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China Unveils Blueprint for FTZ Transformation of Hainan Island

Further details of plans to transform the whole of Hainan Island into China’s newest Free Trade Zone (FTZ) have been released by the State Council. In a communique dated 16 October – entitled The General Plan for the China (Hainan) Pilot FTZ – it was revealed that the island will be reinvented as a showcase for China’s environmental protection programme, an international tourism and retail hub, a globally-oriented centre of professional service excellence and a key gateway to the Pacific and Indian Ocean trading routes.

Overall, the Plan identified six particular developmental priorities:

Easing Market Access for Overseas Investors

In line with this, foreign investment within the Hainan FTZ will be managed via the Negative List/Pre-Establishment National Treatment Model. To fully facilitate access to non-China funding, modern agriculture, the new/high-tech industries and the contemporary services sector will all be further opened-up to foreign investment, while market access will be enhanced for would-be investors in crop production, healthcare, education, tourism, telecommunications, online services, cultural services, financial services, aviation, the maritime economy, new-energy vehicle manufacturing and several other key sectors.  

Enhancing Trade Facilitation

A policy of fully opening-up the first line, while retaining and safe and efficient control of the second line will be implemented on a trial basis for the management of goods entering or leaving Hainan’s Yangpu Bonded Port Area. This will not apply, however in all instances where said goods are prohibited from import/export or are designated as requiring inspection/quarantine.

Innovative, Comprehensive Supervision

A programme of granting general VAT taxpayer status to enterprises operating out of any of the special customs supervision zones will be trialled, as will the practice of supervision of stored goods by category within these same zones. Steps will also be taken to promote the transformation and upgrade of trade and to nurture new trade-related business formats, while enhanced support will be given to the development of cross-border e-commerce and global maintenance/repair services.

Financial Opening-up and Innovation

In order to optimise the development of the financial services sector within the FTZ, a number of supportive measures will be introduced with a view to promoting innovation and greater opening up, with the emphasis on servicing the needs of the real economy and facilitating the further growth of trade and investment.

Cutting-Edge Service Clusters

Priority will be given to nurturing world-class medical tourism and high-end medical service clusters. In order to facilitate their development, import tariffs will be selectively waived or lowered in the case of any high-tariff medical device deemed to be essential for the successful operation of such clusters.

Luxury Tourism

Priority will be given to ensuring Hainan becomes a staple stopover point on all local cruise routes, while cruise operators will also be incentivised to open new Southeast Asia services with the island as the primary embarkation port.

For further details (in Chinese), please access the following links:

Letter of Reply of the State Council Approving the Establishment of the China (Hainan) Pilot FTZ (Guo Han No. 119 [2018]) 

Circular of the State Council on the Issuance of the General Plan for the China (Hainan) Pilot FTZ (Guo Fa No. 34 [2018])

Content provided by Picture: HKTDC Research
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