China unveiled a much-anticipated 14,000 words master plan for the Hainan free trade port, aiming to build the 35,000 sq km tropical island province into a globally influential free trade port by the middle of the century. Chinese President Xi Jinping announced the decision to develop Hainan into a pilot free trade zone during a visit to the island in April 2018. The blueprints include numerous policies, such as duty-free import status for a broad range of industries, the gradual opening-up of the capital account, more data access, and freer cross-border flows of people and capital. To achieve these goals, a set of free trade port policies focusing on trade and investment liberalization and facilitation across the entire island of Hainan will be rolled out by 2025 and be refined by 2035, according to the plan jointly issued by the Central Committee of the Communist Party of China and the Chinese government. The authorities expect to make Hainan, China’s largest special economic zone, the frontline of China’s integration into the global economic system. Chinese President Xi Jinping called for more efforts to free minds and enable bold innovations so reform measures can be rolled out immediately after successful test runs.

Chinese experts said the rise of a world-class free trade port from what are now picturesque beaches will redefine China’s relationships with its major trading and investment partners in the decades to come. “Hainan will morph from being the remote southernmost province of China to become the focal point of three large regions: the Chinese hinterland, Northeast Asia featuring South Korea and Japan, and the vast market of the Association of Southeast Asian Nations (ASEAN),” said Liang Haiming, Dean of the Belt and Road Institute at Hainan University. ASEAN is becoming increasingly important as a trade and investment partner of China amid intensifying trade conflicts between China and the U.S. ASEAN overtook the EU as China’s largest trading partner in the first quarter of 2020 and ASEAN’s standing will be further supported by the signing of the Regional Comprehensive Economic Partnership free trade agreement expected later in 2020.

The China-proposed Belt and Road Initiative (BRI) will also have Hainan as a vital node. “Companies from countries and regions along the route of the BRI are expected to flock in to invest in China’s special zones,” Liang said. New foreign direct investment (FDI) in the tourism, modern services and high-tech sectors will be exempted from corporate income tax until 2025, according to the blueprint. Foreign educational institutions in science, engineering, agriculture, and in medical and technical training, can also set up wholly-owned entities on the island. Tian Yun, Vice Director of the Beijing Economic Operation Association, told the Global Times that the Hainan free trade port will be an experiment in how China can become a globally recognized developed country. “It is a pilot project with China in the driver’s seat to lead the next round of globalization, amid a wave of anti-globalization sentiment in some major Western countries,” Tian noted. The master plan also contains proposals to build innovation centers and trial areas for blockchain technology, cruise ships and the yacht sector, the Global Times reports.

Instead of rushing for quick results, China will advance the plan gradually, the Shanghai Daily adds. Hainan will be given more autonomy in reform and will be encouraged to make both the laws and the regulatory system more flexible and efficient, thus clearing institutional obstacles hampering the flow of production factors. The construction of the free trade port will provide support to national strategic goals in terms of institutional innovation, growth impetus and greater opening-up. The master plan also envisions grasping opportunities in the technological and industrial revolution, focusing on tourism, modern services and high-tech industries.

Shanghai’s free trade zone (FTZ) unveiled a raft of measures aimed to further open up the Yangshan Special Comprehensive Bonded Zone. The eventual aim is to turn Yangshan, covering just over 8 kilometers and a key gateway to the East China sea, into an internationally recognized free trade port. The zone includes small Yangshan island, Luchao Port and the southern part of the Pudong International airport. Shanghai also wants to develop the integration of onshore and off-shore business, finance, trade and industry, Wu Wei, Deputy Director of the Lingang Special Area Administrative Committee, said. Yangshan island will focus on shipping and logistics, port services, the international trans-shipment trade, international transfer and assembly, and other businesses. Luchao Port will focus on attracting major international companies to establish their regional headquarters and becoming a hub for bulk commodities. It also aims to be a center for financial leasing, offshore trade, cross-border finance, international research and development, and manufacturing and to become a multifunctional cross-border trade hub. The southern part of the Pudong international airport will become a civil aviation innovation demonstration area, prioritizing aviation research and development and manufacturing, air freight cold chain logistics, and aviation services, the Shanghai Daily reports.