Hainan Province Becomes a Free Trade Area:China Releases a Heavy Signal of Reform and Opening-up

By Zhang Lin,Institute of World Economics and Politics,CASS

Choosing an important occasion to announce the decision to build Hainan Province a FTA has further released the important signal that China is heading towards the new stage of opening-up.

On April 13th,2018,Xi Jinping,General Secretary of the Central Committee of the Communist Party of China(CPC) and President of China,solemnly announced at the conference in celebrating the 30th anniversary of the Hainan Province-run Special Economic Zone that the CPC Central Committee decides to support the construction of a pilot free trade area on the whole island of Hainan province.A day later,the guiding opinions of the CPC Central Committee and the State Council on supporting Hainan's comprehensive reform and opening-up are officially released.A series of new measures of reform and opening-up for Hainan province have appeared in public view.This is a major decision made by the Central Committee in view of the overall international and domestic development situation,with in-depth study,overall consideration and scientific planning.It is a significant measure to highlight China's determination to expand its opening to the outside world and actively promote economic globalization, and carries great significance.

China is in the great era of going forward and opening up,and China's reform and opening-up has opened a new era.China is now in the convergence and opportunity period of the"two century goals",which aims to build a moderately prosperous society in all aspects by 2020 and reach the level of middle-income countries.The year 2018 coincides with the 40th anniversary of the reform and opening-up and Comrade Xiaoping's speech in 1978 successfully opened the door to China's opening-up.It is just few days that President Xi Jinping puts forward in a remarkable speech at the opening ceremony of the Boao Forum for Asia that China will take a series of major initiatives to expand market access,strengthen the protection of intellectual rights,expand import and join as soon as possible the government procurement agreement,marking a new height of open development.China's history and reality show continuous deepening reform and opening wider is the consistent development direction of China.This is not just shouting a slogan,but through keeping a promise and practice to prove to the world that China has made great contributions to the creation of a stable and sustainable world.China is willing to share the development opportunities of reform and opening-up with peoples of Asia and the world,and gives the Chinese people greater sense of gains and happiness brought about by the growing prosperous motherland through continuous development of reform and opening-up.Therefore,the decision to choose this important occasion to announce the construction of the Hainan province into a pilot free trade area has further released an important signal for China to move towards a new stage of opening-up.

Since the establishment of China’s Shanghai pilot free trade area in September 2013,China's pilot free trade areas have been built for five years.China's pilot trade area has formed a"1+3+7"gradient development pattern and set up a new platform for development of China's high level and open economy.The Report to the 19th National Congress of the CPC puts forward"promoting the formation of a comprehensive open pattern"and explores the establishment of free trade ports;Secretary General Xi Jinping also makes it clear that a pilot free trade area is given greater reform autonomy;and in November 2017,the Deputy Prime Minister Wang Yang has a signed article published in the People's Daily,and clearly defines a free trade port.During the sessions of the NPC and CPPCC in 2018,free trade port was also a hot topic for delegates’discussions from all walks of life.

Free trade ports have become an important starting point of opening wider to the outside world in the new era and is also a systematic manifestation of the integrated upgrading of the reform.The building of island of Hainan province into a pilot free trade area not only expands the construction of pilot free trade areas in breadth,but further promotes the application of valuable and innovative experience that can be used for reference,copy and popularization as well as strengthens the free trade ports with Chinese characteristics in depth,and is another important measure of institutional innovation,and has laid a solid foundation for creating new heights of open economy.

As China's largest special economic zone,Hainan province has been the"experimental field"and"pacesetter"of China's reform.To turn the Hainan island into a pilot free trade area and a free trade port have natural advantages.The key to the construction of a free trade port is the controllability of risks and the oper ability of policies.The most fundamental requirement of a free-trade port is"front-line liberalization and second-front control",between which the boundary must be delimited clearly. In comparison,the three composite areas of the Shenzhen free trade area(Shekou,Qianhai,Nansha)are relatively scattered,while Hainan is a relatively independent geographic unit,so is easier to realize the opening ofthe whole island.Compared with the plan drawn up by Shanghai Yangshan free trade Port,the whole island of Hainan province has a larger area and a certain economic hinterland, which can meet the development needs of the supportive industries of the free trade port.Learning from the international experience,the construction of Hainan free trade port can refer to the experience of Singapore and Dubai,combining the"free trade areas+port+Airport",and with advantages in several areas such as modern service industry,information industry,scientific research innovation and tourism as the support,attract global talents,form a global economic headquarters,and create a most open and most standardized free trade port with Chinese characteristics. For Hainan province, it is undoubtedly a great opportunity to catch up;for China,it provides an important experience of innovation and development, explores new pacesetter and cases,and demonstrate pilot effects.

Of course,we still need to face up to the gap between the international high level,high standard and high open free trade area and that of Hainan at the present stage.Under the guidance of the central top design,we need to set up systematic and comprehensive new systems,step by step,phase by phase,from local to national,including the transformation of government functions,the law making,the negative list investment policy,and the open and liberalize financing,the free flow of personnel and others,form the highest level of optimal allocation of resources,and build Hainan island a comprehensively deepening reform and opening-up pilotarea,the national ecological civilization pilot area,the international tourism consumption center,the national major strategic service guarantee area.