China has established four pilot free trade zones in Shanghai and Tianjin municipalities, Guangdong and Fujian provinces as of the end of April 2015. Institutional innovation, as the core of the free trade zones, is essential to the success of the pilot zones.
 

First, new systems should be feasible and serve practical needs. It is necessary to accelerate the transformation of government functions, innovate management models and facilitate convenient trade and investment in a bid to seek new ways and accumulate new experiences for comprehensively deepening reform and opening-up. Proper measures should be made to resolve various problems in the transition from old to new systems. Innovated systems should be easily implemented and profitable for enterprises. 
 

Next, institutional innovation should tailor measures to local conditions. The four pilot zones, which are different in terms of both geography and development, need to emphasize innovative cooperation. Meanwhile, they should take their own geographic and developmental conditions into consideration in the process.
 

With the aim of becoming a demonstration zone of economic cooperation between China’s mainland and Taiwan as well as boosting cooperation with countries and regions along the Maritime Silk Road, the Fujian free trade zone should focus on the liberalization of investment and trade between both sides in institutional innovation, perfecting the legal system in aspects such as industry opening to Taiwan, trade in goods and services, financial cooperation and personnel exchanges. 
 

Then, institutional innovation should be carried out within the framework of the rule of law. Systems involved in the free trade zones shouldn’t break through the bottom line of China’s existing law. If they do need to do so, they should have a clear legal mandate. Meanwhile, institutional innovation beyond the existing law should be encouraged. The free trade zones may make bold attempts to be the vanguard of institutional  innovation.
 

Finally, proper measures are needed for institutional innovation. First, the construction of talent teams should be stressed in the free trade zones. Quality of institutional innovation ultimately depends on talent. The free trade zones can become the focal point for talent accumulation through effective measures of talent team construction and policies to attract talent.
 

Second, the promotion of institutional innovation should be intensified. For example, the core of institutional innovation in the Fujian free trade zone is to innovate cooperative mechanisms between the Chinese mainland and Taiwan and to enhance economic connection between Fujian and Taiwan. New systems should be well understood by residents of Taiwan. Otherwise, these systems will not work regardless of how good they sound on paper.
 

Third, sufficient funds should be provided for institutional  innovation. Public finance must be utilized in the cultivation of talent, the construction of informatization platforms and the promotion of new systems to provide necessary funding support for institutional innovation.
 

Fourth, effectiveness evaluation mechanisms of system operation should be established. Feasible systems that can be accepted by the public should be popularized while improper ones should be amended or suspended. Unpractical systems that don’t conform to development must be abolished in a timely fashion. Furthermore, it is better to entrust the evaluation of a third party to ensure objectivity and fairness.

Shi Zhiyuan is from the School of Law at Fujian Normal University.