Big plans for Hainan - Free trade port and more

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Offshore duty free sales on Hainan island surge to unprecedented highs
2020-10-05 08:13:29China Daily

Expenditure by bargain hunters more than doubles to $1.27 billion

South China's island province of Hainan is riding a shopping boom after its new duty-free policy took effect on July 1, according to the General Administration of Customs.

Duty-free spending by visitors in Hainan has grown 227 percent year-on-year to 8.61 billion yuan ($1.27 billion) in the period from July 1 to Sep 30, the administration said.

During that time, customer numbers have topped 1.29 million, up 62 percent year-on-year. This, coupled with the personal duty-free allowance increase, has driven the purchase of 9.35 million duty-free items, with a 147 percent year-on-year increase, according to the statistics from Haikou Customs.

The top three commodities in value were cosmetics, watches and jewelry, with total spending of 6.31 billion yuan.

Starting July 1, Hainan increased the tax-free quota from 30,000 yuan to 100,000 yuan per person each year, and tax-free goods categories were expanded from 38 to 45, including electronic products and wine.

Experts believe Hainan has become a leading participant in the development of China's duty-free industry.

They expect a gradual spending recovery despite the mounting downside pressure amid the COVID-19 pandemic.

They said the new allowance increase, together with other preferential policies in the Hainan free trade port will help spur consumption, aid trade and investment in the island province.

China released a master plan in early June on building a high-quality free trade port in Hainan province, as part of the country's ongoing efforts to build an open economy within the framework of globalization.

According to the plan, Hainan will establish a basic free trade port policy system with a key focus on helping free trade and investment by 2025.

By 2035, the free trade port system and operations in Hainan will be more mature, and high-level process supervision will be constructed to achieve free trade and investment facilities, free cross-border capital flows, free and convenient transportation and access for people, and safe and orderly flow of data.

By the middle of the century, a high-level free trade port with strong international influence will be fully established, the plan said.

Cui Weijie, director of the Institute of Industry Development and Strategy under the Chinese Academy of International Trade and Economic Cooperation, said the preferential policies will help offer more products worldwide with lower prices, provide higher-quality services and create more jobs in Hainan.

Cui expected to see more measures that center on zero tariffs for the trade of goods in the future, as the nation is working hard to enable the free flow of trade and investment for Hainan.

Chi Fulin, president of the Haikou-based China Institute for Reform and Development, said the construction of a free trade port in Hainan is part of China's larger drive to promote economic globalization, and it will help cushion the effects of COVID-19.

"The move has demonstrated China's firm determination to open its doors wider to the outside world and deeply integrate itself into the global economy," Chi noted.

According to Chi, to expand opening-up at a higher level, the central government needs to grant greater autonomy to Hainan to carry out reforms and innovation and establish the system and mechanism suitable for the construction of the free trade port.

More efforts are also needed to further implement zero tariffs on daily consumer goods and speed up the construction of an international tourism and consumption center in the province, Chi added.

Hainan's Sanya ranks first in the number of car rental orders during the 'golden week'

5 OCT, 15:00

SANYA, October 5. /TASS/. Hainan's Sanya becomes a leader in total car rental orders in China since the start of the weekend's golden week, reported the "Hainan Daily" newspaper.
Over the past four days, the total number of car rental orders via China's largest online tour operator, Ctrip, increased by 50% over the same period last year, and the turnover increased by 120%. According to Sun Dexiang, a company's spokesman, Sanya currently ranks first in the country in terms of this indicator. At the same time, about 25% of the total number of orders were placed for luxury and sports cars.

The first days of the 10th month in China fall on weekends and are considered the "golden week". At this time, the Chinese leave big cities for their hometowns or go on a trip around the country. Traditionally, Hainan is one of the most popular travel destinations. This year's holiday week coincided with the lunar Mid-Autumn Festival (Zhongqiujie). This time it falls on October 1. Having no opportunity of traveling abroad, many Chinese have to spend their holidays at the country's resorts, and the beaches of Hainan are especially popular. According to the newspaper, the interest in individual car tourism has grown amid the coronavirus pandemic, which has given a new impetus to the development of this market, in particular, on the Island of Hainan.

 

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9 AUG, 21:35
Sales in Hainan duty free stores increased by 257.2% in January-June
A pilot program for the development of a chain of duty free shops on Hainan was launched by the Chinese government in 2011

HAIKOU, August 9. /TASS/. Sales of goods in duty free stores on Hainan in the first six months of 2021 amounted to 26.76 billion yuan (about $ 4.1 billion), which is 257.2% higher than in January-June 2020, reported citing the Haikou customs department on Monday.

During this period, about 36.9 million different types of goods were sold in all Hainan duty free shops, which is 56.5% higher than in the first half of 2020. Over 3.8 million customers visited duty free stores in January-June. The growth of this indicator in annual terms amounted to 258.9%.

Hainan’s Negative List for Overseas Service Providers: An Explainer
July 28, 2021

Hainan has launched the country’s first negative list for cross-border trade in services. This article explains how the negative list for cross-border services trade differs from other negative lists in China. We also compare the level of openness in Hainan’s services negative list with China’s WTO commitments as well as RCEP commitments. Overseas services providers are suggested to read the list carefully or consult local professionals to assess new market opportunities.


China unveiled its first negative list for cross-border trade in services, which is to be implemented in the Hainan Free Trade Port (FTP) from August 26, 2021.

The list, officially called the Special Administrative Measures for Cross-Border Service Trade at Hainan Free Trade Port, includes 70 regulatory measures targeted at overseas services providers in 11 sectors.

What is the negative list for cross-border trade in services?
Under the World Trade Organization (WTO) General Agreement on Trade in Services (GATS), trade in services is defined as the supply of services through the following four modes:

• Cross-border supply
• Consumption abroad
• Movement of natural persons
• Commercial presence

The supply of services through the first three modes are collectively referred to as cross-border trade in services, while through the fourth mode (commercial presence) is referred to as cross-border investment.

Therefore, Hainan’s negative list for cross-border trade in services is different from its negative list for foreign investment access – the latter is more about cross-border investment.

Under Hainan’s negative list for cross-border services trade, overseas service providers are not allowed to provide the services prohibited by the list through the first three modes (that is, cross-border supply, consumption abroad, and movement of natural persons) in the whole Hainan island.

At the same time, it implies that unlisted economic activities are considered allowed, and domestic and overseas services providers should enjoy a level playing field and equal market access in unlisted sectors.

Which Hainan services sectors are restricted or prohibited by the negative list?
The Hainan FTP services negative list specifies 70 special administrative measures for 11 sectors:

1. Agriculture, forestry, animal husbandry, and fishery
2. Construction
3. Wholesale and retail
4. Transportation, storage, and postal services
5. Information transmission, software, and information technology services
6. Financial industry
7. Leasing and business services
8. Scientific research and technical services
9. Education
10. Health and social work
11. Culture, sports, and entertainment

China Briefing produced a free translated version of Hainan’s negative list for cross-border trade in services. You can find the full text in English here to assess whether your business is affected.

To take a few examples, in the financial sector, the list stipulates that without the approval of China’s banking regulatory authority, overseas service providers shall not engage in business activities of banking financial institutions, financial asset management companies, trust companies, finance companies, financial leasing companies, consumer finance companies, and auto finance companies through the mode of cross-border supply.

In the leasing and commercial services sector, foreign individuals are:

• not allowed to take part in the national uniform legal professional qualification examination to obtain the legal professional qualification certificate;
• not allowed to take part in the national tour guide qualification examination; and
• not allowed to serve as security guards to engage in security services.

In the information services industry, overseas service providers shall not engage in news information services or public information release services on internet.

Which Hainan services sectors have been relaxed by the negative list?
Hainan’s negative list for cross-border services trade is expected to widen market access in professional services, transport services, and financial services.

According to China’s vice-commerce minister Wang Shouwen, the “liberalization level (of Hainan’s negative list for cross-border services trade) goes beyond China’s commitments for WTO accession and its main free trade agreements (FTAs) in corresponding areas.”

Hainan’s services negative list vs. China’s WTO commitments
Of the 160 services sub-sectors under the 12-sectors in the WTO classification, China committed to opening up 100 sub-sectors under nine sectors.

However, under Hainan’s negative list for cross-border services trade, there are about 120 sub-sectors where the liberalization levels are higher than China’s WTO commitment, according to Wang.

For example, in the legal services sector, under China’s WTO commitments, overseas service providers are banned from providing legal services in China. However, Hainan’s services negative list allows the representative offices (ROs) of foreign law firms in Hainan to engage in some non-litigation legal affairs related to Hainan’s commercial affairs.

In the education industry, the WTO commitment of China is that foreign individual education service providers that offer education services in China must have a bachelor’s degree or above, the corresponding professional title or certificate, and two years of professional work experience. Hainan’s negative list removes the restriction of two years’ professional work experience.

Hainan’s services negative list vs. China’s services positive list under RCEP
The Regional Comprehensive Economic Partnership (RCEP) agreement that China signed with 14 Asia-Pacific countries also provides for the liberalization of trade in services among the member states.

The member states set out their respective “positive list” or “negative list” in opening up their service sectors to the trade partners:

• “Negative list” approach – Australia, Brunei, Indonesia, Japan, Malaysia, Singapore, and South Korea.
• “Positive list” approach – Cambodia, China, Laos, Myanmar, New Zealand, Philippines, Thailand, and Vietnam (member states that adopt the “positive list” approach are required to transition to “negative list” within six years of entry into force of the agreement).

China is one of the countries adopting the “positive list” approach under RCEP. The “positive list”, as the name suggests, is a list of service sectors that foreign service providers are allowed to enter. In other words, the areas that are not on the list are closed to foreign service providers. This means the level of openness of the “positive list” is lower than that of the “negative list”.

Compared with the RCEP agreement, of the 160 sub-sectors, in more than 110 sub-sectors, the level of openness of Hainan’s services negative list exceeds China’s RCEP commitments, according to Wang.

For instance, in the sub-sector of air transport support services, China did not make commitments under the RCEP agreement, nor did it make commitments when it joined the WTO. However, under Hainan’s services negative list, the restriction that foreign service providers are not allowed to engage in aviation weather services has been lifted.

In the sub-sector of urban planning services, China has made no commitment regarding the “movement of natural persons” under the RCEP. However, Hainan’s services negative list has lifted the restriction that prohibits overseas individuals from applying for the qualification examination of registered urban and rural planners.

Overall, the list scraps limits on more than 10 vocational exams for overseas citizens in a bid to push for greater financial opening and free flow of talent.