China to Develop Hainan Province into Global Free Trade Port

Source: Regulation Asia Editors, Regulation Asia 2020-06-10

The first phase of the plan will focus on liberalising trade and cross-border investment, starting with the launch of QDLOP and QFLP pilot programmes.

China is reportedly planning to introduce a package of policies to build Hainan province into a globally free trade port, allowing it to serve as a new growth engine.

According to NDRC (National Development and Reform Commission) vice-minister Lin Nianxiu, the first phase of the plan will focus on liberalisation and facilitation of trade and investment – to be completed in 2025.

The liberalisation will reportedly start with the launch of QDLP (Qualified Domestic Limited Partnership) and QFLP (Qualified Foreign Limited Partnership) pilot programmes to test more liberal cross-border investment in Hainan.

The QFLP (already being piloted in Beijing and Shanghai) allows foreign individuals and institutions to invest in Chinese assets through fund managers, while the QDLP (being piloted in Guangzhou, Shenzhen and Tianjin) grants domestic investors access to foreign investment.

A new cross-border financing system will also be tested in Hainan, and local residents will be gradually granted more freedom to exchange foreign currencies.

The second phase of the Hainan plan will focus on further optimising opening-up policies and institutional arrangements. This will include free trade and investment, free cross-border capital flows, free and convenient transportation and access for people, and safe and orderly flow of data – by 2035.

“Hainan needs to learn from the advanced experience of internationally renowned free trade ports such as Hong Kong, Singapore and Dubai, converging with high-level economic and trade rules and building an open system with international competitiveness,” Lin said.

“We will further cooperate with the Guangdong-Hong Kong-Macao Greater Bay Area to ensure long-term prosperity.”

According to Lin, Hainan’s positioning and industry focus makes it complementary to Hong Kong, rather than a competitor.

To further enable the free flow of trade and investment, Hainan will eventually eliminate trade tariffs and grant foreign investors access to its financial services sector.

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China to Develop Hainan Province into Global Free Trade Port

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