China (Yunnan) Pilot Free Trade Zone

The China (Yunnan) Pilot Free Trade Zone (YNFTZ) is one of six such pilot zones designated by the State Council in its Circular on Issuing the Overall Plan for the Six New Pilot Free Trade Zones (See Chinese version) in August 2019. The YNFTZ consists of three areas totalling 119.86 sq km: the Kunming Area (76 sq km, including the 0.58-sq km Kunming comprehensive bonded zone), the Honghe Area (14.12 sq km) and the Dehong Area (29.74 sq km).

Development Goals

The YNFTZ is geared towards fostering institutional innovation and the accumulation of replicable and scalable experience. It will help to achieve the central government’s goal of expediting the opening-up of border regions. Efforts will be made to construct a major corridor connecting Belt and Road markets with the Yangtze River Economic Belt as well as key hubs that link to South Asia and Southeast Asia, so as to further open up the border regions and enhance China’s influence in South Asia and Southeast Asia.

Over the next three to five years, the YNFTZ will embark on institutional innovations in line with advanced international standards, in a bid to boost quality, efficiency and competitiveness in its economic development. Steps will be taken to build a world-class free trade zone that facilitates trade and investment, offers good accessibility in terms of transportation, supports ease of doing business, maintains a sound, innovative financial services sector, demonstrates safe and efficient oversight, supports a quality ecological environment and wields significant influence on neighbouring areas.

Foreign Investment Management

The Special Administrative Measures (Negative List) on Foreign Investment Access (See Chinese version), issued by the National Development and Reform Commission, set out unified special management measures governing issues such as equity ratios and senior management personnel of businesses operating in FTZs in China. For industry sectors falling outside the scope of the negative list, the principle of foreign and domestic investors receiving the same treatment will apply.

Special administrative measures relating to national security, public order, public culture, financial prudence, government procurement, subsidies, special procedures and tax-related matters not on the negative list remain subject to existing provisions. Foreign investment concerning national security is subject to review in accordance with the Tentative Measures for the National Security Review of Foreign Investment in Free Trade Zones (See Chinese version).

Positioning of Sub-zones

Kunming Area

Covering an area of 76 sq km, this site will be the focus of development in co-ordination with the Kunming Airport Economic Zone. The focus will be on developing industries such as high-end manufacturing and airport logistics, as well as fostering digital and headquarters economies. The plan is to establish the sub-zone as a connectivity hub that links up with South Asia and Southeast Asia, as an information and logistics centre, and as a cultural and education centre.

Honghe Area

The site covers an area of 14.12 sq km, encompassing the Honghe comprehensive bonded zone and Mengzi economic and technological development zone. Development will be stepped up throughout the area, with an emphasis on fostering industries such as processing and trade, ‘big health’ services, cross-border tourism and cross-border e-commerce. Plans include establishing Honghe as a processing and manufacturing centre targeting ASEAN, as a trade and logistics hub, and as a demonstration zone for innovation and collaboration within the China-Vietnam economic corridor.

Dehong Area

With an area of 29.74 sq km, this sub-zone will focus on developing sectors such as cross-border e-commerce, cross-border production capacity co-operation and cross-border financial services. It will act as a pilot zone for opening up the border regions and as a gateway for the China-Myanmar economic corridor.

Latest Policies and Regulations

Please refer to the official websites of:

People’s Government of Yunnan Province (Chinese only)

Department of Commerce of Yunnan Province (Chinese only)

China (Yunnan) Pilot Free Trade Zone Kunming Area (Chinese only)

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