Tianjin - a port city in North China with a population of more than 14 million - may become the country's second pilot free trade zone, after Shanghai received approval last week.

Zhang Aiguo, director of the Administrative Committee of the Dongjiang Free Trade Port Zone, said the Tianjin municipal government submitted its proposal to the State Council, or China's cabinet, in May to turn the bonded area of Dongjiang, located in the Binhai New Area on the city's eastern coast, into a free trade zone to boost the city's logistics business.

The zone, which will cover an area of about 40 square kilometers, will be built on reclaimed land, and will have an investment of up to 60 billion yuan ($9.8 billion), Zhang said. Construction will be finished in five years.

He said the proposal has won "in principle" support from the State Council and is now soliciting opinions from the departments under the State Council.

On July 3, an executive meeting of the State Council agreed to set up a free trade zone in Shanghai, which will cover 28 sq km and finish construction in a decade. The State Council said in a statement that it hopes that the pilot project in Shanghai will serve as a reference to other places.

Although he didn't reveal more details in the proposal, Zhang said that Tianjin's draft plan for the free trade zone includes transit visa-free policies for foreign visitors, hoping to add incentives to invest in Dongjiang, which is also a port for cruise liners. The visa-free policy is expected to result in more hotel bookings and shopping in both Dongjiang and in the downtown area, he said.

Yu Rumin, chairman of Tianjin Port Holdings Co Ltd, said in March that the construction of a free trade zone will be one of the best ways to push forward the opening-up policy in China.

Yu's company is responsible for the construction of a second reclaimed island in Dongjiang for the free trade zone, after an area with about 30 sq km on a first island in Dongjiang has been developed.

Tianjin - a city seen as an engine in North China to drive the country's economy after Shenzhen and Shanghai - has long been eyeing a free trade zone as a way to transform itself from a city of traditional heavy industry to a logistics hub.

The State Council said in 2008 that Dongjiang was allowed to make exploratory moves to set up a free trade zone when "the conditions are right".

Last year, Tianjin port's cargo throughput reached 477 million tons, ranking it the fourth in the world, and its container throughput stood at 12.3 million standard containers, ranking it 11th globally.

Tian Lihui, a professor at Nankai University in Tianjin, said that the city's plan for a free trade zone differs from that of Shanghai and is a bid to stand out from the numerous harbor cities on China's east coastline.

"The city should make use of its traditional advantage, which is its connection with inland provinces, as well as recent favorable policies related to ship registrations and finance leasing," Tian said.

A free trade zone is only possible if the area has a relatively large level of shipping capability, a field in which Tianjin has made progress recently, he said.

Tianjin has just lowered its requirements for ship registrations, allowing international cargo carriers to get more tax refunds if they register their vessels at Dongjiang port.

"The move is expected to increase the number of cargo carriers registered in the area and to boost the regional shipping trade," Tian said.

zhaoyinan@chinadaily.com.cn

(China Daily USA 07/11/2013 page14)