Seizing the Opportunities of the Times 【 10th Anniversary of Free Trade Zone · National Search ① 】 Hainan: Internationalization

Editor's note:

In September 2013, the Shanghai Pilot Free Trade Zone was officially established. Since then, there have been 21 pilot free trade zones in China, basically forming a reform and opening up innovation pattern covering the east, west, north, south, and central regions.

Over the past decade, the pilot free trade zone, which accounts for less than 4% of the country's land area, has contributed more than one sixth of the country's total import and export value and total foreign investment absorption, providing strong support for China to cultivate new drivers of economic development and consolidate new advantages in international competition; At the same time, it has also played a leading role in institutional innovation, created a vivid model of open development, promoted the in-depth implementation of major strategies, and played an important role in China's reform and opening up process.

In the past few months, reporters from Liberation Daily and Shangguan News have visited six pilot free trade zones in Shanghai, Guangdong, Tianjin, Beijing, Hubei, Zhejiang, and Hainan Free Trade Port to visit enterprises, parks, and government agencies. They have had in-depth exchanges with local party and government officials, as well as experts from universities, and felt the changes brought by the national free trade strategy to cities.

In March this year, Hainan proposed to fully launch preparations for the island wide customs closure operation, which means that the entire island of Hainan will become a "domestic and international" area, implementing a "first line opening up, second line management, and free import and export management system for goods on the island.".

Since 2018, the Central Committee of the Communist Party of China has decided to support the construction of a pilot free trade port in Hainan, and to gradually explore and steadily promote the construction of a free trade port with Chinese characteristics. Since then, the closure has undoubtedly been the "number one project" in the construction of free trade ports, and it is also one of the most discussed topics both inside and outside the island. People want to know, can Hainan still "come casually" after the lockdown? Will there be long queues for personnel to clear customs? Will the entry and exit procedures for goods be different from before?

These specific and enthusiastic discussions have converged into another imagination of the development of Hainan.

Since the establishment of Hainan Province in 1988, the modernization history of Hainan has ushered in numerous development opportunities, arousing people's endless imagination of the changes in the appearance of this island, and of course, bringing about changes and reflections time and time again.

In 2013, the country launched the strategy of free trade zones, and Shanghai built China's first free trade pilot zone. Five years later, Hainan, with its special identity as a "free trade port," became a part of this opening-up matrix that undertakes unique functions.

In this new round of development, Hainan seems to have taken a different path than before. The national trust of the free trade port has fundamentally transformed the underlying driving mechanism of Hainan's "great development". The business environment, urban functions, and industrial positioning have been regarded as key considerations by today's Hainan.

What will happen tomorrow in Hainan? Looking back at these five years, Hainan's yesterday may have given us some answers.

Hainan Free Trade Port.

The way out for Phoenix Corner

For a long period of history, Hainan was known as South Phoenix Point, a remote area of the "ends of the earth and corners of the sea". After the establishment of the People's Republic of China, Hainan fell significantly behind other coastal areas in terms of development due to its long-term position on the front line of national defense, limited population resources, and small land area. As of the eve of the reform and opening up, the per capita GDP of Hainan was less than the national average, and the agricultural population accounted for 80% of the total population.

In the days when the commodity economy was not yet developed, Hainan ushered in the first opportunity in modern development history. On April 13, 1988, the decision to establish Hainan Province was officially passed at the Great Hall of the People. At this point, Hainan has become the largest and only provincial-level economic special zone in China, entering a new era of development.

The next 5 years will be a period of "100000 talents going to Hainan", and it will also be a period of 5 years when Hainan continues to gain the favor of capital and attract countless merchants to rush for gold.

After the establishment of the special zone, about 100000 people from all over the country came to Hainan to seek their dreams and start businesses, which can be regarded as a large-scale population migration in modern Chinese history. In 1992, the real estate investment in Hainan Province reached 8.7 billion yuan, and 40% of Hainan's fiscal revenue came from the real estate industry. However, the brilliant real estate foam also burst quickly. In 1993, the State Council issued macro-control measures, and "Tianya, Haijiao, and uncompleted residential buildings" became the "three major landscapes in Hainan" that were ridiculed by the public at that time.

Since then, many knowledgeable individuals have realized that a false and prosperous real estate industry will not be the way out for Hainan. Hainan, which has long been dominated by agriculture, wants to truly achieve modernization and become another growth pole in China's coastal areas, fundamentally relying on strengthening industries.

But where is the industrial direction of Hainan?

In 1994, Hainan proposed to vigorously develop the tertiary industry led by tourism, and quickly realized the fundamental position of industry in Hainan. It was proposed that "no matter how poor or difficult Hainan is, modern industry must be developed". In the next three years, although Hainan, which has the lowest GDP growth rate in the country, has not yet emerged from its difficulties in the short term, it will gradually stand firm in the face of new efforts.

In 2010, the State Council issued several opinions on promoting the construction and development of Hainan International Tourism Island, marking the beginning of the historical period of Hainan's international tourism island construction. The future of Hainan is bound to develop a modern economic system that integrates various traditional and emerging industries, with tourism as one of the key industries, based on fully utilizing its natural geographical advantages.

And becoming a free trade port means that Hainan, which has experienced setbacks and setbacks, will once again stand in the global perspective and under the new mission of Chinese path to modernization, thinking and practicing a more ambitious proposition: how to build a free trade port with Chinese characteristics that has global influence and become a model of China's reform and opening up in the new era?

The key to solving problems often lies in focusing on the most simple aspects.

Binhai Avenue, Haikou City

Street views on both sides of Binhai Avenue in Haikou City

"Dad Tea" Moving into Government Office Building

In Haikou, there is an authentic form of dining called Dad Tea. The restaurant is located in the small streets and alleys of the old city area, with little decoration. Ten tables and eight stools are arranged towards the entrance. Tea is the most common green tea and black tea. Snacks have sweet and salty tastes, such as sweet potato soup, mung bean paste, Qingbu Liang, etc. Tea drinkers often drink tea, chat and spend the day leisurely.

However, such a scene has been moved into the government office building by the Hainan Provincial Department of Business and Environment Construction since May this year. Tea is the cup of tea, and Dim sum may be a little more refined. The two sides of the conversation become business owners and administrative cadres, talking about major and minor issues encountered in the business development.

Perhaps some people may say that a good business environment does not lie in formal innovation, but we can also glimpse some sincerity from the institutional settings in Hainan alone. The Hainan Provincial Department of Business Environment Construction was the first national department of business environment construction to be established in December last year. Ranked after the National Development and Reform Commission and before the Department of Commerce, the person in charge is a department level cadre, and the responsible leader is the deputy governor, belonging to the provincial government department. After the establishment of the department, the "Regulations on Optimizing the Business Environment of Hainan Free Trade Port" were immediately released, becoming one of the first supporting regulations of the Free Trade Port Law formulated and promulgated by Hainan.

Many people feel that Hainan's bold reform and establishment of new institutions is somewhat revealing of its shortcomings. During the interview in Hainan, some companies and citizens told reporters that in the past, when doing something in Hainan, one had to travel ten places and not necessarily have a result. At the entrance of the International Economic Development Bureau of Hainan Province, which is specifically responsible for investment promotion, the six big characters "We Run for Enterprises" are even more prominent than institutional signs, and the underlying intention is also self-evident.

Obviously, this island, which has gone through many detours, has realized that in order to build and achieve industrial functions, open efficiency, and urban functions that are compatible and matched with Hainan Free Trade Port, it is impossible to do so without the foundation of a modern and international business environment.

In order to break the inevitable administrative constraints of a sound first level government and build a more efficient and dynamic business service echelon, the People's Government of Hainan Province has initiated the establishment of a statutory institution - the International Economic Development Bureau. Except for the director who is appointed within the system, all other staff members are appointed through appointment.

Entering their offices, there is quite a taste of Internet enterprises. The workstations have slightly denser compartments, and when you look around, all you see are young faces. The flexible employment mechanism and salary system have made this office almost the most densely populated place for highly educated and overseas talents in Hainan.

Of course, among the four words of business environment, the two most significant words still fall on "environment". The establishment of regulations, the formation of teams, and the emergence of one touching story after another of political, business, and pro Qing sentiment are certainly a new phenomenon. But a taxi driver from Hainan threw out the essence of the problem, "When a boss from out of town comes to Hainan, he can't drink coffee, watch movies, find good doctors, attend good schools, and still leave."

After the construction of the free trade port started, it further improved the urban functions and gradually became an important part of the two-way feedback from the market and the government. Two years ago, Li Jian, a recruitment cadre who was transferred from Shanghai to Hainan Provincial Government, observed that when he first arrived in Haikou, it was difficult to find even a chain coffee shop. However, soon, some tasteful independent coffee shops opened up, and there were more options for dinner and late night snacks. After the implementation of the Haikou Bay Smooth Traffic Project, the taste and function of the public space under the Haikou Century Bridge are no less than that of the Huangpu River in Shanghai. The newly opened Yundong Library, skateboard space, camping site... "Hainan has a special charm that combines the prosperity of a metropolis with the comfort of an island."

The CBD of Haikou Jiangdong New Area under construction, photographed by Xinhua News Agency reporter Guo Cheng

Hainan of China, Hainan of the World

During the Dragon Boat Festival holiday from June 22 to June 24, Haikou Customs supervised a total of 260 million yuan in duty-free sales on outlying islands, with 43700 duty-free shoppers.

If people went to Hainan 10 years ago, it might have been for the summer coconut groves and the blue coast. Today, no one would have missed Hainan's duty-free shops.

After becoming a free trade port, Hainan quickly became a highland for free trade policies and reforms in the country. The "zero tariff" policy not only allows high-quality foreign goods to be placed on domestic shelves at lower prices, but also makes it possible for the yacht economy to develop in Sanya and achieve the internationalization transformation of the tourism industry.

The three consecutive sessions of the China International Consumer Goods Expo have truly brought Hainan closer to the international market.

In fact, in Hainan, which has hosted the Boao Forum for Asia for 22 consecutive years, the "pan exhibition" industry has already matured, and Hainan has never lacked international attention. But under the empowerment of policy innovation in the free trade port, international exhibitors still smell different signals and opportunities in this land of reform.

Taking the special food policy as an example, the first Consumer Expo in 2021 applied for the qualification to participate in this category. The State Administration for Market Regulation has delegated its authority to allow Hainan to temporarily import special food during the Expo, and can extend it for 180 days in Boao Lecheng after the Expo.

De Beers Eternal Impression is an internationally renowned luxury brand that not only has a deep connection with the domestic market through the Consumer Expo, but also has set up a factory in Hainan due to its appreciation for the unique processing value-added policy of over 30% duty-free in the free trade port. This has changed the history of all products being imported from overseas and accelerated the company's global supply chain layout.

Gong Qijun, Deputy Director of the International Economic Development Bureau of Hainan Province, told reporters that this year's 6-day exhibition welcomed 3382 consumer boutique brands from 65 countries and regions worldwide, with a 19% increase in the number of participating brands compared to the previous year. "And international exhibitors are becoming increasingly high-end, such as Lifen, Kaiyun, LVMH, Est é e Lauder, and others who are regulars of the Consumer Expo. This year's Consumer Expo also established an exhibitor alliance for the first time, with international cosmetics giant Est é e Lauder Group serving as the first rotating chairman unit."

On June 29th this year, Hainan held the second batch of concentrated commencement ceremony for the 2023 free trade port construction project. The ceremony is simple, but the signed projects are not simple.

From the perspective of investment scale, there are 7 projects with a total investment of over 1 billion yuan; From the perspective of investment entities, there are 115 government investment projects; From the perspective of project types, there are 56 industrial projects. Hainan, which was once confused and wavering at the crossroads of industrial development, has gone through five years of construction as a free trade port, becoming increasingly clear and firm in the path of high-quality regional development.

In the Yangpu Port Bonded Zone of Danzhou, the tens of kilometers long gas pipeline has a magnificent momentum. The liquids and gases flowing through these pipelines serve the entire industrial chain of Yangpu Port and even the entire Hainan Free Trade Port, from refining to aromatics, olefins, and new petrochemical materials.

Agriculture is a traditional industry in Hainan Province. Since the construction of Hainan Free Trade Port, innovative business models around the agricultural sector have also emerged continuously. At Xihe Farm in Danzhou, female entrepreneur Zhou Jinzhi from Zhejiang not only developed an agricultural brand with a demonstration planting base covering an area of over 5000 acres, but also combined the "second industry" cultural brand "island impression" and the "third industry" tourism brand "Yunshe Songtao" to empower the natural resources located in the hinterland of Lianhua Mountain.

Among the 11 key parks in Hainan Free Trade Port, Sanya Yazhou Bay Science and Technology City, which has a distinct industrial logo, has taken the lead in introducing the implementation plan for the development of the CRO model in the seed industry this year, helping to build the "Southern Silicon Valley" in Hainan Province. This science and technology innovation park, located at the southernmost end of China, is transforming from a former "deserted island wasteland" into an integrated science and technology new city of production and research.

Whether it is the Yangpu Bonded Port Area located in the northwest corner of Hainan Island or the Yazhou Bay Science and Technology City standing along the coast of Sanya, although there are still differences in size in the industrial layout of Hainan Free Trade Port, an industrial layout that avoids "internal competition" and fully utilizes the natural resources on the island has been formed, which will drive the innovation and vigorous development of the primary, secondary, and tertiary industries.

We cannot fully outline the future of Hainan. With the introduction of new policies and the specific implementation of customs clearance operations, Hainan also faces new challenges such as limited application scope of individual policies, high pressure on supervision of people and goods entering the country, and the need for further improvement in administrative efficiency. But in the face of significant opportunities of the times, Hainan, which holds high the banner of reform and opening up, is firmly seizing this opportunity.

Haikou International Duty Free City. Photo by Du Chenwei