Business / Economy

Growing the link between government and market forces

By Zhu Wenqian/Zhang Min (China Daily) Updated: 2015-05-29 09:29

Liu Enzhuan is a free trade economist and professor at the Tianjin University of Finance and Economics. He was also a member of the team that worked on the draft document for the Tianjin Pilot Free Trade Zone.

Here, he talks about what it will mean for the FTZ, and explores the relationship between the government and market forces.

How will the free trade zone work and what will be the priorities?

Liu: Its priorities are to simplify the governmental approval process, to smoothly coordinate the policies between different departments, and to let the supervisors and enterprises clearly know the process.

Is it right to say that financial innovation will play a major role in making the FTZ a success?

Liu: It's critical to let the central government pass on more power to the local government. This will enable the local government to step forward on investment convenience and interest rate liberalization, and achieve innovative growth.

What are the key elements behind the free trade zone?

Liu: The core function of the FTZ is to push forward reform to open up and grow the economy. It will help liberalize and facilitate free trade, and speed up the transformation of governmental functions.

How will this benefit local residents?

Liu: The FTZ will introduce many first-class foreign products. This will work in favor of Chinese consumers as they will see cheaper prices in the shops. Improving the quality of consumer consumption will help reform domestic enterprises. They will increase added value to their products, which they will eventually be able to sell overseas.

What is the difference between the free trade zones in Tianjin and Shanghai?

Liu: The volume of financial operations in Tianjin is small compared with that in Shanghai. But with its advantage in manufacturing, Tianjin will develop into an FTZ with a focus more on the real economy. It will emphasize shipping finance, which is related to financial leasing.

Will this lead to the joint development of Beijing, Tianjin and Hebei province, and improve the region's overall competitiveness?

Liu: If the policies of Tianjin FTZ can cover Hebei province within half a year, then it's a success."

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