China unveiled three free trade zones (FTZs) following the pioneering precedent of the Shanghai model on Tuesday, a move expected to accelerate institutional reform to benefit China and the rest of the world.
The three new FTZs in Guangdong and Fujian provinces and Tianjin Municipality will inherit practices already proved successful in Shanghai, while playing to their unique geographical and industrial advantages.
The expansion of FTZs from 28.78 square kilometers to about 480 square km in less than two years indicates that more reform and opening-up measures are on the horizon.
The FTZ drive has been compared to the establishment of development zones over the past two decades, which have courted investors with lucrative offers of low taxes, cheap labor and other resources.
However, it has been made clear that the FTZs will be the testing grounds for institutional reform, with the lessons learned to be shared with the whole country as the old export-reliant growth model is no longer sustainable.
There will be no excuses to gain more preferential policies, but daring steps to test reform policies and better integrate the economy with international practices.
Since opening in 2013, the Shanghai FTZ has pioneered the streamlining of administrative procedures for setting up new companies, eased foreign investment and promoted the use of the yuan.
More dividends are expected as the FTZ expands.
The government reviewed and reduced the zone's negative list, which specifies investment sectors off-limits to foreign investors, which allowed greater foreign participation in economic growth.
Aside from some sectors related to national security, the FTZ expansion means foreign investors are governed by the same rules for new investment as domestic firms.
Opening up is a gradual process and risk management is a key principle to its success.
With more steady market-oriented steps to come, the world can expect a more open China with abundant opportunities thanks to freer flow of capital, goods and talent.