An aerial drone photo taken on March 27, 2024 shows a construction site at Lingang new area of the China (Shanghai) Pilot Free Trade Zone in east China's Shanghai. (Photo by Zhang Jiaxing/Xinhua)

Over the past year, a slew of pioneering institutional innovations implemented in China's pilot free trade zones (FTZs) have formed a strong magnet for foreign investment, shifting the opening up process of the world's second-largest economy to a higher level.

When HSBC, a multinational banking and financial services provider, launched a branch in Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, it had no pre-existing clientele. Although starting from scratch, the bank rode on the tailwinds of the "opening up spirit" of Lin-gang and reaped fruitful results from conducting innovative business practices in the area, said Chen Jiong, the head of the branch.

The Lin-gang Special Area pioneered a new policy that eased the financing ratio requirements for overseas mergers and acquisitions. The policy has not only created opportunities for companies, but also brought business to banks, "HSBC can fully leverage its strengths in cross-border business operations here," Chen said.

The area has accumulated a number of pioneering projects nationwide over the past five years. A total of 1,552 financial and trade projects have been implemented during the period, with registered capital exceeding 563.7 billion yuan (about 79.14 billion U.S. dollars), according to Chen Jinshan, director of the management committee at Lin-gang.

These include various unprecedented projects across the country, such as the first foreign-controlled joint venture wealth management company, the first wholly-owned financial technology company of a multinational financial group as well as the first wholly foreign-owned public fund.

"The mission and vision of the Lin-gang Special Area is to align with international high-standard economic and trade rules, create a new benchmark for China's opening up and development, and become the preferred place for the innovative development of businesses," said Chen, also a member of the Standing Committee of the Communist Party of China (CPC) Shanghai Municipal Committee and secretary of the Party working committee of Lin-gang.

Lin-gang's spearheading drive is an epitome of China's pilot FTZs fulfilling the country's greater reform and opening up ambitions during the past year. In June 2023, China's State Council issued a circular on deepening reforms in eligible FTZs in Shanghai, Guangdong, Tianjin, Fujian and Beijing, as well as in the Hainan Free Trade Port, to align with high-standard international economic and trade rules.

A year later, these measures have been fully implemented in the FTZs, resulting in a slew of leading and pioneering institutional innovations, China's Ministry of Commerce (MOC) said earlier this month.

For instance, imports of 62 types of remanufactured products have been relaxed, including automotive engines. Last September, Pudong International Airport in Shanghai welcomed a remanufactured engine. Imported by Volvo Construction Equipment (China), it is the first of its kind in China.

China has also made it more convenient for foreign nationals to live and work in the country, by issuing visas of up to two years for foreign executives who are establishing companies in the FTZs, as well as their families, and by issuing visas to family members of experts working at foreign enterprises with the same duration of stay as those issued to the experts themselves, according to the MOC.

Data from the ministry showed that in the first six months of this year, foreign direct investment in actual use in 22 pilot FTZs across the country stood at 103.96 billion yuan, or 20.8 percent of the country's total. During the period, foreign trade value in the pilot FTZs reached about 4.1 trillion yuan, representing 19.5 percent of the country's total.

Looking to the future, China is expected to beef up efforts to "steadily expand institutional opening up." In the resolution adopted at the third plenary session of the 20th CPC Central Committee, it said it will seize the initiative by opening its commodity, services, capital and labor markets wider to the outside world in an orderly manner and unilaterally opening its doors wider to the world's least developed countries.

In an interview with Xinhua on economic structural reform, Zheng Shanjie, head of the country's top economic planner, said that China will implement the strategy for upgrading the pilot FTZs, encourage pioneering and integrated exploration and promote innovative development across the entire industry chain in the zones.

"We must be brave in tackling difficult issues and solving complex problems while enhancing the quality of the construction of the FTZs," said Zhu Bing, director of the MOC's department of foreign investment administration. He added that this will be the "new experiences" for China to deepen reform and expand its opening up.