#China #Xi Jinping #Hainan #China Economy #Hainan Free Trade

Hainan Free Trade Port: A Strategic Move for China's Economy

In just a month, on December 18, the much-anticipated special customs procedures at the Hainan Free Trade Port (FTP) will officially kick off across the island. This development represents a significant milestone in China's commitment to enhancing global openness and fostering institutional transparency, which aims for a smoother and freer flow of goods, capital, and services.

The Hainan FTP is set to transform the economic landscape by implementing innovative customs operations that align with President Xi Jinping's vision for a more open and market-driven economy. During a meeting earlier this month regarding the FTP, Xi praised the upcoming initiatives as a crucial step towards expanding high-quality openness and promoting an open global economy.

Key Features of the New Customs Procedures

The Hainan FTP will introduce a unique oversight model, featuring a dual-layer customs system. In this new arrangement, the first tier will allow for looser access and monitoring at the frontline, while the second tier will enforce regulated access. This strategic approach is expected to promote more fluid trade between Hainan and regions beyond China’s customs borders, with standard customs controls remaining for mainland China.

An example of how these operations will work includes the recent registration of the unmanned vessel Xiang Tai Kou, which will be the first Chinese ship contracted for duty-free imports. This vessel is expected to yield savings of over 10 million yuan (around 1.4 million USD) due to exemption from import duties and VAT on rentals, exemplifying the tangible benefits expected from the FTP.

Benefits and Economic Growth

Wang Changlin, Vice Chairman of the National Development and Reform Commission, noted that the percentage of duty-free items within the Hainan FTP is expected to increase from 21% to 74%. Additionally, products processed in Hainan with at least a 30% added value will also qualify for tariff-free entry into mainland China. This shift could significantly ease restrictions on certain goods currently banned or limited nationwide.

In the past five years, Hainan has attracted real foreign investments amounting to 102.5 billion yuan, growing at an average annual rate of 14.6%, with participation from 176 countries and regions. It is expected that these promising trends will accelerate with the implementation of the FTP.

Expanding Port Facilities and Services

Eight ports will serve as primary entry points for the accelerated customs clearance of qualified imports, while ten secondary ports will handle goods entering the mainland. Furthermore, local authorities are planning to expand the existing visa-free policy for travelers from 85 countries, making Hainan an even more attractive destination for international visitors and investors.

In a move towards enhancing service trade, Hainan is piloting a negative list for cross-border trade services, which aims to provide national treatment to foreign investors in key sectors such as finance, healthcare, and education.

Du Chengcai, Deputy General Manager at Hainan Port, highlighted ongoing efforts to upgrade and expand the port facilities. This includes the addition of 200,000 tons of new anchor points and an expansion of the existing 58 shipping routes to improve cargo flow efficiency and strengthen Hainan’s link to global markets.

Conclusion

Economist Li Daokui from Tsinghua University remarked that China is poised for one of its most significant market opening phases yet. Hainan is set to emerge as a crucial special customs zone and testing ground for broader economic reforms. The developments at Hainan highlight its potential as a central hub for an intensified opening of China to foreign businesses and technologies, promising exciting opportunities on the horizon.

For additional details, visit CGTN's news portal.