Steering China's Economic Reform and Cross-Strait Integration Under "Top-Level Design": The Fujian Pilot Free Trade Zone

Abstract:Since 2013 China has established new Pilot Free Trade Zones (PFTZs) across the country to encourage experimentation in economic reform. The objective of the PFTZ policy is twofold: they serve as experimentation grounds for "policy innovation" and further economic development by gradually diffusing reform implementation beyond the PFTZs, and those PFTZs located at border areas promote economic regionalization beyond the Chinese mainland's territory, tying in the "Belt-and-Road Initiative" (BRI). Based on recent fieldwork in the Fujian PFTZ and its three localities, Fuzhou, Xiamen and Pingtan island, this article contributes to our understanding of economic reform and policy experimentation in the era of "top-level design" under Xi Jinping. The authors argue that PFTZ policy achievements have been mostly procedural rather than tackling the core issues of trade, service and financial reform. Moreover, the recentralized policy process has led to dysfunctional results regarding the PFTZ's reform agenda. We also shed light on changing patterns of Taiwanese investment in Fujian in times of frozen cross-strait relations.