#China #Hainan #China Trade #Hainan Free Trade Port #Economic Openness

Hainan Free Trade Port: A Key Gateway to Economic Openness

In a significant development for China's economic landscape, the Hainan Free Trade Port (FTP) is set to officially launch its special customs operations on December 18, just a month away. This newfound initiative is hailed as a landmark step toward enhancing economic openness in China and plays a vital role in promoting institutional transparency and the seamless flow of goods, capital, and services.

The FTP will implement a specialized customs model aimed at facilitating smoother trade, characterized by two tiers of access: a freer first-line access and a more regulated second-line access. This dual-level customs system is designed to improve trading conditions between Hainan and the regions beyond China's borders while maintaining standard customs checks for the mainland, thus creating a unique trading bridge.

According to Wang Changlin, Deputy Chief of the National Development and Reform Commission, the percentage of tariff items with a zero tariff in the free trade zone will rise dramatically from 21% to 74%. Furthermore, imported products processed in Hainan to add at least 30% value could be brought to the mainland duty-free. This means that several products currently restricted across the country will experience a relaxation of these limitations within Hainan, thereby enhancing its position as a hub for international trade.

In preparation for the official launch, significant investments have been made in the infrastructure supporting the FTP. The Hainan International Ship Registration Administration has completed the registration of the Xiang Tai Kou, a semi-submersible vessel, marking it as the first China-imported duty-free charter vessel. This addition symbolizes the practical benefits that the new customs operations aim to provide, saving over 10 million yuan (around $1.4 million) in import duties and VAT.

Chinese President Xi Jinping has endorsed the FTP's special customs operations as a transformative effort towards broader economic openness, urging actions to facilitate cross-border resource mobility and create an exemplary business environment that prioritizes market orientation, rule of law, and internationalization.

In the latest developments, Hainan has reported foreign investments totaling 102.5 billion yuan over the past five years, reflecting a robust annual growth rate of 14.6%, while attracting investments from 176 countries. Experts anticipate that this trend will only accelerate post-launch of the FTP, allowing further integration into the global economy.

The designated eight main ports will act as key entry points for imported goods, streamlining customs clearance processes. Complementing this, there’s an existing visa-exemption policy for tourists from 85 countries, which will potentially be expanded to include more qualifying nations along with more flexible and appealing stay regulations.

Moreover, Hainan is piloting a negative list for cross-border trade in services and granting foreign investors national treatment in critical sectors such as finance, healthcare, and education. This strategic approach aims to foster a more attractive and competitive environment for foreign enterprises.

As part of its ongoing infrastructure enhancement, Yangpu Port, designated as the primary logistics center for the FTP, will see the development of 200,000 new berths for 200,000-ton vessels. The existing network of 58 shipping routes will also be expanded to further enhance cargo flow efficiency and improve Hainan's connectivity to global markets.

According to Li Daokui, an economist from Tsinghua University, with the FTP's initiatives, China is poised for one of its most significant rounds of market openings. Hainan is expected to serve as a testing ground for broader economic reforms, positioning itself as a center for China's forthcoming engagement with international businesses and technologies.

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