Hainan poised to become unique FTZ
Move can make China a globalization leader
“This is not a pilot FTZ for China but for the entire region and even the global economy.” Chen Fengying
Research fellow at the China Institutes of Con temporary International Relations
Beijing on Tuesday rolled out a comprehensive plan to establish what experts call an “unprecedented” free trade zone (FTZ) covering all of South China’s Hainan Province, a signal that the nation will continue to pursue economic reform and market opening at its own pace regardless of foreign pressure.
Coming at a time when economic globalization is facing great uncertainty, China’s move to set up an FTZ that could transform the island of Hainan into a global free trade hub comparable to Hong Kong and Singapore puts the country in the leading position of preserving globalization, analysts added.
The plan, announced by the State Council, China’s cabinet, gives Hainan more autonomy to reform and open up and is aimed at building a highlevel FTZ that offers a significantly improved business environment for foreign investment.
“Establishing an FTZ that covers an entire province is unprecedented in China,” Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told the Global Times on Tuesday.
He added that the level of market opening is also unprecedented.
Under the plan, market access for foreign investors would be “significantly” eased, with preferential treatment to be offered and more sectors to be opened. Foreign investment would be managed using a negative list approach and pre-establishment national treatment, which means national treatment would be offered to foreign capital during the entry stage, the plan said.
Market access would also be eased for foreign investors in an array of areas, including seed production, healthcare, education, tourism, telecom munications, the internet, financial services and new-energy vehicle manufacturing.
“Almost all the sectors are open now to foreign investors, although to different degrees,” Chen Fengying, a research fellow at the China Institutes of Contemporary International Relation in Beijing, told the Global Times. “Unlike other pilot FTZs, the Hainan FTZ represents a new standard
in China’s openness.”
Coming at a critical juncture for the Chinese economy, which faces great external and internal pressure, the Hainan FTZ would also send an important message from the nation’s top leaders: that China will not change its reform and opening-up pace because of pressure and that China will take concrete action to lead the fight against the backlash to economic globalization.
“This is a very important symbolic move at a unique point in history, when our country faces challenging conditions abroad and at home, and it shows China will not shut its doors because of trade friction,” Wang said.
Chen put it more plainly. “This could be described as the move that puts China in the leading position of global free trade and fills the void created by the retreat of the US under [President Donald Trump].”
Analysts also noted that the goal for the Hainan FTZ, designed by the highest level of government, is very bold. “The way I see it is that this is not a pilot FTZ for China but for the entire region and even the global economy,” Chen said.
“[The Hainan FTZ] will adopt more proactive opening strategies, accelerate the creating of a new open economic system, promote the formation of a new structure for comprehensive opening-up and build the island of Hainan into our country’s key gateway for the Pacific Ocean and the Indian Ocean,” read the plan.
The Hainan FTZ would significantly improve the business climate, open up more sectors for foreign investors and adopt innovative models in managing foreign investment.
It would also improve trade facilitation, adopt more innovative management models, promote trade upgrading and accelerate financial opening.