Free trade zones (FTZs) are types of special economic zones (SEZs) where goods may be imported, handled, manufactured and exported without direct intervention from customs.
Each FTZ in China has an industrial and economic focus, with different incentives to fulfil its objectives. Incentives and regulations in FTZs align with the Chinese government’s ongoing policy priorities. According to the Chinese Ministry of Commerce, in 2021, China's 21 FTZs contributed 17.3% of China’s total foreign trade (Rmb 6.8 tln) and 18.5% of China’s foreign investment inflows (Rmb 213 bln).
Benefits of China’s FTZs
- Reduced corporate income tax (CIT) (varies by FTZ)
- Duty-free imports and exports
- Bonded warehouse capacity
- Streamlined port and customs operations
- Simplified company registration
- Faster value added tax refund
- Targeted policy liberalisation in specific industries
- Purpose-built clustered industrial zones
- Reduced foreign exchange controls
- Additional liberalisations per Foreign Investment Law
- Subsidies and tax benefits for recruitment of highly skilled workers
- Partnerships with universities to nurture young talents locally