Hainan should lead the way to high-level opening-up

Editor's note: Hainan Free Trade Port launched island-wide special customs operations on Dec 18. Chi Fulin, president of the China Institute for Reform and Development, spoke to 21st Century Business Herald about the next steps the island should take to enhance its opening-up and boost growth. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

The island-wide special customs operations in Hainan Free Trade Port are a pivotal measure demonstrating China's resolve to open its door even wider. The special customs operations show that China is addressing the challenges of "de-globalization" through institutional and structural opening-up and injecting new impetus into global free trade.

Hainan enjoys unique geographical and locational advantages. It can take the lead in implementing "unilateral opening-up" to the Association of Southeast Asian Nations by adopting more open policies than those of the mainland with regard to trade in goods, trade in services, investment access and cross-border travel.

For instance, Hainan could impose lower or zero tariffs on agricultural products and raw materials from ASEAN members. As for trade in services, it could further open up sectors such as education, healthcare and tourism to ASEAN enterprises. It could also offer more convenient visa policies for business travelers, tourists and researchers from ASEAN.

Institutional opening-up focuses on the development of internationalized and law-based rules, management and standards. Hainan should prioritize efforts to advance institutional opening-up by promoting free and convenient trade, investment, cross-border capital flows, inbound and outbound travel and transport, as well as the safe and orderly flow of data.

The essence of institutional opening-up lies in establishing a stable, transparent and predictable institutional system to attract high-end resources from around the world.

China will gain from Hainan's experience, as it facilitates the country's accession to high-standard agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Hainan should focus on three pressing tasks to ensure the stability and predictability of policies.

First, it should formulate and improve local regulations concerning trade, investment, finance, taxation and the ecological system. Second, it should establish diversified mechanisms to settle international business disputes. Third, it should build an interdepartmental regulatory system involving different authorities, including those in charge of customs, finance and data to control risks, while following the requirement for "freer access at the first line and regulated access at the second line".

Zero tariffs and a low tax rate, together with Hainan's geographical and ecological advantages, will enable the island's breakthroughs in sectors such as green and low-carbon industries and the digital economy.

Hainan should leverage its tropical resources to develop high-end tourism, international healthcare tourism and wellness industries while developing other sectors, such as tropical agriculture, marine technologies, new energy, carbon trading and smart logistics.

When the Hainan FTP collaborates with the Guangdong-Hong Kong-Macao Greater Bay Area, different growth paths should be followed.

Hainan should prioritize institutional opening-up and regional cooperation, including engagement with ASEAN members and the other members of the Regional Comprehensive Economic Partnership, with a focus on trade liberalization and investment facilitation.

The Greater Bay Area should highlight efforts to promote scientific and technological innovation and develop itself into a financial hub. It should leverage Hong Kong's status as an international financial center and Shenzhen's technological innovation capacity. By taking advantage of Hainan's opening-up policies and the Greater Bay Area's differentiated strengths, both sides can work together to become hubs for China to allocate resources in the Asia-Pacific region.