On November 23th, in the Chengdu Qingbaijiang Railway Port Area of Sichuan Pilot Free Trade Zone, Chen Ran, manager of the multimodal transportation department of Chengdu Inland Port Operation Co., Ltd. suddenly drew back the curtains during the conversation. We could see through the window a large regular parking space packed with cars. "Can you imagine that this place was a still used as a basketball court not long ago?" The idea conveyed in this sentence is that the Sichuan Pilot Free Trade Zone is "developing" at a speed visible to the naked eye.
As of September this year, more than 44,000 new enterprises have been established in the Sichuan Pilot Free Trade Zone, 522 of which are foreign-invested. So what has the land offered us for the past over 600 days since it was officially established as a Pilot Free Trade Zone on April 1st, 2017?
We are going to examine its achievements in the light of small aspects by interviewing a number of workers involved in the reform and exploration work. Hopefully, we could use their fragmented "statements" to construct a collective narrative work concerning the reformers.
What is the focus of pilot reforms?
Establishing a general direction which is approved by superior departments and takes into account the real conditions, and fostering an enabling environment which embraces and encourages bold attempts, in this way, each market is allowed to navigate its own directions from below.
Traveling back to the original point - August 31st of 2016.
The relevant person in charge of the Comprehensive Information Department of the Sichuan Provincial Free Trade Office could still recall his reactions on that very day. He literally sprung to his feet when he came across that piece of news posted on the Internet. The Minister of Commerce announced on that day that the Party Central Committee and the State Council had decided to set up seven pilot free trade pilot zones in provinces including Sichuan. “Sichuan has been striving for such privilege since 2013, and suddenly it won over the favor of good fortune.”
On the next day, in the conference room on the 6th floor of the Sichuan Provincial Department of Commerce, the minister and heads of various other departments formed an official group to promote the relevant work of the Sichuan Pilot Free Trade Zone, and thus began the exploration into the puzzle - What is the focus of pilot reforms? - that would take countless days and night shifts to solve.
Mr. Chen Youqing, the full-time Vice Director of the Sichuan Provincial Free Trade Office, recalled that the only clear task at hand was regarding institutional innovation as the core, but we had to probe along the way and turn the general direction into key clear reform tasks.
It wasn’t an easy task and views diverged regarding this matter. Some recommended that we should follow established rules, while some proposed that we should forge our own development path. Over time, by drawing lessons from extensive domestic and foreign experiences and by examining in-depth the status quo of Sichuan's opening-up reality, cadres had reached a consensus: Sichuan had to follow the already established rules to promote the transformation of government functions and the facilitation of trade and investment, that was how it could thereby enhance the business environment; That said, Sichuan also had to come up with its own moves such as ensuring coordinated development between the inland and areas along the coasts, borders and rivers, so as to develop its relative areas of weaknesses like financial opening-up, innovation and entrepreneurship.
In March 2017, the Overall Plan of China (Sichuan) Pilot Free Trade Zone was officially issued by the State Council; in November of the same year, relevant implementation plans were also issued by the provincial government.
The above-mentioned responsible person mentioned in particular that the scheme designed by superior officials have empowered those at lower level to engage themselves in explorations. The above-mentioned programs have mapped out the general direction based on real conditions, while other specific choices are at the disposal of government agencies and enterprises that are going to explore independently by first-hand experiences.
What is focus of Sichuan’s pilot reforms? The baton to this question was passed on to all the "free traders" on the front line.
Chen Ran recalled the “one bill-of-lading reform” concerning multimodal transportation, one of the ten reforms of 2017 launched in China Pilot Free Trade Zones, and one that involved both him and his colleagues. Before the reform, we had always received complaints from small and medium-sized customers who reported that it was troublesome for them to try to find a way to transport the goods to their destinations once they arrived at the European railway station by the China Railway Express (Chengdu). Apart from that, land transportation differed greatly from sea transportation for the documents of global railway transportation bore no real rights properties. As such traders were not allowed to pledge such documents for financing. “These two obstacles have presented us with market potentials; the overall plan of the Pilot Free Trade Zone has proposed ways to improve the standard and service rules for multimodal transportation, which has equipped us with power and confidence.”
“The driving force and direction of the Pilot Free Trade Reform derive more from the needs of enterprises.” The head of the Chengdu International Railway Port Management Committee of the Chengdu Qingbaijiang Railway Port Area of the Sichuan Pilot Free Trade Zone put forward an intriguing point: since Sichuan is inland based, it should pay more attention to the demands of export-oriented enterprises as a way to precisely adjust the direction of pilot reforms, which would help reshape the local business environment and attract more export-oriented enterprises.
“Immersed in an environment that accepts daring trials and embraces bold attempts, the market will find the direction of its own accord,” said the person in charge. And the Sichuan Pilot Free Trade Zone has made it.
How to advance the reforms?
The global-oriented vision and eagerness for improvement brought about by the pilot reforms of free trade constitute the most powerful driving force for keeping a reform-alerted mind and for moving forward our experimental reforms.
Laying out the direction marked just the beginning; the key lay in how to advance the reforms.
While counting down the fruits of reforms, like the "single window" for the disposal of international trade, the "one bill-of-lading reform" of multimodal transportation, the "innovation and entrepreneurship debts" of small and medium-sized technology enterprises, and the containerized transportation of China Railway Express... we could find that almost behind every sparkling achievement of institutional innovations of Sichuan Pilot Free Trade Zone unfolds a “continuous trajectory of setbacks”–
At the end of last year, the “one bill-of-lading reform” of multimodal transportation was faced with enormous barriers: by the end of last year, only 20 transactions had employed the one bill-of-lading system starting from the first one in April of the same year, and only a handful of banks were in support of this reform.
The watch-and-wait approach reveals their concern over the uncertainty of reform: As for sea transportation, the property rights of multimodal transportation documents are guaranteed by international conventions; while when it comes to railway transportation, no corresponding laws and regulations are established at home or abroad, so the property rights could only be specified by tripartite indentures. Chen Ran said with a tinge of plaint, “The reform has neither guarantee from legal systems nor endorsement by industry practices. The banks have to take into consideration the depreciation of the goods caused by potential damage, theft, etc., that’s why they have taken the watch-and-wait approach.”
At the beginning of this year, the reform of the “first-license pass” concerning administrative review and approval was initiated in the Sichuan Pilot Free Trade Zone, but was faced with similar frustrations. This reform aims at promoting information sharing between relevant departments, so that the main market players applying for licenses could be saved from the trouble of repeated information submission, thus reducing the processing time from one month to as fast as one day. However, at that time some insiders had filed for opposition that the number of external investigation teams was indeed considerable, but not a single team agreed on information sharing. “For one thing, relevant departments tend to avoid troubles while reforms would surely increase their workloads; for another, they are unwilling to share with others their core information because they want to maintain information barriers and keep the information to themselves." One insider confessed.
These setbacks didn’t take us by surprise. "These reforms have gone thus far. Surely any reform would have encountered frustrations. During the collision of grassroots explorations and the top-level design, repeated revisions would be made to those reforms. In this way, we are able to tackle these frustrations from varied points. That is how we can launch reforms across the board by means of scattered breakthroughs," according to Sheng Yi, a researcher at the Sichuan Provincial Academy of Social Sciences.
The question lies in the way to brave such frustrations. Sometimes, a flexible and indomitable mind is what it needs to accomplish breakthroughs. "If one path failed to deliver us anticipated results, we can just take a step back and retry another one." Chen Ran and his colleagues came to the conclusion that they would circumvent immature financial conditions after careful considerations: they would introduce financing-irrelevant, door-to-door multimodal transportation service of "one bill-of-lading" to give full play to the time- and energy-saving strengths of reforms, and to upgrade the monitoring of goods gradually, "as long as we could secure large quantity of transactions, the concerns about the damage and pilferage of goods would be dispelled, and then banks will adopt this method as times goes by.” He revealed that the number of orders employing the "one bill-of-lading" reform of multimodal transportation this year is expected to exceed 1,000, 50 times that of last year.
…“Sichuan Pilot Free Trade Zone has witnessed the free of people’s minds, the biggest gain since its establishment more than one year ago." The relevant person in charge of the Sichuan Provincial Free Trade Office remarked with a tinge of emotion. In the past, we carried out reforms “step by step without paying attention to the outside world", while at present, we are always prepared to "adjust our methods to the international standards such as that of America and Shanghai.” In his view, the global-oriented vision and eagerness for improvement brought about by the pilot reforms of free trade constitute the most powerful driving force for keeping a reform-alerted mind and for moving forward our experimental reforms.
...On November 23rd, Chen Ran told the reporter about his recent visit to the famous railway port in Tilburg of Netherlands. He shared with the reporter his irrepressible excitement when he saw the highly automated warehouse management in the port. "With such advanced management, the goods can be delivered from the warehouse in a very short time..." Chen Ran praised their accomplishment, and then added, "However, it is very likely that they will be superseded by us in the future."
That statement exudes the confidence of Sichuan traders.
Reporter's notes
The secret of launching an innovative reform in every 3 days
Not long ago, a list of accomplishments made by the South Sichuan Port Area of the Sichuan Pilot Free Trade Zone was sent over: in the past year and half, 175 institutional innovations have been made, and 21 new systems have been established in the country. That is to say, an innovative reform is secured in every three days.
How did Sichuan manage to accomplish the seemly "impossible"?
Objectively speaking, the hundreds of institutional innovations are not completed in a short period of time, but accomplished by the joint efforts of dozens of departments in the region. “These accomplishments are secured by every individual department who launches several institutional innovations annually which will amount to hundreds if added together,” said the relevant person in charge of the management committee of the South Sichuan Port Area in the Sichuan Pilot Free Trade Zone.
Subjective speaking, these accomplishments could be ascribed to Sichuan Pilot Free Trade Zone’s ability to self-improvement and talent introduction.
We have made prudential preparations by self-improvement. We have set in motion the timetable and roadmap in advance in accordance with the Overall Plan of China (Sichuan) Pilot Free Trade Zone, and establish an integrated construction mechanism linking various reform pilot zones. We have established a standard management and operation mechanism by introducing a management system for the Sichuan Pilot Free Trade Zone based on local legislation. And the mechanism would incorporate institutional innovations into performance evaluation factors of various departments, which would in turn encourage all departments to assume their due responsibilities.
We have made former precautions regarding personnel allocation. The reporter noticed on the official website of the South Sichuan Port Area that the South Sichuan Port Area proposed the idea to build a "lion strong" cadre team in the construction of the talent team at the beginning of this year. Moves to cultivate a reform-oriented talent that dares to launch bold attempts and to promote institutional innovation by freeing minds have already been listed on the agenda.
It is also an important means to accelerate institutional innovation by introducing brainy talents from other places outside Sichuan. By searching the key word "cooperation" in the official website of Sichuan Pilot Free Trade Zone, one could obtain a large number of results concerning cooperation cases between Sichuan and other pilot free trade zones, such as the Cooperation mechanism of industrial transfer, launched by South Sichuan Port Area and Nansha New District of the Guangdong Pilot Free Trade Zone, which aims at establishing a cost-shouldering and revenue-sharing mechanism.
In addition to the cooperation with other Pilot Free Trade Zones, Sichuan also set up a “think tank”, research institutes, an expert decision-making and consultancy committee, introduced third-party institutions, established idea banks for research topics and talent training bases.
Up to now, the institutional innovation of the Sichuan Pilot Free Trade Zone has gradually moved from “individual efforts” to high-quality collaborative innovation.
The first national promotion of the “detailed hour list” represents a strong case. That innovation involves multiple departments. It introduced three “hour lists” which set a time limit of one hour, three hours and six hours to force these departments to improve their efficiency. It is an innovation mechanism involving the government, society and market.
Riding the tide of reform and opening-up, the one-year-old Sichuan Pilot Free Trade Zone has just embarked on its long journey. We expect more secrets to success could be unveiled in this vantage point of institutional innovation.
