, and uncensored internet access, but it ultimately only became a large tariff-free zone due to resistance from local officials. If Xi can make the free-trade ports genuinely free zones, however, they would pose a challenge to the CCP dictatorship. Based on the interactions between Xi and President Donald Trump, we believe that Xi could yet produce some surprising moves.
Search past entries by date

Recommended articles

Political Censorship and the Communist-style Erosion of America
The 2020 US Presidential Election and the Communist Threat
Analyzing the Purge of Wang Qishan Aide Dong Hong
What the ‘Xi-Li Split’ Says About the State of the CCP Regime
Culture Strategy: Inoculating America and the World Against China’s ‘Virulent Strain of Communism’
The Trump Administration Is Tough and Strategic on China
Politics Watch: Hong Kong’s NatSec Set Up Signals ‘Supra-authority’ Status of the CCP’s NatSec Commission
Politics Watch: Ramifications of the Hong Kong Security Law for CCP Factional Politics
Politics Watch: Fourth Plenum Timing and Agenda Confirm Political Crisis in China
Influence Watch: Why the CCP Fears an Ideological Battle and a ‘Clash of Civilizations’
Politics Watch: Xi Faces Pushback from the Intelligence Apparatus
Why Xi Jinping Removed China’s Presidential Term Limit

Testimonials

“The breadth of SinoInsider’s insights—from economics through the military to governance, all underpinned by unparalleled reporting on the people in charge—is stunning. In my over fifty years of in-depth reading on the PRC, unclassified and classified, SinoInsider is in a class all by itself.”
James Newman, Former U.S. Navy cryptologist
“Unique insights are available frequently from the reports of Sinoinsider.”
Michael Pillsbury, Senior Fellow for China Strategy, The Heritage Foundation
“Thank you for your information and analysis. Very useful.”
Prof. Ravni Thakur, University of Delhi, India
“SinoInsider’s research has helped me with investing in or getting out of Chinese companies.”
Charles Nelson, Managing Director, Murdock Capital Partners
“I value SinoInsider because of its always brilliant articles touching on, to name just a few, CCP history, current trends, and factional politics. Its concise and incisive analysis — absent the cliches that dominate China policy discussions in DC and U.S. corporate boardrooms — also represents a major contribution to the history of our era by clearly defining the threat the CCP poses to American peace and prosperity and global stability. I am grateful to SinoInsider — long may it thrive!”
Lee Smith, Author and journalist
“Your publication insights tremendously help us complete our regular analysis on in-depth issues of major importance. ”
Ms. Nicoleta Buracinschi, Embassy of Romania to the People’s Republic of China
"I’m a very happy, satisfied subscriber to your service and all the deep information it provides to increase our understanding. SinoInsider is profoundly helping to alter the public landscape when it comes to the PRC."
James Newman, Former U.S. Navy cryptologist
“Prof. Ming’s information about the Sino-U.S. trade war is invaluable for us in Taiwan’s technology industry. Our company basically acted on Prof. Ming’s predictions and enlarged our scale and enriched our product lines. That allowed us to deal capably with larger orders from China in 2019. ”
Mr. Chiu, Realtek R&D Center
“I am following China’s growing involvement in the Middle East, seeking to gain a better understanding of China itself and the impact of domestic constraints on its foreign policy. I have found SinoInsider quite helpful in expanding my knowledge and enriching my understanding of the issues at stake.”
Ehud Yaari, Lafer International Fellow, The Washington Institute
“SinoInsider’s research on the CCP examines every detail in great depth and is a very valuable reference. Foreign researchers will find SinoInsider’s research helpful in understanding what is really going on with the CCP and China. ”
Baterdene, Researcher, The National Institute for Security Studies (Mongolian)
“The forecasts of Prof. Chu-cheng Ming and the SinoInsider team are an invaluable resource in guiding our news reporting direction and anticipating the next moves of the Chinese and Hong Kong governments.”
Chan Miu-ling, Radio Television Hong Kong China Team Deputy Leader
“SinoInsider always publishes interesting and provocative work on Chinese elite politics. It is very worthwhile to follow the work of SinoInsider to get their take on factional struggles in particular.”
Lee Jones, Reader in International Politics, Queen Mary University of London
“[SinoInsider has] been very useful in my class on American foreign policy because it contradicts the widely accepted argument that the U.S. should work cooperatively with China. And the whole point of the course is to expose students to conflicting approaches to contemporary major problems.”
Roy Licklider, Adjunct Professor of Political Science, Columbia University
“As a China-based journalist, SinoInsider is to me a very reliable source of information to understand deeply how the CCP works and learn more about the factional struggle and challenges that Xi Jinping may face. ”
Sebastien Ricci, AFP correspondent for China & Mongolia
“SinoInsider offers an interesting perspective on the Sino-U.S. trade war and North Korea. Their predictions are often accurate, which is definitely very helpful.”
Sebastien Ricci, AFP correspondent for China & Mongolia
“I have found SinoInsider to provide much greater depth and breadth of coverage with regard to developments in China. The subtlety of the descriptions of China's policy/political processes is absent from traditional media channels.”
John Lipsky, Peter G. Peterson Distinguished Scholar, Kissinger Center for Global Affairs
“My teaching at Cambridge and policy analysis for the UK audience have been informed by insights from your analyzes. ”
Dr Kun-Chin Lin, University Lecturer in Politics,
Deputy Director of the Centre for Geopolitics, Cambridge University
" SinoInsider's in-depth and nuanced analysis of Party dynamics is an excellent template to train future Sinologists with a clear understanding that what happens in the Party matters."
Stephen Nagy, Senior Associate Professor, International Christian University
“ I find Sinoinsider particularly helpful in instructing students about the complexities of Chinese politics and what elite competition means for the future of the US-China relationship.”
Howard Sanborn, Professor, Virginia Military Institute
“SinoInsider has been one of my most useful (and enjoyable) resources”
James Newman, Former U.S. Navy cryptologist
“Professor Ming and his team’s analyses of current affairs are very far-sighted and directionally accurate. In the present media environment where it is harder to distinguish between real and fake information, SinoInsider’s professional perspectives are much needed to make sense of a perilous and unpredictable world. ”
Liu Cheng-chuan, Professor Emeritus, National Chiayi University
Previous
Next