China on Monday released a master plan for the Hainan free trade port, through which China has enlisted 60 key measures to turn the tropical island and China's popular tourist destination into an international hub that could compete with global centers such as Dubai and Singapore.
According to the package of special policies, Hainan is expected to "basically establish" a free trade port system focusing on trade and investment liberalization by 2025, to become "more mature" by 2035 and to turn into an "internationally influential, high level" port by 2050.
In order to meet the development plan of the region over the 15-year span schedule, a delegation of the local government has been sent to Dubai, Singapore, etc., to study how free trade rules have been successfully implemented.
An immediate consequence of the proposed policies could be an attempt to turn Hainan into China's new frontier free trade port and transportation hub, as well as opening to foreign investments in fields such as healthcare, biotech, education, entertainment and innovation leaving financial services.
Hainan has always been considered of strategic importance by the Chinese leadership since the era of Deng Xiaoping when it's promoted to the country's smallest and southernmost province in 1988, to April 2018 when President Xi Jinping announced the plan to make the island into China's largest free-trade zone (FTZ).
At this regard, the latest master plan represents a bigger and more ambitious initiative than the previous FTZ in 2018 and will be characterized by tax free on imports and exports, a more opened and friendly investment environment and an increased capital flow.
In global finance, tax plays a pivoting role in the direction of flows of investments and capitals and is a key element for turning a place into an attractive pole for consumers, talents, investors and companies.
Places such as Dubai and Singapore have become over the years so wealthy and prosperous because of the lower than average income tax on both businesses and individuals and these successful case studies unquestionably represent an incentive for Hainan to convert itself into a better and thriving place where to live and to conduct business.
In this sense, the decision to set a 15 percent maximum personal income tax on eligible talents and corporate income tax on enterprises is going to guarantee Hainan the ability to establish a level playing field with other global tax havens.
The strategic location of Hainan, which stands besides Guangdong Province and in a southern position than Hong Kong, plays a key role in extending the border of China and in bridging the mainland territory and its Greater Bay Area with South East Asian countries such as Vietnam, the Philippines and Indonesia, enhancing trade and cooperation and making Hainan the natural entry point to China from the southern part of the world.
The tropical climate plays in favor of making Hainan a natural alternative to Singapore for holding important international political and economic events due to the large experience as a tourist spot and to an already well developed infrastructure of five-star beachfront hotels and a resort-like atmosphere.
In this sense, China could add to the so-called "summer Davos" in Dalian another international renowned location where to hold major events with an immediate benefit for the domestic economy in terms of increased volume of international tourism and consumption and in terms of strengthening China's image and influence on the global stage.
The decision made by China to bet on Hainan represents a wise move in the direction of a further expansion of the country's economy by promoting joint development with the Greater Bay Area.
In light of China's opening-up policy, the country has chosen to develop its crown jewel by converging economic and political interests, making Hainan into a future global center and a natural choice for foreign investments.
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