Hainan FTP off to a good start, sees imports and arrivals soaring

Nearly three months after the launch of island-wide special customs operations, Hainan Free Trade Port is witnessing surging foreign investment, duty-free imports and visa-free arrivals, said Liu Xiaoming, the governor of southern China's Hainan province.

In an interview with China Daily on the sidelines of the ongoing two sessions, Liu, who is also a deputy to the 14th National People's Congress, the country's top legislature, described the special customs operations, which began on Dec 18, as a "new historical starting point" for higher-level opening-up. Since the launch, operations have been stable and the flow of goods, people and capital has been accelerating.

"The vitality and potential of Hainan's high-level opening-up have been fully demonstrated," Liu said.

The share of imported goods eligible for zero tariffs has jumped from 21 percent to 74 percent of all tariff items. Imported products that undergo at least 30 percent value-added processing in Hainan can now enter the mainland tariff-free.

During the nine-day Spring Festival holiday in February, Hainan recorded nearly 48.6 million yuan ($7.03 million) in zero-tariff imports, saving 9.42 million yuan in duties. In the first two months since operations began, the value of imports and exports at local customs ports grew 9 percent year-on-year.

The developments are being noticed by foreign enterprises. German turbine manufacturer Siemens Energy and French pharmaceutical company Mayoly have established their presence on the island, while Singapore-based Fullerton Health Group opened Hainan's first wholly foreign-owned hospital. Liu said that in the first two months of operation, the number of new foreign-invested enterprises grew 45.6 percent.

Tourism is also surging, and Liu attributed this to the country's most open entry policy. In the two months since the launch, 557,700 inbound and outbound tourists passed through the province's ports. Of them, 141,000 were visa-free foreign nationals, a year-on-year increase of 62.2 percent.

Domestic consumption is being reshaped through optimized duty-free shopping policies for outbound travelers and new duty-free stores that cater to residents' needs for daily goods. The first five duty-free stores selling daily consumer goods opened on Feb 11 and attracted 465,000 visitors in the first two weeks. During the Spring Festival holiday, the value of offshore duty-free sales increased 30.8 percent, and the number of shoppers rose 35.4 percent.

"The policy dividends have won wide recognition," Liu said, adding that the province will continue to expand the range of duty-free goods and integrate duty-free shopping with tourism and culture.

Liu emphasized that, with these operations in place, Hainan is ready to advance its opening-up on a larger scale and at a deeper level. He said that Hainan will steadily expand institutional opening-up by aligning with the rules of the Regional Comprehensive Economic Partnership and proactively connecting with high-standard international trade agreements.

The province will further liberalize trade and investment by optimizing port layouts and supervisory models. It will work to shorten the negative list for cross-border service trade and explore a coordinated access system for domestic and foreign capital.

Liu added that Hainan will increase the flow of goods and factors of production. This includes fully utilizing the multi-function free trade accounts, expanding the list of visa-free countries and improving the management of data exports.

Hainan aims to become a strategic hub in the country's dual-circulation development paradigm, serving as a bridge between the domestic market and the global economy, Liu said.

He noted that Hainan is within a four-hour flight of 21 countries and regions, encompassing about 47 percent of the world's population. The province has attracted investment from 180 countries and regions, and established partnerships with 41 global free trade zones and ports.

Cooperative industrial parks built in collaboration with Guangdong, Hunan and Zhejiang provinces, as well as the Hong Kong economic cooperation demonstration zone, are flourishing in Hainan.

"We will actively integrate into and serve the unified national market," said Liu, adding that Hainan will build a high-quality platform to help domestic enterprises go global.

Liu highlighted five key priorities for developing unique industrial chains.

In seed breeding, efforts will focus on core technologies. The marine industry aims to make the deep sea a source of technological innovation and plans for the marine sector to account for 40 percent of the province's GDP this year. In the space sector, Hainan's commercial spacecraft launch site plans to carry out 60 launches per year. Regarding green development, the province will promote new energy storage, electric vehicles, prefabricated construction and carbon sink trading. To advance e-commerce and international data services, Hainan plans to leverage green computing power and cross-border data flow policies.

To build a free trade port with global influence, Liu said that Hainan will develop internationally competitive industries.