Beijing suspends free-trade zone applications after nationwide frenzy

The central government has suspended applications for new free-trade zones (FTZs) in an attempt to cool the nationwide frenzy to compete for the special status given to Shanghai last year, a Communist Party magazine reports.

Xinhua's magazine on Monday quoted an anonymous source close to the central authorities as saying that "all application processes for new FTZs have been suspended". State officials were "not satisfied" with the proposals submitted by the regional governments, and had sent them back for revision, the source said.

He Manqing, director of the Institute of Foreign Investment under the Ministry of Commerce, told the : "Some regional governments just wanted to catch the bus [of FTZ development] first. They had not figured out what exactly a free-trade zone is and if it would work in their region before they submitted their proposals."

More than 20 local governments listed FTZ proposals in their annual work reports this year, with local officials lobbying various central authorities, the magazine reported.

Guangdong, among many other provinces, proposed a pilot zone to foster economic ties with neighbouring regions. Its proposed FTZ encompassing Hong Kong, Macau and parts of the province already had the backing of Beijing, Governor Zhu Xiaodan said in April.

Zhu's comments came after Premier Li Keqiang mentioned in his first work report that China would launch a number of new trials after giving Shanghai the go-ahead to launch the country's first free-trade zone.

The central government "was looking for innovative proposals … But local governments read FTZ as a preferential policy, and wanted to secure funds and land by applying for an FTZ regardless of the region's own characteristics," He said. He added that the central government had also suspended the approval of new economic and technology development zones.