quarantine certificates, and facilitate mutual recognition of Authorized Economic
Operators.
The PFTZs are also allowed flexibility to serve as test beds to experiment with
new businesses that may require new legal frameworks. In Chongqing, for example,
a notification of the State Council allows flexibility to the local government to
promulgate laws that furthers and develops business opportunities in the PFTZ.
34
Pursuant to that notification, the local government in Chongqing has permitted
certain activities to be carried out inside the PFTZ which would otherwise have
contravened Chinese laws. For instance, to develop financing business in the PFTZ,
the following activities are permitted:
a. Bonded automobile storage and bonded goods and material financing business in
the special customs supervision area.
b. Financial leasing of aircrafts, ships and large engineering equipment by both
domestic and international companies.
c. Pilot projects for settlement and facilitation of various trade formats, such as
inland processing trade and entrepot trade for optimization of cross-border financial settlement services.
d. Foreign exchange revenue and expenditure facilitation measures that are compatible with cross-border transactions.
In addition, the banking and financial institutions in Chongqing PFTZ have been
allowed to cooperate with the payment institutions that hold necessary permits. The
Chongqing PFTZ can also grant more business autonomy to the banking and
financial institutions to enhance cross-border financial services and establish specialized institutions for currency exchange and credit reporting.
Based on the aforesaid notification, the local government is also permitted to
enact laws suitable to local conditions, provided they do not conflict with the
Constitution or the central laws of China.
35 The notification provides normative
guidance in areas where legislation is still lacking. The formulation is made in broad
terms and the details are left to be devised and applied by the specific departments
and authorities at the local level. The notification emphasises that the relevant
departments of the local government should support the PFTZ to deepen reform,
strengthen supervision, prevent and control risks and coordinate amongst themselves. More importantly, emphasis is laid on “opening up trials in various fields”
and also “solve the problem of institutional guarantees in the pilot process”. What
remains unclear though is how conflict may be resolved if and when that arises
between central and local laws pursuant to the use of the flexibility? Also, what
remains unclear is whether the above notification was subjected to any enactment
procedure? If the notification is not subjected to an enactment procedure, then it can
34 See Overall Plan for the China (Chongqing) Pilot Free Trade Zone, notified by the State Council
on 15 March 2017. http://www.gov.cn/zhengce/content/2017-03/31/content_5182300.htm,
accessed 17 April 2019.
35 Wang and John (1999), p. 8.
48
A. Basu Bal and T. Rajput
Operators.
The PFTZs are also allowed flexibility to serve as test beds to experiment with
new businesses that may require new legal frameworks. In Chongqing, for example,
a notification of the State Council allows flexibility to the local government to
promulgate laws that furthers and develops business opportunities in the PFTZ.
34
Pursuant to that notification, the local government in Chongqing has permitted
certain activities to be carried out inside the PFTZ which would otherwise have
contravened Chinese laws. For instance, to develop financing business in the PFTZ,
the following activities are permitted:
a. Bonded automobile storage and bonded goods and material financing business in
the special customs supervision area.
b. Financial leasing of aircrafts, ships and large engineering equipment by both
domestic and international companies.
c. Pilot projects for settlement and facilitation of various trade formats, such as
inland processing trade and entrepot trade for optimization of cross-border financial settlement services.
d. Foreign exchange revenue and expenditure facilitation measures that are compatible with cross-border transactions.
In addition, the banking and financial institutions in Chongqing PFTZ have been
allowed to cooperate with the payment institutions that hold necessary permits. The
Chongqing PFTZ can also grant more business autonomy to the banking and
financial institutions to enhance cross-border financial services and establish specialized institutions for currency exchange and credit reporting.
Based on the aforesaid notification, the local government is also permitted to
enact laws suitable to local conditions, provided they do not conflict with the
Constitution or the central laws of China.
35 The notification provides normative
guidance in areas where legislation is still lacking. The formulation is made in broad
terms and the details are left to be devised and applied by the specific departments
and authorities at the local level. The notification emphasises that the relevant
departments of the local government should support the PFTZ to deepen reform,
strengthen supervision, prevent and control risks and coordinate amongst themselves. More importantly, emphasis is laid on “opening up trials in various fields”
and also “solve the problem of institutional guarantees in the pilot process”. What
remains unclear though is how conflict may be resolved if and when that arises
between central and local laws pursuant to the use of the flexibility? Also, what
remains unclear is whether the above notification was subjected to any enactment
procedure? If the notification is not subjected to an enactment procedure, then it can
34 See Overall Plan for the China (Chongqing) Pilot Free Trade Zone, notified by the State Council
on 15 March 2017. http://www.gov.cn/zhengce/content/2017-03/31/content_5182300.htm,
accessed 17 April 2019.
35 Wang and John (1999), p. 8.
48
A. Basu Bal and T. Rajput