Hainan and Free Trade Zones

[Randy W]

This article may be of interest both about Hainan and the information it provides about free trade zones. From the SCMP

 

 

Questions raised over Hainan free port plan and WTO rules

• China’s plan to turn Hainan into a free-trade port may run counter to global trade and competition rules, experts say
• Free-trade zones are common, but few are on the scale of Hainan, nor do they promise access to the world’s largest consumer market for select firms

 

While the world is dotted with free-trade and special economic zones, few are on the scale of Hainan, China’s most populous island, covering an area only slightly smaller than Taiwan, and home to more than 9 million people.

 

Beijing’s latest attempt to reinvent the sleepy tropical island as a massive free-trade port have drawn suggestions that it is trying to replace Hong Kong as the trading entrepôt for multinational companies trying to tap the mainland’s manufacturing base or consumer market.

 

As a World Trade Organisation (WTO) member in its own right, Hong Kong has independent trade and customs regimes and policies to those set in Beijing. Hainan however, does not, and some experts have questioned whether establishing a separate massive customs regime off China’s southern coast might flout global trading rules.

 

Hainan will offer duty-free treatment for most goods and commodities, lower income tax and relaxed visa requirements for foreign tourists and professionals, but crucially will also allow goods to enter the rest of China duty free, provided 30 per cent of their value is added on Hainan.

 

Trade and customs specialists are concerned that the scale of Hainan, coupled with the fact that firms allowed to open factories there could have cheaper access to China’s giant consumer market, could skirt competition rules.