German media: Hainan Island officially "closed" to build the world's largest free trade port

The Chinese government announced on Thursday that the Hainan Free Trade Port has officially started full island "closure" operations. This move marks the tropical island, covering more than 30,000 square kilometers, formally transforming into a special customs supervision area. At the same time as the zero-tariff scope is greatly expanded, Hainan also attempts to become a new high-level open frontier in China against the backdrop of rising global trade protectionism.

On December 18th, the Chinese official announced that the world's largest free trade port - Hainan Free Trade Port (FTP) - has officially launched the special customs supervision operation across the entire island. This move is widely regarded as a milestone attempt by China to respond to the rise of global protectionism and promote trade liberalization.

According to the new arrangement, Hainan Island is designated as a "special customs supervision area." Its core operation is summarized as "open the first line, control the second line." The so-called "first line" refers to trade between Hainan and overseas (including Hong Kong, Macao, and Taiwan) will be more free; the "second line" refers to goods entering the Chinese mainland from Hainan will be subject to standard import regulatory measures.

"Zero tariff" scope significantly expanded

With the start of the closure operation, the zero-tariff product ratio in the Hainan Free Trade Port has increased from the previous 21% to 74%, and the number of tax-exempt items has expanded from 1,900 to more than 6,600.

This means that international luxury brands such as Rolex and Louis Vuitton may gradually achieve zero-tariff sales on the island. In addition, a key policy stipulates that if imported raw materials processed in Hainan have an added value of 30% or more, their products can be exempt from import tariffs when sold to the Chinese mainland.

Analysts point out that although Hainan's current price level is higher compared to neighboring Guangdong Province, the ultra-low tariffs brought by the closure are expected to significantly boost local offline physical consumption growth, especially for the large group of tourists who come to Hainan every winter to escape the cold.

Strategic significance: Ambition to Rebuild the "Shenzhen Special Zone"

The construction goal of the Hainan Free Trade Port is to turn it into a globally influential trading center by the mid-21st century. The expectations of Beijing for Hainan are often interpreted as an attempt to recreate a "Shenzhen Special Zone," even becoming an export hub for China to Southeast Asia.

Special date and regional competition

Notably, the closure date of December 18 coincides with the anniversary of the day in 1978 when China began its reform and opening-up path.

Hainan was one of China's earliest special zones, and now it has further relaxed foreign investment access in service sectors such as medical care and education. Official data shows that since the overall plan was released in 2020, more than 9,600 foreign-funded enterprises have been established in Hainan.

Amid the escalating tensions in the South China Sea, Hainan's strategic importance has become increasingly prominent. Turning Hainan into a duty-free area is also seen as an important strategy for China to maintain regional stability through economic means and engage in trade negotiations with neighboring countries like Vietnam in Southeast Asia.

Source: DW

Original: toutiao.com/article/1851861944293385/

Statement: This article represents the views of the author himself