Hainan Free Trade Port: A Pivotal Step in China's Economic Opening

As China gears up for a significant milestone in its economic landscape, the much-anticipated operations of the Hainan Free Trade Port (FTP) are set to officially commence on December 18. Prior to its launch, important preparations have been made, including the registration of the Xiang Tai Kou, a semi-submersible vessel, which marks a historic entry into the fleet, taking advantage of specially designated customs policies that exempt it from import tariffs and VAT on charter rentals.

The significance of this new initiative cannot be overstated. It is seen as a key move towards increasing China's trade openness, aligning with President Xi Jinping’s efforts to promote transparency and accelerate the flow of goods, capital, and services across borders. During a recent report on the External Trade Program, Xi applauded the customs operations as a major achievement, urging enhanced cross-border movements of production factors while fostering a business environment reflective of a modern market economy, legally structured, and internationally oriented.

Following its official launch, the FTP will implement a two-tier customs supervision model allowing for greater ease of access for trade goods. The “first line” where goods flow freely will be established at the border of the FTP and overseas regions, while a secondary system will oversee regulated access before goods can circulate freely within Hainan. This approach is designed to streamline trade both within and beyond China's customs boundaries while maintaining standard customs checks in mainland regions.

Wang Changlin, the deputy director of the National Development and Reform Commission, projected that the proportion of zero-tariff lines for products within the FTP would surge from 21% to 74%. This shift will allow imported goods processed with a value addition of at least 30% in Hainan to enter mainland China without incurring tariffs. Furthermore, certain currently restricted products will benefit from liberalized trading protocols in Hainan.

Hainan's strategic position is expected to attract increased foreign direct investment (FDI), having already secured a remarkable 102.5 billion yuan (around $14.3 billion) in the last five years from investors across 176 nations and regions, reflecting a substantial annual growth rate of 14.6%. The outlook is optimistic, with forecasts predicting further expansions post-launch of special customs operations.

Eight primary ports are being prepared to expedite import clearance, while an additional ten secondary ports will manage goods destined for deeper entry into the mainland. Local authorities are already planning to enhance travel accessibility by expanding visa-free access for visitors from 85 nations, potentially introducing more flexible and appealing immigration policies in tandem with the new customs framework.

Moreover, Hainan is piloting a negative list approach for cross-border services trade, enabling foreign investors to receive national treatment in critical sectors such as finance, healthcare, and education.

In line with these policies, modernizing efforts are moving ahead at the Yangpu Port, a crucial logistics hub for the FTP. Du Chengcai, deputy general manager of the International Port and Shipping Group of Hainan, indicated that new facilities and infrastructure are in development to increase operational capacity significantly, enhancing connectivity with global markets significantly.

Economist Li Daokui from Tsinghua University emphasized that China is on the verge of a significant market opening, noting that Hainan will serve as an experimental ground for broader reform initiatives and a gateway for foreign investments and technologies. As these changes roll out, Hainan stands poised to play an instrumental role in shaping the future of China’s economic landscape and trade relations.

This upcoming transformation in the Hainan Free Trade Port is a testament to China's commitment to a new era of openness, highlighting its strategic importance in establishing itself as a pivotal player in global trade. For more details on Hainan's Free Trade Port and its implications for future economic policies, visit CGTN News.