Hainan FTP moves to be model of opening-up

Development project to turn island into world-class trade and innovation port

In June 2020, China unveiled a master plan to build the island province of Hainan into a free trade port with Chinese characteristics and global influence by the middle of the century.

The master plan said the Hainan Free Trade Port is set to introduce island-wide customs clearance operations by 2025, as part of broader measures to promote trade and investment liberalization and facilitation.

Preparation work for customs clearances on Hainan Island is being accelerated this year, focusing on projects that optimize the layout of ports and the operation of comprehensive law enforcement stations in non-customs areas, the provincial government said.

Hainan FTP will carry out high-level opening-up stress tests to benchmark high-standard international economic and trade rules.

Hainan has been making solid efforts to strengthen the strategic functions of the free trade port entrusted by the State, serving as a "reaction furnace" in attracting and allocating global resources, and becoming a key intersection of the "dual circulation" economic model, under which the domestic market is the mainstay while the domestic and foreign markets reinforce each other, said officials with the provincial government.

Hainan FTP has adopted over 150 policy measures released by the central authorities to widen market access and promote trade facilitation and liberalization.

They include a positive "zero tariff" list for free trade port vehicles and yachts, a negative "zero tariff" list for cross-border trade in service and a catalog of encouraged industries, according to a recent official news briefing.

Sanya Yuanding Performing Arts Co Ltd, for instance, became a new beneficiary of the "zero tariff" policy. By taking advantage of the upgraded version of the zero-tariff policy for self-use production equipment, the company enjoyed a tax reduction of about 1.2 million yuan ($188,380) for importing one shipment of large-sized amusement equipment valued at 875,000 euros ($944,750).

Statistics show that the policy incentives have started to pay off, as the free trade port has led the nation in economic growth and welcomed a record inflow of foreign investment.

Hainan's economy grew 11.2 percent year-on-year in 2021, the highest growth rate among all provincial areas in China.

A total of 1,936 foreign-invested enterprises were established in 2021, an increase of 92.64 percent over the previous year.

The actually utilized foreign capital reached $3.52 billion, up 16.2 percent over the previous year, with 97 percent of the investment flowing to the modern service sectors and the manufacturing industry, according to data from the Hainan provincial department of commerce.

Hainan has also made significant headway in promoting the integration of institutional innovation.

It has completed a total of 123 institutional integration innovations in fields such as commercial registration, foreign investment management, trade supervision, and financial opening up, which have facilitated a more open, convenient and efficient business environment for traders and investors.

Meanwhile, with provisions on liberalization and facilitation in both trade and investment, it is widely expected that the Regional Comprehensive Economic Partnership agreement, together with the Hainan FTP policies, will generate superimposed effects in stimulating more opening dividends that ensure bright prospects for businesspeople in Hainan, said experts at a recent forum held in Haikou, capital of Hainan.

Provincial authorities said that Hainan has unleashed 20 measures to help domestic and foreign enterprises better benefit from and better cope with the new opportunities and challenges brought by the RCEP pact for the construction of the Hainan free trade port.

Ong Tee Keat, former minister of transport of Malaysia and currently president of the country's Center for New Inclusive Asia, said at a recent forum that he has seen complementariness between Hainan and Southeast Asian economies in areas of the green and blue economies, such as trading in carbon credits, aquaculture, fisheries and maritime logistics.

He took a rosy view of the development prospects of the cooperation between Hainan and Southeast Asian countries under the RCEP framework.

Hainan FTP will continue to transform its industrial structure to build a modern industrial system that focuses on tourism, high-tech industry, modern service industry and efficient agriculture with tropical characteristics, with the added value of the modern service industry accounting for 54 percent of the service industry by 2025, said Gu Gang, director of the provincial development and reform commission.

He added that by then, Hainan FTP's industrial competitiveness will be significantly advanced and the degree of industrial agglomeration will be dramatically improved.