Hainan Free Trade Port VS Shanghai Free Trade Zone

Hainan Free Trade Port VS Shanghai Free Trade Zone

At the celebration of the 30th anniversary of Hainan Special Economic Zone, the Party Central Committee has decided to support Hainan in building a pilot free trade zone across the island, and to support Hainan in gradually exploring and steadily promoting the construction of a free trade port with Chinese characteristics. On June 1, the General plan for the construction of Hainan free trade port was released, and the construction of Hainan free trade port officially kicked off. The plan shows China’s will and determination to comprehensively deepen reform and opening up in the new era. Since its release at the beginning of the month, it has attracted wide attention from all parties. So what are the highlights and signals of the plan?

The plan comprehensively expounds the construction of Hainan free trade port from the following four aspects: General requirements, system design, step-by-step arrangement, organization and implementation, and puts forward the system security of five free conveniences and institutional arrangements, i.e. free trade, free investment, free cross-border capital flow, free entry and exit of personnel, and free transportation row as well as safe and orderly data flow. The plan also makes arrangements for the tax system and the rule of law system, which is an innovative move, and also releases the signal of conforming to the international high standard economic and trade rules. These institutional arrangements will bring together high-end resources around the world, and promote Hainan to become a more attractive and competitive investment hot spot. So what is a free trade port? What’s the difference between it and free trade zone?

The free trade port is an upgrade based on the free trade zone. The free trade port has a wider range of areas. It is usually set up in the port (sometimes there are airports) cities, including the whole city, while the free trade zone is defined a certain area around the city. The free trade port has a wider range, including freedom of investment, free employment, free operation, free entry and exit of operators, etc. in addition to freedom of trade, the free trade port is allowed to carry out departure On the basis of offshore trade, we will further open the high-end service industry and develop offshore finance and other related businesses. When talking about Hainan free trade port, many people naturally think of Shanghai free trade zone. As the bridgehead of China’s opening up and the leader of China’s economy, the establishment of Shanghai free trade zone is not only of milestone significance to China’s expansion of opening up. Looking around the world, free trade ports are built on the basis of free trade zones, the following is a simple comparison between Shanghai free trade zone and Hainan free trade port:

The reason why Hainan set up a free trade port is that Hainan has its unique advantages. However, it has to be said that with years of reform experience, Shanghai still has an absolute strength in the field of opening up and finance field; and the Lingang new area of Shanghai Free Trade Zone, which was established on August 20, 2019, is further expanded to open up to the outside world. According to the general plan of Lingang new area of China (Shanghai) pilot Free Trade Zone issued by the State Council, Shanghai should be free of investment, trade freedom, capital freedom, transportation freedom and personnel employment freedom. We will implement a tax system with international competitiveness and a comprehensive risk management system. Two “privileges” will be granted: one is to realize the registration and confirmation system of commercial subjects, explore and try it out in the new zone of Shanghai Free Trade Zone, and change the nature of enterprise establishment registration from administrative license to administrative confirmation; the other is to realize the whole process of “zero face-to-face processing”, with credit commitment, real name certification and independent declaration as the core, and implement the independent declaration of name, residence and business scope. The applicant shall be responsible for the authenticity and legality of the materials. In addition, special tax system arrangements are implemented for offshore business. By 2025, it will establish a relatively mature system of liberalization and facilitation of investment and trade, build a number of functional platforms with higher openness, gather a number of world-class enterprises, significantly enhance regional creativity and competitiveness, and significantly boost economic strength and total economic output. By 2035, a special economic functional area with strong international market influence and competitiveness will be built, more mature and finalized system achievements will be formed, and the core function of global high-end resource element allocation will be built, which will become an important carrier for China’s deep integration into economic globalization.

It can be seen that the state attaches great importance to Shanghai, from the establishment of the first National New Area Pudong New Area by the central government in 1992, to the approval of Shanghai Pudong as the first comprehensive reform pilot area by the state in 2005, to the establishment of the first bonded port Shanghai Yangshan Bonded Port by China in 2005, to the establishment of the first free trade zone Shanghai free trade zone by the central government in 2013. It can be said that from the national new area to the comprehensive reform zone to from the free trade zone to the free trade zone, Shanghai has always been the leader in deepening reform and opening. Therefore, Shanghai free trade zone needs to further explore in the reform, find problems in practice and strive for new policies step by step. Efforts should be made to create a better business environment and simplify the supervision of investors to release their amazing economic development momentum.