Positive Reviews: Hainan Free Trade Port is a Key Hub for National Strategic Coordination, Injecting New Impetus into Regional Economy
The full – island closed – loop operation of Hainan Free Trade Port is a landmark event in China’s deepening reform and opening – up. From strategic positioning, industrial upgrading to regional coordination, Hainan’s development not only does not compete with Hong Kong, Shanghai, Guangzhou, and Shenzhen but has become a key hub in the new pattern of national opening – up through differentiated positioning and complementary cooperation. Its positive significance is mainly reflected in the following three aspects:
I. Unique Strategic Value, Strengthening the Pivot Role of the National “Dual – Cycle” Openness
Hainan’s geographical location and policy advantages make it a core node connecting the domestic and international dual – cycles. On the one hand, with the Guangdong – Hong Kong – Macao Greater Bay Area at its back and facing ASEAN (China’s largest trading partner), it covers a huge market of 2.1 billion people. The shipping distance advantage (e.g., it is closer to Hanoi than Guangzhou and 430 kilometers closer to Singapore than Beijing) naturally makes it a “transfer station” for China’s economic and trade exchanges with ASEAN. On the other hand, as an independent island, Hainan’s physical isolation conditions provide natural convenience for implementing the special customs supervision policy of “liberalizing the first – line and controlling the second – line”, which is an advantage difficult to replicate in other inland or coastal areas.
More importantly, in the wave of anti – globalization, the high degree of openness of Hainan Free Trade Port (such as “zero – tariff, low – tax rate, and simplified tax system”) is a “window” for China to convey its determination to open up to the world. The uniqueness of its policy dividends (other free trade zones can replicate Hainan’s policies, but Hainan’s policies may not be replicated) makes it a “testing ground” for institutional – type opening up. For example, innovative measures such as off – island duty – free and negative lists for cross – border service trade not only introduce high – quality global resources into the domestic market but also provide a more convenient platform for Chinese enterprises to “go global”.
II. Remarkable Achievements in Industrial Transformation, Building Differentiated Competitive Advantages
In the past decade, Hainan has shifted from a single economic model “relying on tourism and real estate” to four pillar industries of “tourism, modern service industry, high – tech industry, and tropical characteristic high – efficiency agriculture”, and the development quality has far exceeded expectations. Data shows that the four industries contribute 67% of the province’s GDP, and there are outstanding highlights in the sub – fields: the output value of the South China breeding seed industry has exceeded 18 billion yuan (an important support for the national food security strategy), the average annual growth rate of the marine industry is 13.9% (a regional practice of the marine power strategy), and the off – island duty – free accounts for 8% of the global share (a typical case of consumption backflow).
In addition, the coordinated development of science, education, and ecology in Hainan provides long – term impetus for industrial upgrading. Sanya has gathered off – campus research institutes of 6 top domestic universities, and Lingshui has become an “education special zone”. The internationalization of higher education has accelerated, which has reserved talents for high – tech industries; the proportion of new energy vehicles ranks first in the country, the carbon – neutral goal in Boao, and the circular economy model in Yangpu provide samples for the green economic transformation. This composite development model of “industry + science and education + ecology” forms a complementary relationship with the “financial centers”, “high – tech innovation high – grounds”, and “manufacturing hubs” in Hong Kong, Shanghai, Guangzhou, and Shenzhen.
III. Deepening Regional Coordination, Activating the Linkage Effect of the “Golden Triangle”
The relationship between Hainan and Hong Kong, Shanghai, Guangzhou, and Shenzhen is by no means “substitution” but “coordination”. The “Hainan – Hong Kong – Guangdong Golden Triangle” mentioned in the news is a typical example: Guangdong has the most complete manufacturing industry chain in the country, Hong Kong has advantages in international finance, law, and professional services, and Hainan provides a “policy interface” for the cooperation between the two places with its free trade port policies (such as low – tax rates and trade freedom). For example, cooperation projects between Shenzhen and Danzhou have been launched. Guangdong’s manufacturing capabilities can reduce export costs through Hainan’s “liberalizing the first – line” policy, and Hong Kong’s financial services can serve mainland enterprises through the facilitation of cross – border capital flows in Hainan.
In addition, the cooperation between Hainan and Hong Kong, Shanghai, Guangzhou, and Shenzhen is not a “replacement” relationship but a “synergistic” one. The relationship between Hainan and Hong Kong, Shanghai, Guangzhou, and Shenzhen is not about “substitution” but “synergy”. The news mentioned the “Hainan – Hong Kong – Guangdong Golden Triangle”, which is a typical example. Guangdong has the most complete manufacturing industry chain in the country, Hong Kong has advantages in international finance, law, and professional services, and Hainan provides a “policy interface” for the cooperation between the two places with its free trade port policies (such as low – tax rates and trade freedom). For example, cooperation projects between Shenzhen and Danzhou have been launched. Guangdong’s manufacturing capabilities can reduce export costs through Hainan’s “liberalizing the first – line” policy, and Hong Kong’s financial services can serve mainland enterprises through the facilitation of cross – border capital flows in Hainan.
Moreover, the cooperation between Hainan and Zhanjiang and the Beibu Gulf (such as setting up overseas warehouses in Zhanjiang and jointly building the Beibu Gulf urban agglomeration) further amplifies the regional synergy effect. Hainan has a relatively small economic scale (its GDP in 2023 was only 681.8 billion yuan, about one – fifth of that of Shenzhen). Through division of labor and cooperation with surrounding areas (such as tourism cooperation and logistics support), it can not only make up for its own shortcomings in industrial supporting facilities but also drive the common development of surrounding areas, achieving an overall effect of “1 + 1>2”.
Negative Reviews: Hainan Free Trade Port Still Needs to Overcome Multiple Challenges, and Potential Risks Need to Be Alerted in the Implementation of Synergy Effects
Although the strategic significance and development achievements of Hainan Free Trade Port are remarkable, as a “latecomer”, it still faces practical challenges such as a weak economic foundation, insufficient industrial competitiveness, and great difficulties in regional cooperation implementation, which need to be rationally examined.
I. Weak Economic Foundation, a Long Way to Go for the Transformation to “High – Value – Added” Industries
There is still a large gap between Hainan’s economic aggregate and quality and those of Hong Kong, Shanghai, Guangzhou, and Shenzhen. In 2023, Hainan’s per capita GDP was only 79.31% of the national average, lower than that of Sichuan, Liaoning and other provinces. Although the proportion of the four pillar industries has increased, the “gold content” of high – tech industries and modern service industries still needs to be verified. For example, although the output value of the South China breeding seed industry has exceeded 18 billion yuan, its core technologies (such as seed gene editing) still rely on cooperation with domestic universities, and the independent innovation ability of local enterprises has not formed obvious advantages; although the marine industry has a high growth rate, it is mainly concentrated in fishery and shipping, and high – value – added marine biomedicine and deep – sea equipment manufacturing are still in their infancy.
In addition, although Hainan’s “high – degree – of – openness” policy has attracted foreign investment (with an average annual growth rate of 97% in the past five years), the structure of foreign investment is mainly in trade and real estate, and the proportion of foreign investment in high – tech industries is less than 20%. If Hainan cannot cultivate local enterprises with global competitiveness in the future, it may fall into “policy dependence” and find it difficult to achieve the leap from “policy dividends” to “industrial dividends”.
II. There is a “Temperature Difference” in Regional Coordination, and the Interest Distribution Mechanism Needs to be Improved
Although the concepts of the “Hainan – Hong Kong – Guangdong Golden Triangle” and “Zhanjiang – Hainan Logistics Cooperation” are beautiful, their actual implementation may face multiple obstacles. First, it is difficult to coordinate policies: How can Hainan’s free trade port policies (such as “zero – tariff”) be connected with Guangdong’s free trade zone policies and Hong Kong’s independent customs territory policies? For example, Hainan’s “controlling the second – line” (paying back taxes when goods enter the Chinese mainland) may increase the logistics cost between Guangdong and Hainan and weaken the cooperation efficiency. Second, there are contradictions in interest distribution: Hainan hopes to attract industries to settle through its policy advantages, while Guangdong may worry about the “transfer” of local enterprises leading to tax revenue losses; Hong Kong may be concerned that Hainan’s financial opening (such as cross – border capital flows) will divert the business of its international financial center.
Taking “Hainan setting up an overseas warehouse in Zhanjiang” as an example, if the goods in the overseas warehouse enter duty – free through Hainan’s “liberalizing the first – line” policy and are then transported to the Chinese mainland via Zhanjiang, it may trigger disputes over “tax arbitrage” – mainland enterprises may avoid tariffs through the Hainan – Zhanjiang channel, resulting in tax revenue losses. How to balance openness and supervision requires more refined institutional design.
III. The Supervision Pressure Increases Dramatically after the Island – Wide Closed – Loop Operation, and the Risk Prevention and Control Ability Needs to be Strengthened
After the island – wide closed – loop operation, Hainan will implement a special supervision model of “liberalizing the first – line and controlling the second – line”, which poses extremely high requirements for the supervision ability in the fields of customs, finance, and data. For example, “liberalizing the first – line” means that foreign goods can freely enter Hainan, but the risk of smuggling needs to be prevented (such as luxury goods and electronic products flowing into the Chinese mainland through Hainan); the “low – tax rate” (15% corporate income tax and a maximum of 15% personal income tax) may attract “shell companies” to seek arbitrage. How to distinguish between “substantial business operations” and “speculation in tax havens”?
In addition, Hainan’s financial opening (such as free cross – border capital flows) may bring risks such as exchange rate fluctuations and capital flight. In 2023, the added value of Hainan’s financial industry only accounted for 7% of GDP (19% in Shanghai), and there is a relative shortage of financial supervision talents and experience. If the pace of opening up gets out of control, it may trigger local financial risks.
Suggestions for Entrepreneurs: Seize Policy Dividends, Focus on Synergy Opportunities, and Pay Attention to Risk Assessment
The island – wide closed – loop operation of Hainan Free Trade Port is a major opportunity for entrepreneurs, but they need to formulate strategies according to its characteristics:
I. Focus on Areas with Dual Advantages of “Policy + Industry”, Avoid Blind Following
Hainan’s policy dividends (such as off – island duty – free, negative lists for cross – border service trade, and 15% corporate income tax) provide a “first – mover advantage” for some industries. Entrepreneurs can focus on the following:
– Tropical Characteristic High – Efficiency Agriculture: The South China breeding seed industry and deep – processing of tropical fruits (such as coconuts and durians), combined with Hainan’s ecological advantages to create high – end brands;
– Marine Economy: Deep – sea technology (such as marine exploration equipment) and marine biomedicine (such as research and development of coral extracts), relying on Sanya’s deep – sea technology base for technical support;
– Integration of Health Care and Culture and Tourism: The international medical tourism pilot zone in Boao and Sanya’s “tourism + duty – free + culture” model, exploring niche markets such as high – end health care and customized tourism;
– Cross – Border Services: Utilize Hainan’s policies such as “pilot cross – border data flow” and “international ship registration” to layout in fields such as cross – border e – commerce and international shipping services.
It should be noted that entrepreneurs should avoid flocking to low – threshold industries (such as ordinary tourism services and primary agricultural product processing) and should extend to high – value – added links based on their own technological or resource advantages.
II. Make Good Use of Regional Cooperation Opportunities, Build a Linkage Model of “Hainan + Surrounding Areas”
Hainan’s industrial supporting capacity is limited (such as an incomplete manufacturing industry chain). Entrepreneurs can form a synergy with the Guangdong – Hong Kong – Macao Greater Bay Area through models such as “front – shop, back – factory” and “R & D in Hainan, production in Guangdong”:
– Technology R & D: Set up R & D centers in Hainan, taking advantage of its scientific and educational resources (such as off – campus research institutes of universities) and tax incentives;
– Production and Manufacturing: Arrange the production links in Guangdong (such as Dongguan and Foshan), taking advantage of its mature industry chain to reduce costs;
– Service Output: Expand overseas markets through Hong Kong’s international network (such as finance, law, and marketing), and simplify cross – border processes with the help of Hainan’s policies.
For example, a start – up enterprise engaged in deep – sea equipment R & D can set up an R & D center in Sanya (enjoying a 15% corporate income tax), produce in Zhuhai’s marine equipment manufacturing base (utilizing Guangdong’s industrial supporting facilities), and export through Hong Kong’s shipping network, forming a full – chain synergy of “R & D – manufacturing – export”.
III. Be Alert to the Details of Policy Implementation and Market Risks, and Make Long – Term Plans
Although Hainan’s policies are good, some detailed rules are still being improved (such as the criteria for determining “substantial business operations” and the specific operations of “controlling the second – line”). Entrepreneurs need to closely follow policy developments to avoid business disruptions caused by policy adjustments. In addition, the local market in Hainan is relatively small (with a permanent population of only 10.27 million). Entrepreneurs need to plan in advance a market strategy of “using Hainan as a fulcrum to radiate the whole country or ASEAN” to avoid over – reliance on local demand.
At the same time, entrepreneurs need to assess the shortages of talents and supporting facilities in Hainan: Although the proportion of high – level talents has increased, there is still a relative shortage of technical workers and professional service personnel (such as cross – border tax and legal professionals). This can be solved through a combination of “introduction + cultivation” (such as cooperating with local universities for targeted training).
In short, the island – wide closed – loop operation of Hainan Free Trade Port is a “once – in – an – era opportunity” for entrepreneurs. They need to seize policy dividends with a “strategic vision” and deal with real – world challenges with a “pragmatic attitude” to achieve long – term development in this “new high – ground for opening up”.
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