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Hainan will offer duty-free purchases and more relaxed visa rules under the plans. Photo: Xinhua

Hainan free-trade plan will help Hong Kong, not rival it, top official says

  • Turning the island province into China’s freest place to trade will complement Hong Kong, according to deputy director of planning agency
  • The plan will target different industries, and Hainan will build ties with the Greater Bay Area, he says
Hainan
A senior Chinese official said on Monday that China’s southern province of Hainan would complement and not compete with Hong Kong, despite Beijing’s plan to turn the subtropical island into the country’s most attractive free-trade zone.

“The free-trade area of Hainan will have a different status, unlike that of Hong Kong,” Lin Nianxiu, a deputy director of top state planning agency the National Development and Reform Commission, said about the plans in Beijing. “It will focus on industries different from those in Hong Kong.

“It will play more of a complementary role – not a competitive rivalry – to Hong Kong, and [this plan] will not impact on Hong Kong.”

He said the free-trade zone in Hainan would focus on tourism and hi-tech industries.

In addition, Lin said that under the plan Hainan would strengthen ties with the Greater Bay Area – the government’s scheme to create an integrated economic hub around the Pearl River Delta – helping to bolster Hong Kong’s prosperity in the long run. The hub links Hong Kong, Macau and cities in the neighbouring province of Guangdong.

Beijing has unveiled plans to turn Hainan – an island measuring 35,000 sq km (13,500 square miles) at the southern tip of China – into a huge “free trade port” by promising duty-free treatment for most goods and commodities, lower income tax and relaxed visa requirements for foreign tourists and professionals.

The Communist Party secretary of Hainan said that as the province became a free-trade zone, it would step up its efforts to prevent smuggling and corruption.

“We will build a system to combat smuggling along our 1,944km (1,208 miles) coastline and set up grid management on land,” Liu Cigui said, referring to Hainan’s policing system. “We will fight smuggling with satellites and radars on sea and on land.”

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Liu said the island would strengthen its anti-corruption body to cover investment approval and implementation of free-trade policies.

Hainan would also pay close attention to national security and corrupt influences from foreign countries while it was being transformed, and prevent itself becoming a haven of vices such as prostitution, gambling and narcotics, Liu said.

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The island has a long history of struggling to contain smuggling and prostitution, despite being subject to the same laws that forbid them on the mainland.

In the early 1980s, Hainan was notorious for its rampant smuggling, particularly of cars, an activity that disrupted the car market on the mainland.

About a decade later, the island’s economy suffered another serious blow when a huge property bubble burst, bankrupting thousands of property companies and leaving hundreds of unfinished projects.

This year, a prosecutor in Hainan charged a woman and a man with recruiting more than 100 prostitutes in three years.

And in March, a group of nine people were found guilty of smuggling parts of endangered animals into Hainan from Southeast Asia and selling them for over half a billion yuan (US$71 million).

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Meanwhile on Monday, Edward Yau Tang-wah, Hong Kong’s secretary for commerce and economic development, said the new free-trade zone would be mutually beneficial to Hainan and Hong Kong.

“Given the size and [Hainan’s] location, I think it has tremendous prospects, in particular with its connections to Asian nations,” Yau said, discussing measures to boost Hong Kong’s economy.

“But Hong Kong does not see this as a zero-sum game. Hong Kong has been surviving and growing from strength to strength through more of the mainland, and in fact the wider world, opening up more.

“The designation of Hainan [to move] towards a freer trading environment would certainly reinforce our country’s policy of more open trade, and Hong Kong would stand to benefit.

“We are one of the major global financial trading and navigation hubs. Hong Kong stands to benefit not just from trade, but also in professional services.”

Additional reporting by Lilian Cheng

This article appeared in the South China Morning Post print edition as: free-trade zone for Hainan ‘to boost city’
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