Changchun paving way for Northeast Asian trade

17  January 2013

A large-scale free trade zone is taking shape on the outskirts of Changchun, an industrial city in Northeast China, is aimed at supporting fledgling economic cooperation between China and the Democratic Peoples Republic of Korea.

With phase one due for completion at the end of this year, Changchun Xinglong Free Tax Zone, in Jilin province, is part of efforts to create an economic corridor through Northeast Asia. The total budget for the project is $495.14 million.

A storage area and customs building have already been completed on the 4.89 square kilometer site. Other infrastructure, including water and electricity supplies are under construction.

“The main purpose of the zone is to create an international economic corridor across Northeast Asia that connects China, the DPRK and other countries in the region,” said Yu Haijun, deputy general manager of Changchun Xinglong Free Trade Zone Investment and Construction Company.

The Chinese government has introduced a series of policies over the last three years to promote regional opening-up. Last month Beijing signed an agreement with Pyongyang to push for greater investment in two special economic zones, one in Rason and the other covering the Hwanggumphyong and Wihwa islands, that were established in the DPRK by both countries.

“The establishment of Xinglong Free Tax Zone will provide support for the Rason zone in terms of logistics and industry,” said Li Zichen, deputy director of Rason Economic and Trade Zone.

Currently, most trade between China and the DPRK goes through Dandong, a coastal city in Liaoning province. But experts believe Jilin province may be a more promising hub for activity between the two countries in the long run.

Zhang Huizhi, a professor from the Center for Northeast Asian Studies at Jilin University, said: “The China-DPRK zones will not only improve bilateral economic cooperation but also serve as a platform to explore trade with Japan and South Korea.”

The distance between Changchun and Hunchun, a city that borders both the DPRK and Russia, is just 700 kilometers, she said, and Rason is relatively close to Japan by ship. This creates a string of enterprise zones across Northeast Asia.

Many Japanese and South Korean companies invest in Jilin and Heilongjiang provinces, including Toyota, Pohang Iron and Steel Company, or POSCO, and Hyundai. They could also benefit from the creation of an economic corridor.

The new zone has already attracted 17 companies with investment of $425.3 million, including Sinotrans, China Merchants Logistics Group and Japan Tokina, according to local government information.