The China (Hainan) Pilot Free Trade Zone [Photo/VCG]
【The biggest pilot free trade zone in China】
The China (Hainan) Pilot Free Trade Zone (HNFTZ) will be developed into an international free trade port that covers the whole island, with an area around 35,000 square kilometers. The total area of China' other 11 free trade zones is only about 1,300 square kilometers. Once Hainan is completely opened up, it will be the first free trade zone at the provincial level and the biggest pilot free trade port in the world, 49 times bigger than Singapore, 32 times larger than Hong Kong, and nine times the size of Dubai -- three of today's world-leading free trade ports.
【The artery of transportation by sea】
Mandated to take control of a 2-million-square-kilometer area on the South China Sea, Hainan connects the Pacific Ocean and the Indian Ocean and is a hub for marine international shipping. The island has a number of ports constructed for international trade, including Haikou Port, Qinglan Port and Mulan Port in the north; Sanya Port and an International Cruise Terminal in the south; Longwan Port in the east; as well as Yangpu Port, Baimajing Port and Basuo Port in the west. It offers key sea lanes between Northeast and Southeast Asia, by which an average of 79.1 percent of global goods are transported every year between the Association of Southeast Asian Nations (ASEAN), Asia, Europe and the Americas. Apart from convenient international transportation of cargo, rich options are also provided for the citizens -- two international airports, as well as railways and highways reaching out from the island.
Since 2001, the annual Boao Forum for Asia (BFA), which boosts international communications and deepens opening-up, has been held in Hainan. With the aim of promoting the development of the HNFTZ, Hainan will set up a platform for ship marketing services, shipping, financing and talent cultivation for importers and transporters, and a bulk commodity exchange for trade in crude oil, palm oil and rubber.
【Prioritizing full convertibility of renminbi & tax free policies】
A tryout to develop renminbi into an international freely tradable and usable currency will be launched in Hainan with a view to an onshore capital market with full convertibility of the currency. In contrast to the China (Shanghai) Pilot Free Trade Zone where corporations reign supreme in economic contributions, Hainan is more diverse and balanced, and has more flexibility on capital flows and more opportunities for international exchanges. To attract foreign capital and ease restrictions on foreign investors, the interest and exchange rates of the renminbi in Hainan will remain the same as the domestic market rates; meanwhile a means of multilateral settlement for trade in the global scope will be provided. Once implemented on the whole island, it will make free exchange of renminbi available, bridging the domestic market and its global counterparts.
As the most open economic zones in the world, free trade ports are inside national territories but outside national customs boundaries; thus most commodities have low or no tariffs. Vessels from all countries can dock on Hainan Island and all commodities can be transported without taxes or customs declarations. From 2012 to 2017, the total revenue of Hainan’s duty-free industry surged from 2.38 billion yuan ($349.4 million) to 30.59 billion yuan, an increase of 26.98 percent in Compound Average Growth Rate (CAGR). Hainan enjoys promising potential as an international shopping center due to its tax-free policies and large consumer groups -- a population of 9.2 million and a large number of tourists worldwide (67.5 million in 2017).
【Mainstay tourism industry & booming service industry】
Due to its warm weather in all seasons and rich tourism resources such as tropical forests, beaches, and ethnic group villages, Hainan is a famous resort for tourists all over the world. To stimulate consumption and promote tourism, the Hainan government plans to grant 32 more countries airport tourist visas and prolong the duration of visits to 30 days.
Recreational facilities for legal lottery and sports-betting such as horse-racing will be built on the island to compete with Hong Kong and Singapore. In the first half of 2018, a total of 147.3 million people visited two tax-free shopping centers in Haikou and Sanya, recording sales of 5.29 billion yuan, up 24.6 percent year-on-year. Another two international shopping centers will be built in Haikou and Qionghai. Inspired by the vision of building Hainan into an international tourist destination, the HNFTZ will offer a new world of opportunity to service and cultural industries.
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