China inaugurated a harbor
area with preferential tax rates on Thursday in the northeastern city of Dalian,
a major step towards forming a free trade zone between China, Japan and the
Republic of Korea (ROK).
The Dayaowan Bonded Harbor Area, located at the Dagushan Peninsula in the
northeastern part of Dalian, enjoys preferential taxation and foreign exchange
policies, said Zhang Shikun, director of the Dalian Bonded Area Administrative
"It will remove tariffs for foreign cargo and offer tax rebates for domestic
cargo. It will also exempt businesses from value added taxes and consumption
taxes if they trade with each other," Zhang said.
Analysts predict the efficiency of logistics will be raised by 20 percent
after the port is put into operation.
The first phase of the area covers 3.06 square kilometers and includes
warehouses, cold storage facilities, a container terminal and processing and
About 200 million yuan (25 million U.S dollars) has been spent on the
construction of the area since August 31 last year, when the State Council
approved its establishment.
The second phase is expected to be finished by the end of next year,
expanding the area to 6.88 square km.
The Dalian port is the seventh largest in China and handled 200 million tons
of cargo and 30 million containers (TEUs) last year.
The Dayaowan Bonded Harbor Area is the second of its kind in China, following
the operation of the Shanghai-based Yangshan Bonded Harbor Area in December
2005. The State Council has also approved a third such area, the Dongjiang
Bonded Harbor Area which is under construction in north China's Tianjin
Analysts say the Dayaowan area is expected to increase China's share in the
northeast Asian shipping industry, and is also considered a major step towards
forming a free trade zone between China, Japan and ROK, which political leaders
and business circles of the three countries have repeatedly called for.
Dalian has advantages for a free trade zone in terms of its location and its
close economic and cultural links with neighboring countries, said Wang Jun,
associate professor on logistics studies with the Dalian Maritime University.
Dalian is one of the most successful Chinese cities in attracting Japanese
and ROK businesses -- half of the city's overseas-funded businesses come from
Japan and the ROK, more than 5,000 in number, and 40 percent of the city's
foreign trade comes from the two countries, local government statistics show.
"The internationalization of Dalian has been largely due to Japan and the
ROK, and Dalian has every advantage for building a free trade zone in northeast
Asia," said Xia Deren, mayor of Dalian.
"We expect to develop the area of about 50 square km surrounding the Dagushan
Peninsula into a free trade zone on the basis of the Dayaowan Bonded Harbor
Area," he said.
"But, of course, it has to depend on the country's overall economic layout,"