TIANJIN: The country's largest free trade harbor area, offering the most preferential tax treatments available, began operations in this northern port city yesterday.

Dongjiang Bonded Harbor Area, located in the Bohai-rim region near Beijing, "is regarded as a pilot for reforms and renovations to promote the opening-up drive", Li Kenong, deputy chief of China Customs, said at the inauguration ceremony.

The area will provide favorable tax and foreign exchange policies and offer comprehensive international shipping, distribution, purchasing, transit trade and export processing services, Li said.

The first phase of the harbor area, which currently covers 4 sq km and includes warehouses, container terminals, processing and logistics zones, required 6.6 billion yuan ($900 million) of foreign investment.

The project, which was approved by the State Council on August 31 last year, is scheduled to become fully operational by 2010, when another 6-sq-km area is completed. It has a designed capacity to handle 4 million containers a year.

The bonded area is expected to boost the development of Tianjin Binhai New Zone, which has been designated as a test site for many new economic and financial policies.

"The operation of the new free trade harbor will not only boost Tianjin's maritime businesses, but greatly expand the overall scope of the economy," Yu Rumin, chairman of Tianjin Port (Group) Co Ltd, which is in charge of the construction project, said.

Dongjiang Bonded Harbor Area is the third of its kind in China, joining the Shanghai-based Yangshan Bonded Harbor Area, which started operations in December 2005, and Dayaowan Bonded Harbor Area in Dalian, Liaoning Province, which opened in June.

The Yangpu Bonded Harbor Area on the island of Hainan was approved by the State Council last month.

The strategy of developing free trade harbor areas marks a new step forward in the country's opening-up campaign, Xu Fu, a professor at the Tianjin-based Nankai University, said.

Establishing bonded harbor zones in major port regions will help the country meet new challenges arising from globalization, Xu said.

They combine many foreign-oriented functions, including free trade zones, logistics centers and export processing bases, he said.

(Xinhua News Agency December 12, 2007)