BEIJING (CHINA DAILY (ASIA)/ASIA NEWS NETWORK) - The Central Committee of the Communist Party of China and the State Council, China's Cabinet, recently released a master plan for the Hainan Free Trade Port.
Eleven key industrial parks were unveiled on June 3, marking the start of construction of the port.
From a pilot free trade zone to a free trade port, Hainan has experienced an increased level of opening-up. The master plan requires that the port put in place economic and trade rules that match international standards.
The zero-tariff policy will facilitate the free flow of factors of production. As China's largest zone for economy and talent in the new era, the port will be built into a new high ground for China's opening-up.
The Hainan Free Trade Port has four distinctive features.
First, its trade and investment facilitation policies aim to reach international standards. It will reduce trade barriers and improve quarantine procedures on goods and articles outside the taxable catalogue.
The port will work to promote liberalisation and facilitation of trade in service, where a negative list will be introduced to break barriers and provide national treatment to overseas service providers.
Second, the roles of tourism, modern services and high-tech industries have been emphasised.
Preferential policies have been considered for these sectors. Companies in Hainan in these sectors could get the largest corporate income tax concession (a maximum of 15 per cent).
Foreign investors who get involved before 2025 can have their corporate taxes totally exempted. The plan considers financial benefits and guarantees for startups from the central government and simplified legal procedures.
Third, the offshore duty-free shopping quota has been raised, making Hainan a new shopping paradise.
The offshore duty-free shopping policy was implemented in Hainan in April 2011 with a per capita quota of 5,000 yuan (S$988), and was later increased to 30,000 yuan per person a year. It has been proposed that the quota be raised to 100,000 yuan per person a year.
This expansion will help Hainan attract more tourists after the Covid-19 pandemic ends.
Fourth, regulations will be improved to support the building of the free port.
Sound regulation could help companies get more benefits from preferential policies, such as improving trade and investment facilitation, and protecting lawful rights of enterprises.
Hainan's upgrade from a free trade area to a free trade port, together with the existing 18 free trade areas, is shaping a more sophisticated opening-up architecture stretching from coastal regions to inland China.
The port will blaze new trails for opening-up, which could be expanded to other areas.
For Hainan, zero tariffs represents an important start, and it may evolve into zero subsidies and zero barriers.
Such a triple-zero policy is the ideal model for free trade development, since it will promote competition, unleash corporate innovation and offer consumers more options.
High-level opening-up cannot be achieved without international talent.
Hainan will become a window through which international talent could come to China. The free port will introduce a maximum of 15 per cent personal income tax for eligible talent.
In addition, high-level overseas polytechnic, agricultural and medical universities, as well as vocational colleges, will be allowed to run independent or jointly run schools.
The upgrade of the Hainan Free Trade Port sends an important signal to other Chinese cities: While responding to the economic fallout of Covid-19, they should adopt proactive policies and promote vigorous institutional innovation.
Although Hainan's construction plan cannot be copied indiscriminately, it could lend some reference to other provinces and municipalities.
For example, they could formulate more beneficial policies for tourism, modern services and technology startups, and encourage them to explore new business models to accelerate the economy.
China will further integrate itself with the development of the world and contribute more to economic globalisation through Hainan.
The free port could form greater synergy with the Guangdong-Hong Kong-Macao Greater Bay Area and boost economic and trade relations with Southeast Asian countries.
Building the Hainan Free Trade Port marks a major step toward China's higher-level opening-up.
Only through opening-up and cooperation can the world better respond to the pandemic, the globalisation wave and other global challenges.
China's positive signals will inject confidence and strength into international cooperation and pandemic response efforts.
The author is president of the Centre for China and Globalisation, a think tank. China Daily is a member of The Straits Times media partner Asia News Network, an alliance of 24 news media organisations.