China unveils plan to build Hainan into free trade zone

A famous scenic spot in Hainan Photo:

The State Council, China's cabinet, on Tuesday unveiled a detailed plan to build the country's southern island province of Hainan into a free trade zone (FTZ), in its latest move to open up the economy to the outside world.

According to the plan, foreign investors will have wider access in a number of key areas including seed production, tourism, medical care, aviation, and new energy vehicle manufacturing.

Hainan is striving to become an international tourism and shopping hub, as well as to offer services and support for the Belt and Road initiative, China's ambitious plan to revive ancient trading routes on land and sea, said the plan.

Refuting earlier media reports that local government would develop horse racing and gambling sectors on the island, Liu Cigui, the Communist Party chief of Hainan, said, "Some online comments about opening casinos or copying capitalism to adopt overall private ownership are divorced from China's reality and (they are) absolutely not allowed."

Known for its sandy beaches and resort-lined coast, Hainan is already a global tourist hotspot. Some 67 million people were estimated to visit the island in 2017.

Tourists from 59 countries can travel visa-free if they start or transit in countries and regions with direct flights to Hainan.

In April when attending a conference in Haikou, the provincial capital, to mark the 30th anniversary of the establishment of the Hainan special economic zone, Chinese President Xi Jinping announced the decision of building the whole island of Hainan into a pilot FTZ.

Xi's announcement triggered a wave of excitement, and the local government wasted no time to roll out new policies to back the president's plan.

Special economic zones have played a major part in China's dramatic economic development since the late 1970s.

Not counting Hainan, there are 11 pilot FTZs across the country, including those in Shanghai, South China's Guangdong Province, and Northeast China's Liaoning Province.

Provincial development

Hainan was administered as part of Guangdong until 1988, when it became a separate province.

Around the same time, the island was turned into the largest Special Economic Zone by the then leader Deng Xiaoping as part of the Chinese economic reform.

Talent and money poured into Hainan, but the process led to a property bubble rather than repeating the economic miracle of other special economic zones such as Shenzhen in Guangdong.

In 2009, a new strategic plan was unveiled to transform Hainan into an "international tourist island", attracting huge investment into the local economy.

The property market began to grow again and the infrastructure – including motorways, a high-speed rail line and a new airport – were added.

The island has also become an important military base because of its strategic location near the contested South China Sea, with Vietnam to the west and the Philippines to the east.

The gross domestic product last year of Hainan, slightly bigger than the size of Taiwan, was 446 billion yuan (S$89 billion).

Key challenges

Despite a series of preferential policies by the central government, Hainan still faces some difficulties and challenges in its economic development.

Xie Xiangxiang, an associate professor at the School of Tourism of Hainan University, said that turning the entire island into an FTZ is a good starting point for Hainan to become a leading international tourism and consumption center.

"The biggest challenge facing the island is a lack of talent, so the province needs to improve its education and training," Xie said.

It is said that there is only one national key university, which is Hainan University, in the island at present.

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