China to Establish Hainan Free Trade Zone
China to Establish Hainan Free Trade Zone
May 15, 2018
Chinese President Xi Jinping has declared plans to change the whole southern island region of Hainan into a free trade zone (FTZ).
As indicated by a guidance issued by the Communist Party and the State Council, China plans to set up the Hainan FTZ by 2020 and develop a Hainan free trade port by 2025. By 2035, free trade system should be completely established.
Hainan will profit by relaxed rules for setting up medical institutions, importing medical equipment and pharmaceuticals, and enabling foreign doctors to practice.
Moreover, restricted types of gambling – specifically horse racing and sports lotteries – will be allowed in Hainan, as previously rumored. Macau is presently the main locale in China that permits gambling.
In his declaration, Xi particularly referred to Hainan’s strategic positioning close ASEAN, which makes it an essential area for trade with Southeast Asia. “Hainan has the advantage of being on the front line with ASEAN countries,” Xi said. “It ought to be a pioneer in opening up.”
Xi made the declaration days after his speech at the opening ceremony of the Boao Forum for Asia – which was held in Hainan – where he touted China’s new period of change and commitment to free trade and globalization. In his speech, Xi vowed to further open China’s markets to foreign investments and lower tariffs, however numerous observers were frustrated that he didn’t report pilot reforms for Hainan, which were broadly anticipated.
The declaration of the Hainan FTZ was made in celebration of the 30th anniversary of Hainan’s title as a special economic zone (SEZ). Hainan, which is frequently referred to as China’s Hawaii due to its tropical climate and large tourism industry, was one of China’s primary SEZs and among the primary to profit from the country’s reform and opening up.
China’s primary FTZ, the Shanghai Pilot FTZ, was launched in 2013. In 2015, China announced the Fujian, Guangdong, and Tianjin FTZs. China announced seven additional FTZs in 2016 – in Chongqing, Liaoning, Henan, Hubei, Shaanxi, Sichuan, and Zhejiang – to convey the total to11.
FTZs in China advantage from various incentives, for example, decreased tax rates, expedited administrative procedures, and relaxed investment restrictions. Numerous FTZs additionally promote particular businesses, enabling investors to profit from cluster effects.
China’s FTZs are also known as testing grounds for policy experimentation, before reforms are extended across the country. As Hainan is an island region, an FTZ there enables the Chinese government to test reforms on a more extensive scale than different FTZs, yet still in a contained setting.
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