Tropical island on forefront of next phase of China's reform, opening-up

China has decided to support Hainan in developing the whole island into a pilot free trade zone, and gradually exploring and steadily promoting the establishment of a free trade port with Chinese characteristics.

Vessels anchor at Xingang Port in Haikou, capital of south China's Hainan Province, Dec. 26, 2016. [Photo/Xinhua]

Chinese President Xi Jinping made the announcement when delivering a speech at a gathering to commemorate the 30th anniversary of the founding of Hainan Province and the Hainan Special Economic Zone (SEZ) Friday afternoon.

Hainan will be China's largest free trade zone enjoying increased opening-up policies and will be the country's first free trade port since the founding of the People's Republic of China in 1949.

"As an isolated island, Hainan can only develop and catch up with the pace of the country's growth with the world's highest degree of opening-up," said Chi Fulin, head of the Hainan-based China Institute for Reform and Development.

Chi, 67, a former official who left Beijing for Hainan in October 1987, was among 100,000 employees across the country to find opportunity and fortune in the burgeoning province in the late 1980s.

Once remote and underdeveloped, Hainan has become one of China's most open and dynamic regions and a top tourist destination.

Xi's speech highlighted Hainan's special advantages -- including its status as China's biggest SEZ, its unique geographic location and the best ecological environment in the country, as reasons to make it a test ground for reform and opening up.

Xi urged the province to give priority to opening-up, implement a more proactive opening-up strategy, speed up the establishment of new institutions of an open economy, and make new ground in pursuing opening-up.

Exchanges in international energy, shipping, commodities and carbon trading will be established in Hainan. The island will also focus on developing modern service industries such as tourism, the Internet, healthcare, finance and hosting conferences and exhibitions.

Qian Jiannong, senior vice president of Fosun International Limited, investor of the first Atlantis resort in China, has high hopes of Hainan's future.

"Hainan is the only tropical island province in China. The era of sightseeing is past and the era of leisure and resort is coming," said Qian. The 540,000 square-meters Atlantis resort, with an investment of 11 billion yuan (about 1.75 billion U.S. dollars), is expected to open by the end of this month in Sanya, the most famous resort city in Hainan.

"The growth potential of Sanya and the entire island of Hainan is tremendous," said the resort's managing director Heiko Schreiner.

Biggest test ground of reform

As the smallest province but biggest SEZ, Hainan is an ideal test ground of China's reform and opening-up.

In the early 1990s, it boasted China's first listed private company, and Yangpu Economic Development Zone, the first development zone approved for lease to foreign investors by the Chinese government.

It is also the only province in the country without toll stations on its highways, due to a fee-to-tax reform in 1994.

Since 2001, the town of Boao has become the permanent site of the Annual Conference of the Boao Forum for Asia, the first permanent site for an international conference in China. In 2005, Hainan was the first province to remove the centuries-old agricultural tax.

The national strategy of building Hainan into an international tourist destination has put it on the fast track since 2010, attracting investment and infrastructure, such as high-speed railways, hotels, high-end commercial real estate and tourism facilities.

"Aiming for China' s first free trade port, Hainan will start the country's new round of reform in larger scale and in more extensive areas," said Fu Xuanchao, head of the provincial development and reform commission.

With the rising flow of people, goods and capital due to the tax-free policies brought by the free trade zone and port, Hainan is expected to be a pivotal point linking the Chinese mainland with southeast Asian countries, said Lin Jian, chairman of Hainan Ganghang Holding Limited Company, a local shipping and logistics enterprise.

"I believe Hainan will be a highly international and modernized island in another 30 years," said Chi, who served as head of the provincial policy research office in his early years in Hainan, who later became a scholar.