On September 29, 2013, Shanghai Pilot Free-Trade
Zone has been launched, which is the first free-trade zone opened by China. It
includes Waigaoqiao Free-Trade Zone, Waigaoqiao Free-Trade Logistics Park,
Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.
Also, The Chinese government wants to spread this pilot to other parts of the country
so that they can rebuild a rapid developing economy. Within this zone, people from
all around the world are allowed to convert currency, invest and import and
export of goods freely. Many restrictions are reducing. However, many people do
not know the details about this new experiment, so they urge the government to
give more information as soon as possible.
Because restrictions on export and import,
especially tariffs and taxes, decrease, the prices of products go down. Then many
Chinese people may buy a lot of things from other countries. Therefore, competition
of Chinese companies becomes much fiercer. What’s more, I remember there
was a question in the first test, “international capital movements tend to hurt
labor in donor countries”. A reason is that less capital supports companies in
donor countries and if some companies do not have enough money to operate their
activities, they will layoff workers. On the contrary, it is beneficial to
labor in China, because people have more opportunities to find jobs. I think
there are still other advantages of capital movements. For donor countries, investors,
who can make the capital flow to the most efficient places, can earn much more money.
Capital movements can also help donor countries improve their international
positions. For the recipient countries, not only can they reduce unemployment,
but also can solve the problem of fund storage in domestic.
I pose a question--Will the Free-Trade Zone in
Shanghai threaten Hongkong’s economy, where “has a major capitalist service
economy characterized by low taxation and free trade”?
source:
I think it will not have much impact on Hongkong's economic. As we know, Hongkong is one of the world's biggest freight transfer station due to its specific geographic position. Actually, just a liitle amount of products may come into China through Hongkong. On the contrary，most of Chinese imported products come into China in Chinese main harbours like Shanghai, Dalian and Guangzhou. So it may not affact much about the Hongkong's economic. But as you say in your article, there are less tariffs and tax in this free trad zone, the price of the products in this area may decrease, so more goods may enter China through Shanghai including that should be through other Chinese main larbour cities like Dalian and Guangzhou. Is it that it will hurt the profit of Dalian and Guangzhou? Although some of the people in China better off due to the establishment of free trade zone, it still has some people worse off. Thus, is it worth to build up this kind of zone in China?
ReplyDeleteThe Free-Trade Zone in Shanghai will absolutely threaten Hongkong’s economy. In my opinion, within this zone, Many restrictions are reduced, which has a huge meaning to Chinese mainland. Initially, this Free-Trade Zone can definitely improve its economic surroundings, where there are already a series of developed cities, and at least 3 states' economy will be affected. Secondly, I believes nowadays Shanghai has a larger potential for industrial increase than the HK. Because Chinese mainland has more comparative advantages than the HK, for example, there are huger populations, big consumption and great economic entities which means the faster rate of development and more resources, such as millions of labors and lands. Moreover, I think it is a right time for Chinese mainland to set up a free trade zone. Because it has built much experience from the HK and better advantages in geography. Although the HK has a long tradition of capitalist economy, but HK's success relies much on foreigners and Chinese mainland. So I believe that Chinese authorities will provide better policies of attracting merchants and luring investments. In the future, it is going to be easier for making profit in Shanghai other than the HK. Therefore, the majority of mainland corporations and foreign concerns will turn their investment directions from HK to Shanghai.
ReplyDeleteThis experiment will not affect Hongkong if it is not retaliated in its provision of taxes and tariffs on its products. However,in the first case, I would like to part from the one who has posted this article on the question of restrictions, tariffs and taxes.Restrictions, tariffs and taxes can increase prices and also can decrease prices depending on the movement of emphasis of them. These three can only reduce the movement of trade activities which will either reduce or increase prices of the products.
ReplyDeleteIn the case of Hongkong having trade taxes and tariffs, trade will be impossible to operate with the other countries. However, we can assume that, there are products which must be offered from Hongkong that other Countries in the Free zone do not have. Therefore, Hongkong will import at Cheap, and export at high cost. However, it will depend if it is not retaliated if not a member in free trade zone. Conclusively, I can say that, trade will be good or bad for Hongkong if and only if it is retaliated on the little taxes and tariffs it offers ofr its trade operations with other countries otherwise it will be gaining on one hand, and losing on other hand.Hence, the principle PARETO..Optimum.
I was going to go right into my thinking on free trade but then i figured, since i know very little about the Chinese economy, i'd ask Rachel, Emily, and Jackie, in what respects do you believe the current Chinese policies are better for China than that of a more "free trade" based economy.
ReplyDeleteIt's my thinking from a very macro level that, the introduction of free trade into China, will bring more prosperity to the region, including Hong Kong.
Jackie presented the point that people in Dalian and Guangzhou may be worse off in the short run. That i agree with but if the experiment with free trade in Shanghai works and brings growth to the area, why wouldn't the Chinese policy makers decide to open up the whole country to more free trade oriented policies.