Wei Jianguo: Building the World’s Largest Free Trade Port in Hainan

If we can build a successful free trade port in Hainai, it will set a great example for countries in Southeast Asia, whose economy is mainly based on agriculture and sea ports. By exploring new path of development and reform in Hainan, China will provide the global development with a Chinese solution and new model.

On April 13, the celebration of the 30th anniversary of the establishment of the special economic zone in Hainan Province was held in Hainan, Xi Jinping, General Secretary of the CPC Central Committee, China’s president and Chairman of the Central Military Commission announced that the Party Central Committee decided to support the building of a free trade pilot zone in Hainan and steadily promote the construction of the free trade port with Chinese characteristics.

Xi Jinping stressed that the Central Committee has high expectation for the reform and opening up in Hainan. Recently, the central committee formulated the “Guiding Opinions on Supporting Comprehensive Reform and Opening-up in Hainan”, which not only give the reform and opening up of Hainan Special Economic Zone a new responsibility and mission, but also inject strong momentum for further reform.

Why did the Party Central Committee give such a major responsibility to Hainan? What is the difference between the Free Trade Zone in Hainan and the previous Free Trade Zone? What does it mean for the Free Trade Zone to go from 120 square kilometers to 35,000 square kilometers? How will Hainan gradually explore and steadily promote the construction of a free trade port with Chinese characteristics? What areas of the Hainan Free Trade Zone and Free Trade Port expected to make distinctive explorations? In the context of the 40th anniversary of China’s reform and opening up, what role will Hainan play?

With these questions in mind, the 21st Century Business Herald reporter had an exclusive interview with Wei Jianguo, Vice Chairman of the China Center for International Economic Exchanges and former Vice Minister of Commerce.

A new carrier for opening up to the South China Sea and the Asia-Pacific region

21st Century Business Herald: Why did the Party Central Committee give such a major responsibility to Hainan?

Wei Jianguo: I think there are three reasons. First of all, this year marks the 40th anniversary of China’s reform and opening up and China is ready to promote a new round of reform and opening up. At this particular time, the Party Central Committee announced that it would support Hainan to build a free trade pilot zone, and gradually promote the construction of a free trade port with Chinese characteristics, which means that Hainan will become the pioneer in the new round of reform and opening up.

Secondly, the location of Hainan is very important for the “21st Century Maritime Silk Road” and an important hub for China to connect itself with countries along the South China Sea. We should not just treat it simply as a free trade port with Chinese characteristics, it should be regarded as a free trade port with the best global business environment that China will strive to build throughout the Asia Pacific region in the future.

Moreover, the size of the free trade port which will be built in Hainan is bigger than all the free trade ports in other countries. Its radiating effect, interaction and connectivity are also better than other regions. The free trade port is a good implementation of General Secretary Xi Jinping’s proposal for “Industrial Integration, Connected Development and shared Achievement.”

Thirdly, Hainan will become an important carrier for fully implementing the new development concept. At the conference, General Secretary Xi Jinping repeatedly talked about the harmonious coexistence between man and nature in Hainan. In terms of implementing the five development concepts of innovation, coordination, green, openness, and sharing, Hainan has become a unique platform due to its irreplaceable environment.

21st Century Business Herald: What is the difference between the free trade pilot zone in Hainan and the previous 11 free trade pilot zones?

Wei Jianguo: By building a free trade zone throughout the island, Hainan is expected to become a new highland accelerating China’s opening up, driving economic growth, and creating the best business environment in the next 50 years. It will not only drive the development in Southern China, but also Southeast Asia and the Asia Pacific region. More details can be described as follows.

Firstly, Hainan is expected to become the new leader of economic development in Eastern Asia and the Asia Pacific region. A small region will not be able to have such kind of radiating effect. If all countries can jointly develop this area and form a new industrial integration, it will surely become the new leader in the development of this region.

Secondly, Hainan plays a vital role in creating stable development in the South China Sea and the Asia-Pacific region because it is a stabilizer of China’s security in the Asia-Pacific region and the South China Sea. Its role is not only to promote economic development but also stabilize security in the Asia-Pacific.

Compared with the previous free trade zones, Hainan is a new platform for China to play a better role in the South China Sea and Asia-Pacific region. It will promote joint development and ensure the security of the entire region.

Creating A Model of High Level of Openness and Quality Development

21st Century Business Herald: How to understand that Hainan will gradually explore and steadily promote the construction of free trade port with Chinese characteristics?

Wei Jianguo: The free trade port has the highest level of openness and Hainan should take a gradual approach to build it for two reasons. On the one hand, Hainan has a large area of land and sea. On the other hand, Hainan still needs to make improvement in certain areas such as manufacturing and finance, high-tech industries, transportation, modern logistics, personnel and so on.

We should carry out our explorations step-by-step. I believe that with strong determination from the central government, the willingness of Hainan to explore new model and China’s 40 years of experience in reform and opening up, Hainan is bound to make great progress in the areas of industrial development, business environment (such as protection of intellectual property rights, equal treatment of foreign capital and private enterprises), legal systems and financial reforms, personnel mobilization, service trade, and the exchange rate of the RMB, and become a free trade port with Chinese characteristics.

Building a free trade port with Chinese characteristics means that we should not copy the experiences of other countries but to learn their lessons, and combine them with China’s actual conditions and Hainan’s characteristics. The focus is on the exploration of policies and institutional systems.

Building a successful free trade port is of great guiding significance. The development model will not only provide guidance for Guizhou, Yunnan, and other inland provinces as well as coastal areas, but also play an exemplary role for Southeast Asia, whose economy is based mainly on agriculture and harbors. By exploring new paths of development in Hainan, China will provide a new model for global development. Apart from that, this will also pave the way for China to lead globalization, safeguard the WTO multilateral system, oppose trade protectionism, and promote the liberalization and facilitation of international trade and investment.

21st Century Business Herald: How is the resource endowment in Hainan’s ports? What kind of unique exploration will Hainan make?

Wei Jianguo: Free trade ports include seaports, airports and railways. The size of Hainan is very large and it is necessary to form a comprehensive transportation network, which means we should not only improve the port construction, but also make improvement in other aspects.

We must have a global perspective and a strategic vision when building the free trade port in Hainan. The area should absorb various factors of production, including capital, talents, resources, markets, and technological innovation. To be able to do that, we need new strategies for attracting highly-skilled professionals, new technology initiatives and new financial policies. In terms of local characteristics, Hainan has a huge potential in healthcare, medical care and global tourism.

21st Century Business Herald: Having considered the increasing development gap between Hainan and the developed areas in eastern China, what are the weak links Hainan needs to improve? How will Hainan start its further opening up?

Wei Jianguo: I think that we must first have a top-level design. The most urgent task is not to provide Hainan with funding or build a base there. Hainan needs to build a free trade pilot zone first before turning itself into a free trade port and this is a gradual process and needs careful consideration and design.

Hainan’s opening up is a relatively long process and it should be global and forward-looking. It must face the future and the world, create a model of high-level openness and high-quality growth. We must have a top-level design and make efforts in formulating relevant policies and institutions.

The Central Government has already formulated the “Guiding Opinions on Supporting Hainan’s Comprehensive Reform and Opening-up” and in the future, more policies will be applied to improve the top-level design. The top-level design is formulated by the central government and it is much more than a regional planning, including not only openness, but also reform measures such as the transformation of government functions, reforms of the law development, investment policies, and financial system.

In terms of the opening steps, the entire island must work hard on building the free trade pilot zone in accordance with the deployment of the Party Central Committee, promoting national treatment and negative list management, as well as transforming government functions.

Secondly, we should refer to the experience of other countries and combine them with the characteristics of China and Hainan, give enough consideration on how to bring in foreign investment, create an open and transparent business environment, conduct further opening up and lead high-quality economic development.