Hainan free trade port ratchets up construction
Customers shop at a duty-free store in Haikou, south China’s Hainan Province, July 1. Photo: Guo Cheng/XINHUA
China’s Hainan Province has increased its annual tax-free shopping quota for travelers. With effect from July 1, the quota was raised to 100,000 yuan (about 14,123 US dollars) per person each year from the current 30,000 yuan. The categories of duty-free goods have also been expanded.
Chinese authorities on June 1 released a master plan for the Hainan free trade port, which aims to build the southern island province into a globally influential high-level free trade port by the middle of the century.
A free trade port system focusing on trade and investment liberalization and facilitation will be “basically established” in Hainan by 2025 and become “more mature” by 2035, according to the plan jointly issued by the Central Committee of the Communist Party of China and the State Council.
The authorities expect to make Hainan, China’s largest special economic zone, the frontline of China’s integration into the global economic system, according to the plan.
Building a free trade port in Hainan will play an important role in China’s aligning with a higher level of openness in the world, docking with new international economic and trade rules, and the formation of a new pattern of comprehensive opening up, said Li Shijie, director of the Hainan Institute of Open Economic Systems. The principle of zero tariffs, low tax rates and a simplified taxation system in the Hainan free trade port will significantly enhance its ability to attract capital, talent and other elements and resources.
Yang Zhiyong, deputy director of the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, said that the establishment of the Hainan free trade port has demonstrated China’s determination to open up to the outside world. Hainan has made great progress in institutional innovation, ecological civilization construction, and international tourism and consumption. In particular, the promotion of the construction of a free trade zone has provided support for the construction of a free trade port.
The construction of the Hainan free trade port is a milestone in China’s creation of a new pattern of comprehensive opening up and in its participation in the construction of an open world economy, according to Cui Fan, director of the Hainan Research Institute at the University of International Business and Economics. They are exploring constructing a free trade port while building a free trade pilot zone throughout Hainan.
Sun Yuanxin, deputy director of the Free Trade Zone Research Institute at Shanghai University of Finance and Economics, said that Hainan has a unique geographic location and is backed by the Guangdong-Hong Kong-Macao Greater Bay Area and the national market; it has beautiful tropical scenery and attractive island style and features; and it has a large geographical area, numerous high-quality ports and rich natural resources, especially marine resources.
In addition, Sun said that Hainan can learn from the construction of other international free trade ports, optimize design and construction plans with reference to international experience, and develop the digital economy, online economy, service trade and digital trade with the support of next-generation information technology.
The international economic and trade landscape is undergoing profound changes, Sun continued. The global supply chain structure characterized by “the lowest cost” is gradually being replaced by a new pattern featuring “the lowest cost plus the least risk,” and the importance of regional supply chains is being highlighted. The Hainan free trade port is at the forefront of these changes and backed by China’s enormous domestic market. How to form a regional supply chain that conforms to its own industrial characteristics and the institutional design of a free trade port and how to become an important hub in the global supply chain will be important concerns for Hainan’s future.
Considering Hainan’s relatively weak economic foundation, there is still room for improvement in its infrastructure and talent reserves, Yang noted. In the early stage of the construction of the free trade port, Hainan needs strong financial support from the central government to improve its infrastructure. Favorable talent policies are also needed.
The Hainan free trade port needs to accelerate construction and further release the competitive advantage of zero tariffs, low tax rates and a simplified taxation system. In addition, the construction of the Hainan free trade port should focus on the development of key industries. It is necessary to further improve the service quality of Hainan’s tourism industry. In terms of education, special attention should be paid to schools jointly run by China and other countries and to the development of international schools. In addition to facilitating a hard environment to attract investment, we must also focus on creating a sound soft environment and constantly optimizing business conditions.
edited by WENG RONG
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