CHINA has announced its decision to support Hainan in developing the island province into a pilot free trade zone, which will involve the gradual unveiling of and steady advancement towards making the entire island a free trade port with Chinese characteristics.

Chinese President Xi Jinping made the announcement in a speech at a gathering to commemorate the 30th anniversary of the founding of Hainan Province and the Hainan Special Economic Zone (SEZ) on Friday afternoon.

Hainan will be China’s largest free trade zone, a geographical area characterized by an increase in opening-up policies such as special rules on the landing, handling, manufacturing, or re-exporting of goods and is generally not subject to customs duties. It will also be the country’s first free trade port since the founding of the People’s Republic of China in 1949.

“As an isolated island, Hainan can only hope to develop and catch up with the pace of the country’s growth if it is granted the highest degree of opening-up policies,” said Chi Fulin, head of the Hainan-based China Institute for Reform and Development.

Chi, 67, a former official who left Beijing for Hainan in October 1987, was among 100,000 employees across the country to find opportunity and fortune in the burgeoning province in the late 1980s.

Once remote and underdeveloped, Hainan has become one of China’s most open and dynamic regions and a top tourist destination.

Xi’s speech reiterated Hainan’s upper hand as China’s biggest SEZ, its unique geographic location and the best ecological environment in the country, as reasons why it’s the ideal grounds for testing reform and opening up.

Xi urged the province to prioritize opening-up, implement more proactive opening-up strategies, and quicken the establishment of new support institutions for an open economy.

Exchanges in international energy, shipping, commodities and carbon trading will be established in Hainan. The island will also focus on developing modern service industries such as tourism, the Internet, health care, finance and hosting conferences and exhibitions.

Qian Jiannong, senior vice president of Fosun International Limited and investor of the first Atlantis resort in China, has high hopes of Hainan’s future.

“Hainan is the only tropical island province in China. The era of sightseeing is past and the era of leisure resorts is coming,” said Qian.

Biggest test ground of reform

As the smallest province but biggest SEZ, Hainan is an ideal test ground of China’s reform and opening up.

In the early 1990s, it boasted China’s first listed private company, and Yangpu Economic Development Zone, the first development zone approved for lease to foreign investors by the Chinese government.

It is also the only province in the country without toll stations on its highways, due to a fee-to-tax reform in 1994.

Since 2001, the town of Boao has become the permanent site of the Annual Conference of the Boao Forum for Asia, the first permanent site for an international conference in China. In 2005, Hainan was the first province to remove the centuries-old agricultural tax.

The national strategy of building Hainan into an international tourist destination has put it on the fast track since 2010, attracting investment and infrastructure, such as high-speed railways, hotels, high-end commercial real estate and tourism facilities.

“Aiming for China’s first free trade port, Hainan will start the country’s new round of reform in larger scale and in more extensive areas,” said Fu Xuanchao, head of the provincial development and reform commission.

With the rising flow of people, goods and capital due to the tax-free policies brought by the free trade zone and port, Hainan is expected to be a pivotal point linking the Chinese mainland with Southeast Asian countries, said Lin Jian, chairman of Hainan Ganghang Holding Limited Company, a local shipping and logistics enterprise.

“I believe Hainan will be a highly international and modernized island in another 30 years,” said Chi, who served as head of the provincial policy research office in his early years in Hainan, who later became a scholar.

(Xinhua)