Inner Mongolia's new pilot free trade zone

The official unveiling of the China (Inner Mongolia) Pilot Free Trade Zone (FTZ) on April 11 in Hohhot, capital of Inner Mongolia Autonomous Region, was a pivotal moment for north China.

Inner Mongolia is a sprawling expanse that spans approximately 2,400 km from east to west, bordering Russia and Mongolia. This geographical position has historically endowed it with immense potential as a vital northern gateway.

"While Inner Mongolia leads the nation in border port freight volume, we have historically struggled with a low rate of local manufacturing," Guo Zhouming, Deputy Director of the Department of Commerce of Inner Mongolia, told Shanghai Securities News newspaper. "We possess abundant transit infrastructure but have seen limited success in leveraging it to stimulate local industries. Furthermore, despite our prominent geographical advantages, institutional innovation has lagged behind."

The implementation of the pilot FTZ is the precise "golden key" needed to unlock this complex predicament. A comprehensive plan, made public by the State Council, the highest state administrative organ, on April 9, heralds a new era of reform and opening up for the region. This plan bestows upon the China (Inner Mongolia) Pilot FTZ greater autonomy than before in carrying out pioneering, integrated and differentiated reform exploration across a wider range of areas and at a deeper level.

It specifies 19 reform and innovation measures, including developing border trade in an innovative way, strengthening international logistics services, improving the efficiency of technology transfer and application, and expanding external exchange across multiple fields.

The pilot FTZ covers 119 square km and comprises three subzones, respectively in Hohhot, Manzhouli, a city bordering Russia to the north, and Erenhot, a land port on the China-Mongolia border, each tasked with differentiated functions and the development of industries tailored to local conditions.

The Hohhot subzone, the largest of the three, will focus on strategic emerging industries including new energy, new materials, biomedicine and next-generation information technology. It will also develop specialty sectors such as green agricultural product processing, while fostering modern services like logistics and the digital economy.

The Manzhouli subzone will prioritize industries that leverage its geographic advantages: value-added processing of imported resources, cross-border tourism, cross-border finance and port services.

The Erenhot subzone will focus on international trade, international logistics, cross-border tourism and international medical services.

Streamlining connectivity

The FTZ will facilitate smooth international transportation to the north. This vision is being realized through the in-depth promotion of "smart port" development in Manzhouli and Erenhot. The "smart port" strategy encompasses comprehensive support for the construction, operation, maintenance and upgrading of port infrastructure and inspection facilities, with the goal to achieve intelligent supervision across land ports and customs control zones.

The enhancement of customs clearance efficiency in Erenhot is a microcosm of the FTZ's broader efforts to optimize cross-border circulation. The adoption of an "export express clearance mode" has dramatically reduced transit time. A freight train can now arrive in Erenhot, complete its customs procedures and depart in 24 hours or less. Previously, under the manual review system, paper documentation and related procedures were largely confined to the daytime. Now, even submissions made late at night can be immediately processed through an automatic review system.

Beyond logistical enhancements, the overall plan also promotes the innovation and development of border trade. This involves accelerating the digital transformation and upgrading of the border trade service platform and supervision system. It also mandates the implementation of categorized supervision for imported goods and the exploration of optimized supervision models for exported goods. Border trade allows inhabitants within a 20-km radius of China's land borders to trade goods with residents from neighboring countries at designated markets or approved sites. Transactions are capped at 8,000 yuan ($1,110) per person per day. Any amount exceeding this limit is subject to customs duties.

Within the border trade market operated by Erenhot Yongsheng Investment Co. Ltd., cashmere and horse meat from Mongolia are traded alongside daily necessities, clothing and handicrafts from China. Ye Siyang, the company's general manager, told Xinhua News Agency that continuously expanding import product categories and a growing number of local processing companies are leading to increasing trade volumes. He specifically referred to the "border trade combined with local processing" model, where products imported via border trade undergo value-added processing by designated local enterprises in the border area.

He said he hopes the establishment of the FTZ will further shorten customs clearance processes, allow more product categories to be imported and expand mutual trade.

Fostering industrial clusters

The true measure of a pilot FTZ's success lies in its ability to cultivate industrial clusters. For a long time, Inner Mongolia's exports have been dominated by raw materials. The FTZ is providing a crucial breakthrough to address this structural weakness, aiming to build a modern industrial system characterized by unique strengths and advantages.

At the Hohhot Economic and Technological Development Zone, Inner Mongolia New Vision Group Co. Ltd., a new energy company under Chinese green technology company Envision Energy, exemplifies this shift, currently fulfilling an order from France for wind turbines. Liang Minghui, head of the company's Sha'erqin production base, told Xinhua, "The development of the pilot FTZ gives us greater confidence to build our international projects into more significant profit drivers."

He said with an export footprint now extending to France, Brazil, Viet Nam and Central Asian countries, the FTZ's development will enable the company to further integrate into the global new energy market.

Inner Mongolia Shuangjie Saidu Electric Co. Ltd. is also accelerating its expansion in the transformer sector, with ambitions to base its entire export operations within Inner Mongolia. Bao Andi, the company's planning manager, told Xinhua, "The accelerated upgrading of global new energy power grids is an irreversible trend, and the demand for transformers will continue to grow accordingly."

To bolster these export-oriented manufacturing enterprises, customs authorities have enable qualified companies to obtain the status of Authorized Economic Operator. Once certified, this status gives them priority clearance in more than 50 countries to make international shipping cheaper, faster, and more reliable.

The surge in industrial opening up is equally palpable in the cross-border e-commerce sector. Inner Mongolia Yingshi Shanglian International Trade Co. Ltd., a cross-border e-commerce enterprise, now operates over 40 online stores on Russian e-commerce platforms, reporting steady growth in new orders each month. Mu Jianfang, the company's head, told Xinhua that she eagerly anticipates the FTZ's role in further opening international postal routes, enabling goods to reach global markets more rapidly.

With the establishment of the pilot FTZ, Inner Mongolia is poised to unleash new vitality through accelerated opening up and write a new chapter of reform, opening up and frontier development.