A guide to Beijing’s Two Zones policy framework

The Beijing government has been aiming to further develop the city’s economy under the Two Zones policy framework. From BritCham’s communication with the Beijing government this year, policies under the ‘Two Zones’ have been frequently mentioned with the goals to improve the business environment for foreign companies and broaden their market access. Here is a guide to understand the history, priorities and effects of Beijing’s Two Zones policy.

Has the Two Zones policy been working?

The Two Zones policies are aimed to further open up key industries in Beijing, through broadening market access for foreign businesses, and aligning with international standards. They are also designed to improve the regulatory and business environment in the city, such as by cutting red tape, strengthening IP protection, and attracting domestic and international talents. If all of these are successfully implemented, we will certainly see a more open, transparent and vibrant market environment in Beijing.

So far the Two Zones policies have resulted in some positive progress. For example, several multinational companies have expanded their operations in Beijing. BMW has upgraded its Beijing R&D centre to be their R&D headquarter in China, while Procter & Gamble kickstarted the second phase of its expansion programme of its Beijing innovation centre. Standard Chartered became the first and only foreign bank that has participated in China’s cash pooling pilot scheme, which integrates RMB and foreign currency cash pools to facilitate the use of cross-border funds. The British multinational firm also gained approval to set up a wholly-owned securities company earlier this year. The fact that these companies are expanding their presence in Beijing and increasing their business scope is a testament of the importance of the Beijing market, its growing potential and improving openness. Meanwhile, companies in key industries, especially financial services and technology have also seen their revenue increase notably – a growth of 13% in revenue, for example, was achieved by companies in the technological services sector in Beijing’s key science parks in the first quarter of 2023. Given the focus on digital development, the digital economy accounted for over 42.9% of the city’s GDP in 2022, up 7% from 2015.

On the other hand, despite the clearly stated goals in a slew of policy documents, many opening measures are still in the process of being developed. For instance, an important goal of the Two Zones is to facilitate cross-border data transfers and accelerate digital trade — according to the government, currently a cross-border data pilot, a digital trade port and a Daxing digital trade pilot zone are being established — but few details about their progress have been available to the wider public. Many foreign businesses in Beijing continue to face challenges when conducting security reviews of cross-border data with the cybersecurity administration. Another example is that while the Two Zones policy has encouraged research into areas that are traditionally considered sensitive, such as stem cell and human genetics, in practice, there have not been breakthroughs in terms of market access. Foreign pharmaceuticals and medical institutions continue to find these areas extremely restrictive to venture into.

In summary, the Chamber is encouraged to see the goal to further open up and to involve foreign businesses and international talents in the city’s high-quality development under the Two Zones policy. In the meantime, we also look forward to the further implementation of specific measures in order to fully unlock the potential presented by these market opening measures.

If you want to learn more about Beijing’s Two Zone policy framework, or hear more about the British Chamber’s policy and advocacy work, get in touch via advocacy@britishchamber.cn.