Hainan Leads Reform and Opening-Up with FTP

For Hainan Province in south China, 2024 is a crucial year for promoting independent customs operations throughout the whole island. It is also the sixth year into the island province’s gradual exploration into FTP construction with Chinese characteristics.

Accelerating construction

Six years after its inception, the construction of the Hainan Free Trade Port has unleashed new vitality for high-level opening-up. Feng Fei, secretary of the Hainan Provincial Committee of the Communist Party of China (CPC), said building the FTP with Chinese characteristics is a major reform and opening-up measure personally planned and promoted by President Xi Jinping. It is also the outcome of the CPC Central Committee’s strategic decision, in-depth research, and scientific planning.

Since the 18th National Congress of the CPC in 2012, Xi has visited Hainan three times, reiterating China’s determination to expand high-level institutional opening-up of the Hainan FTP.

The CPC Central Committee has decided to support Hainan in building the whole island into a pilot free trade zone, gradually exploring and steadily promoting the establishment of a free trade port with Chinese characteristics, Xi said at a gathering celebrating the 30th anniversary of the founding of Hainan Province and the Hainan Special Economic Zone on April 13, 2018.

During his inspection tour of the province in 2022, Xi called for accelerating the development of Hainan into an FTP with global influence. He said Hainan will become a paradigm of reform and opening-up in the new era.

According to Liu Xiaoming, governor of Hainan, a primary policy system for the FTP featuring facilitation for trade and investment and cross-border free flow of capital, personnel, goods and services as well as the orderly flow of data in a secure manner has taken shape, shoring up Hainan’s high-quality development.

Hainan saw its GDP grow by 9.2 percent in 2023, and its value-added industrial output climbed 18.5 percent. The per capita disposable income of urban and rural residents increased by 6.3 percent and 8.3 percent, respectively. Trade in goods and services soared by 15.3 percent and 29.6 percent, respectively. The zero-tariff policy has resulted in a cumulative import value of RMB 20.2 billion, with the value of tax reduction and exemption amounting to RMB 3.81 billion. The tariff-free policy for value-added manufactured goods for domestic sales has been extended to key industrial parks across the island. As a result, businesses benefiting from the policy have sold such product valued at RMB 4.71 billion. The island province also applies the preferential policy of reducing both corporate and individual income tax to 15 percent in a wider range of areas.

A new testing ground

This year marks the 10th anniversary of the opening of the Yangpu Bridge, which connects the Yangpu Economic Development Zone and Danzhou City.

The Yangpu Economic Development Zone in Hainan, one of China’s first national development zones open to foreign business, was founded in 1992. Today, it is the testing ground for the construction of the Hainan FTP and a new window for Hainan’s high-level opening-up. At the end of 2021, Hainan made overall arrangements for integrated development of Danzhou and Yangpu, aiming to expand FTP policies wider.

China’s first digital bonded zone was established in Danzhou and Yangpu in February, making it possible for data exchange via a dedicated international Internet line in the zone. While ensuring data safety, the digital bonded zone also provides value-added services for data generated abroad, such as the collection, storage, processing, governance, and transaction of such data as a production factor.

According to the master plan for the construction of Hainan FTP, island-wide independent customs operations will be launched by the end of 2025. For that, an import taxable commodity catalogue, a list of prohibited and restricted items and sectors, and customs supervision measures are being formulated. The main work on 31 construction projects has been basically completed, and 22 of the 27 pressure test tasks have been carried out.

According to Guan Jirong, executive vice director of the Office of the Hainan FTP Working Committee, independent customs operations is of great importance for Hainan’s high-quality development. Once it is achieved, more imported goods will enter Hainan with zero tariff, and a larger number of talent from overseas will work in Hainan. In addition, cross-border wealth management in the island province will be more convenient.

Forging new quality productive forces

Hainan is located at 18 degrees north latitude, making the island an ideal tourist destination. Tourism can be an important focus of efforts in boosting high-quality development of the Hainan FTP. Today, tourism is part of Hainan’s modern industrial system. Since the province extended visa-free entry to visitors from 59 countries, tourists are flocking in.

According to Liu Xiaoming, Hainan is developing modern industries with local characteristics. The province envisions a distinctive modern industrial system made up of tourism, modern services, high-tech industry, high-efficiency tropical agriculture, seed breeding, deep-sea science and technology industry, and commercial aerospace industry. It is also promoting high-end shopping, and attracting people to come to Hainan for its premium medical services and education.

The Sanya Yazhou Bay Science and Technology City is a major base for cultivating new quality productive forces. It boasts the Yazhou Bay Seed Laboratory for seed breeding research, 21 seed industry research institutions and more than 2,800 innovative seed enterprises. The laboratory and other seed-related organizations produce improved seeds with greater yield and better resistance to extreme weathers. Since the founding of the People’s Republic of China in 1949, 70 percent of more than the 7,000 new crop varieties in the country have been bred in Hainan.

The Boao Lecheng International Medical Tourism Pilot Zone in Hainan is China’s only special medical zone, integrating medical services, medical research and pharmaceutical production. The pilot zone also seeks to explore new approaches to reforming China’s approval system for medical products as well as the clinical use of global innovative products in China.

According to Xie Jing, vice governor of Hainan Province and director general of the Hainan Provincial Department of Science and Technology, the zone introduces innovative drugs and medical instrument in sync with their availability in the rest of the world, and has become a “hope city” for patients with rare or difficult diseases who are looking for new drugs, new instruments and new treatments.

The bougainvillea is an iconic flower of Hainan, representing enthusiasm, perseverance, and enterprise. Most homes have a plant or two and it grows in profusion in public places. Besides the riot of colors, the flower also has high commercial and medical potential. To tap that, the Bougainvillea Science Expo Park opened in the city of Sanya in Hainan in March. A base for conserving the germplasm of the flower and its commercial application, the park is an important part of China’s tropical agricultural science center in Hainan.

The Longping Biotechnology (Hainan) Co. Ltd. is a biological breeding enterprise developing hybrid crops in Sanya. The company has pioneered research and development. Today, it owns more than 80 invention patents.

Hainan Province pledged in its 2024 report on the work of the provincial government that great efforts will be made to spearhead reform and opening-up with the construction of the FTP. Connecting the domestic market with the international market, Hainan is embracing unlimited opportunities for development.

Zhou Fayuan is a reporter with China Development and Reform News.

Li Hongwei and Zhao Qingguo are reporters with China Reform Daily.