#China #Hainan #Duty-Free #Free Trade Port

Hainan Free Trade Port Experiences Unprecedented Growth

Hainan Free Trade Port (FTP) has shown impressive results shortly after the initiation of its special customs operations. In less than three months since launching these operations, significant increases in foreign investment, duty-free imports, and visa-free arrivals have been reported. Liu Xiaoming, the governor of Hainan province, described this development as a remarkable step towards a higher level of economic opening.

1. Positive Impact of Special Customs Operations

Beginning on December 18, 2022, the operations have appeared stable and productive. Liu noted that the vitality and potential of Hainan's high-level opening-up have been entirely demonstrated. An impressive jump was reported in the share of imported goods that qualify for zero tariffs, rising from 21% to a striking 74% of all tariff items. This means that any product imported into Hainan, with at least 30% value-added processing done locally, can enter the mainland without incurring tariffs.

During the recent Spring Festival holiday in February, Hainan recorded nearly 48.6 million yuan (approximately $7.03 million) in zero-tariff imports, which resulted in savings of 9.42 million yuan in duties. Overall, the value of imports and exports at local customs ports increased by 9% year-on-year in the first two months following the launch.

2. Attraction of Foreign Enterprises

The growth has not gone unnoticed by foreign enterprises; notable brands like Siemens Energy from Germany and Mayoly from France have established their operations on the island. Additionally, Singapore's Fullerton Health Group opened Hainan's first fully foreign-owned hospital. In the same timeframe, new foreign-invested enterprises surged by 45.6%.

3. Revitalization of Tourism

Tourism in Hainan is also thriving, thanks in part to one of the most open entry policies in the country. The province welcomed an impressive 557,700 inbound and outbound tourists within just two months of the new operations. Among them, 141,000 were visa-free foreigners, marking an astounding year-on-year increase of 62.2%.

The domestic market has seen a transformation too, driven by optimized duty-free shopping policies tailored for outbound travelers alongside the introduction of new duty-free stores focused on meeting residents' everyday needs. Five new duty-free stores debuted on February 11, attracting 465,000 visitors in their first two weeks of operation. Comparing to last year's numbers, the Spring Festival holiday saw a 30.8% increase in the value of offshore duty-free sales alongside a 35.4% rise in shoppers.

4. Commitment to Expanding Opportunities

Governor Liu emphasized that these burgeoning operations indicate Hainan’s readiness to further advance its opening-up strategy on a larger scale. Plans are in place to align with the Regional Comprehensive Economic Partnership's rules and proactively connect with high-standard international trade agreements. Additionally, the province is set to liberalize trade and investment significantly, optimizing port layouts and supervisory models.

Efforts will be directed towards shortening the negative list for cross-border service trade and exploring enhanced access for domestic and foreign capital. Hainan aims to boost the flow of goods and production factors, utilizing multifunctional free trade accounts while expanding the list of visa-free countries and improving data export management.

5. Strategic Development Goals

Liu outlined that Hainan’s position within a four-hour flight of 21 countries and regions, representing approximately 47% of the global population, makes it an attractive investment hub. The province has successfully attracted investments from 180 countries and built partnerships with 41 global free trade zones and ports. Collaborations with Guangdong, Hunan, and Zhejiang provinces, as well as Hong Kong’s economic cooperation demonstration zone, are ongoing and flourishing.

To consolidate its role as a strategic hub within China's dual-circulation development model, Hainan plans to develop unique industrial chains focusing on core technologies in seed breeding and expansion in the marine industry, with the aim for this sector to contribute 40% of the province's GDP this year. Hainan’s commercial spacecraft launch site aims for 60 annual launches, reinforcing the province's commitment to innovation.

In the pursuit of sustainable development, Hainan is pushing for advancements in new energy storage, electric vehicles, and carbon trading. By prioritizing e-commerce and international data services, Hainan aspires to become a free trade port of global significance, striving for industries that are competitive and appealing on the international stage.