Chapter 4: The Construction of Shanghai Pilot Free Trade Zone and the Transformation of Chinese Economy

The China (Shanghai) Pilot Free Trade Zone (CSPFTZ) is a very powerful development strategy featuring “opening-up driving reform in turn”. This had been initiated by the new government led by General Secretary Xi Jinping and Premier Li Keqiang, when China's economy was in a highly volatile and complicated domestic and international economic environment. In the recent years, we have become accustomed to the development model depending on “preferential policies” in tough times. In other words, we are used to asking the government to offer more ideas (industrial policy), launch more projects (financial policy), issue more capital (monetary policy) and grant more subsidies (trade policy) to maintain stable economic indicators including a growth target, employment level and tax surplus in the high cost context. However, are we all fully prepared to leverage the strong “system preferences” of the free trade zone demonstration by means of mechanism design of “negative list management” and pre-access equal national treatment to enable the “opening environment” in the Chinese market? This is to bring irreplaceable “win-win” results created by “market segmentation” in the international value chain to all participants in the free trade zone, which enjoy high-efficiency services and system supervision by the Chinese government. We are aware of the consequent serious sequelae, such as “over-capacity”, “nationalization of private enterprises”, “bribe and corruption”, “imbalance” and “blind optimism”. Moreover, we cannot be indifferent to the environmental problem, since more and more provinces and municipalities are engulfed by haze with high frequency nowadays. Are we fully prepared to give full play to the unique and due initiative of “enterprises of various types of ownership” on the stage where China's economy creates value? Are we fully prepared to take the advantage of entrepreneurial “spirit of innovation” to vitalize the Chinese market?…