.

Read in Chinese

Speakers:

Shen Xiaoming, secretary of the Hainan Provincial Committee of the Communist Party of China and chairman of the Standing Committee of Hainan Provincial People's Congress

Feng Fei, governor of Hainan province

Cong Liang, deputy head of the National Development and Reform Commission (NDRC)

Zou Jiayi, vice minister of finance

Wang Shouwen, vice minister of commerce and deputy China international trade representative

Zhang Jiwen, vice minister of the General Administration of Customs of China (GACC)

Wang Chunying, deputy administrator of the State Administration of Foreign Exchange (SAFE)

Chairperson:

Chen Wenjun, head of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

April 12, 2021

Chen Wenjun:

Ladies and gentlemen, good morning! Today's press conference is about the construction of the Hainan Free Trade Port (FTP). In accordance with the decision and deployment of General Secretary Xi Jinping and the Central Committee of the Communist Party of China (CPC), the construction of the Hainan FTP is being accelerated, policies are being formulated, and important progress has been achieved. Today, we have invited officials from central government departments and the Hainan provincial government to meet with you and introduce the situation. Speakers present at today's press conference include Shen Xiaoming, secretary of the CPC Hainan Provincial Committee and chairman of the Standing Committee of Hainan Provincial People's Congress; Feng Fei, governor of Hainan province; Cong Liang, deputy head of the National Development and Reform Commission (NDRC); Zou Jiayi, vice minister of finance; Wang Shouwen, vice minister of commerce and deputy China international trade representative; Zhang Jiwen, vice minister of the General Administration of Customs of China (GACC); and Wang Chunying, deputy administrator of the State Administration of Foreign Exchange (SAFE). Now, I will give the floor to Mr. Cong.

Cong Liang:

Ladies and gentlemen, friends from the media, good morning! On April 13, 2018, General Secretary Xi Jinping delivered an important speech at a conference celebrating the 30th anniversary of the founding of Hainan province and the Hainan Special Economic Zone, announcing the CPC Central Committee's major measures to support Hainan in comprehensively deepening reform and opening up. The Master Plan for the Construction of the Hainan Free Trade Port was officially released on June 1, 2020.

We studied in depth the series of important speeches and instructions of General Secretary Xi Jinping on supporting Hainan in comprehensively deepening reform and opening up and building itself into a free trade port, and developed a good understanding of the significant decision of the CPC Central Committee that building the Hainan FTP will exert a far-reaching impact. The construction of the Hainan FTP is intended to gather high-quality global production factors including capital, knowledge, technology, management, and data, providing an example of high-quality development for the nation. It will promote deeper reform with a higher level of openness so that we can explore new paths and accumulate new experience to speed up the improvement of the socialist market economy system. It will explore the formation of an internationally competitive open system so as to provide an important platform for China to adapt to and actively participate in the formulation of international economic and trade rules at a deeper level.

Over the past three years, especially since the release and implementation of the master plan, the leading group on deepening all-round reform and opening up of Hainan province has been working with the Hainan provincial government and relevant departments to carefully implement the deployment and requirements of the leading group. The system integration and innovation has been put in a prominent place, with focus on trade and investment liberalization and facilitation and the efficient flow of various factors of production. The system integration and collaborative innovation have been highlighted. A series of supporting policies have been put in place to promote Hainan FTP construction. According to preliminary statistics, more than 110 policy documents have been issued and the policy framework of the FTP is taking shape. We have got off to a good start. In general, these policies and systems can be summarized in six aspects.

First, we introduced policies that enable trade and investment to be freer and more convenient. We have established a goods trade system featuring zero tariffs and introduced one negative and two positive lists. The Yangpu Bonded Port Area took the lead in the implementation of an entry and exit management system for goods to facilitate trade, which features opening up the "front line" (the area between the Hainan FTP and other countries and regions outside the customs territory of China) and regulating the "second line" (the area between the Hainan FTP and other areas within the customs territory of China). We have issued the negative list for the access of foreign investment, rolled out special measures to loosen market access, and reduced the number of sectors and industries that are off-limits to both Chinese and foreign investors in its negative list for market access to 27 articles, making investment freer. We have introduced the Catalogue of Encouraged Industries (2020 version) and 17 policy documents to support the development of tourism, the modern service industry, and the high-tech industry, giving more room for development.

Second, we introduced policies that enable financial support to be safer and more convenient. We issued policy documents such as the Opinions on Financial Support for Hainan to Comprehensively Deepen Reform and Opening Up, and promoted the establishment of financial policies and institutional frameworks that are suitable for the Hainan FTP. We have enhanced RMB convertibility and promoted the facilitation of cross-border trade in goods and services as well as new types of international trade settlements. A quota of US$5 billion has been allocated under the Qualified Domestic Limited Partner (QDLP) pilot scheme in Hainan. We also took the lead to launch a pilot reform of overseas listing registration for domestic companies.

Third, we introduced policies that enable the tax preferential policies to be more efficient and targeted. We have formulated and implemented preferential policies including corporate income tax of 15% on encouraged industrial enterprises and personal income tax of 15% for eligible talents. Enterprises established in the Hainan FTP are entitled to corporate tax exemption for income from newly increased overseas direct investment. We have improved the offshore duty-free shopping policy, approved the establishment of six more duty-free shops, and provided "mail delivery" and "deposit offshore, pick up backshore" services. We have introduced policies such as VAT refunds for ships, and a tax rebate at Yangpu Port of Departure, and allowed ships that transit at Yangpu Port of China to refuel with bonded oil. Now, we are formulating tax exemption policies for foreign exhibits during national level exhibitions.

Fourth, we introduced policies that enable the transportation service to be more convenient and open. We have promoted the integration of ports and shipping businesses in the Qiongzhou Strait and built a safer, more efficient, convenient, and cost-effective transportation channel in the Qiongzhou Strait. A convenient and efficient vessel registration procedure has been established, and we are promoting the construction of Yangpu Port of China into an international port of registry. We have innovated cruise and yacht management, supported the construction of Sanya into a home port for international cruise ships, and promoted travel among Hainan, Hong Kong, and Macao by yacht. We introduced the Seventh Freedom traffic rights for air passenger and cargo services and promoted the upgrading of Boao Airport to an international port.

Fifth, we introduced policies that enable the supporting factors to be more effective. We have expanded the scope and channels of visa-free entry for foreigners and carried out a pilot reform of international talent service management. We have issued the high-level talent classification standards (2020), high-level talent identification measures, and management measures for overseas talents. A total of 38 domestic professional qualification examinations are open for overseas personnel and 219 overseas professional qualifications are recognized. International pilot projects on internet data interaction have been carried out. Special channels for international internet data have been set up in nine key parks. Policies such as "standard land" and "rent first and transfer later" have been introduced to guarantee the demand for land in a more flexible and effective way.

Sixth, we introduced more efficient and sophisticated institutions to secure the implementation of the construction of the FTP. The 24th session of the Standing Committee of the 13th National People's Congress reviewed the draft Hainan Free Trade Port Law and solicited opinions from the public. The first batch of legal adjustment matters have all been settled including the introduction of three laws and seven administrative regulations. Special regulations for key parks such as Sanya Yazhou Bay Resort have been issued. We have also innovated institutional mechanisms for ecological civilization. We streamlined administration and introduced systems such as "one stamp of approval." Thirty-six risk prevention and control measures such as anti-smuggling were introduced. The construction and development environment of the Hainan FTP has been significantly improved.

"Spring brings a new beginning and the best is yet to come." With the implementation of Hainan FTP policies and systems, the improvement of the development environment, and the increase of market players, Hainan will surely become a popular destination for investment and business. Thank you all!

Chen Wenjun:

Thank you, Mr. Cong. Next, I will give the floor to Mr. Shen.

Shen Xiaoming:

Ladies and gentlemen, friends from the media:

Good morning, everyone! First of all, I would like to express my sincere gratitude to all sectors of society for their attention and support during the comprehensive deepening of reform and opening up and the construction of a free trade port in Hainan. On April 13, 2018, General Secretary Xi Jinping delivered an important speech at a conference celebrating the 30th anniversary of the founding of Hainan province and the Hainan Special Economic Zone, giving Hainan a new historical mission to comprehensively deepen reform and opening up, and supporting Hainan to gradually explore and steadily promote the construction of a free trade port with Chinese characteristics. The Master Plan for the Construction of the Hainan Free Trade Port was officially released on June 1, 2020. In the past three years, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, and with the strong support of the central and state departments, other provinces, and all sectors of society, we have put into practice the guiding principles from General Secretary Xi Jinping's important speeches and instructions on Hainan. The vibrant Hainan province has deepened reform and opening up, showing significant changes in ten aspects.

First, our enthusiasm for entrepreneurship has never been higher. We vigorously carried forward the enterprising, pioneering, and hard-working spirit of special economic zones. Each year, we focus on one area and tackle problems centering around the area. We continue to carry out a series of activities such as "making contributions to speed up the construction of the Hainan FTP," encourage government officials to bear the responsibility, and promote the construction of the Hainan FTP to get off to a very good start and develop at a rapid pace.

Second, the quality of economic development has significantly improved. We have made the economic transformation in three aspects, the industrial structure has been optimized, and the quality of development has been considerably enhanced. First, we made the resolve to wean the economy away from the real estate industry. The proportion of industrial investment rose from less than 40% to more than 60%. Second, the economic growth drivers shifted from mainly investment, in particular, real estate and infrastructure investment, to the combination of consumption and investment. Third, we worked to attract various market entities that are in line with the direction of industrial development to participate in the construction of the free trade port. Though under the pressure of real estate regulation and the impact of the epidemic, by great efforts, Hainan's GDP and tax revenue have maintained steady growth, and the main economic indicators are better than the national average. In the first year of the construction of the Hainan FTP, the number of newly established enterprises, the actual use of foreign capital, the number of talents attracted, and offshore duty-free sales have all doubled.

Third, all types of market entities have responded actively. With the implementation of such key policies as the "one negative list and three positive lists for zero tariffs" and the "three lists for lowering market entry threshold," we have added 763,000 market entities in the past three years, exceeding the total number registered entities in the previous 30 years. The utilization of foreign investment has doubled three years in a row, with the three-year aggregate reaching $5.27 billion, a figure more than half the total reported during the previous 30 years combined. For the past three years, central enterprises and their subsidiaries in Hainan saw business revenues grow by more than twentyfold. Additionally, the number of new enterprises grew by 113.7% after the release of the master plan.

Fourth, talent attraction has gained good momentum. With the support of such central ministries and commissions as the Organization Department of the CPC Central Committee as well as other provinces, we have introduced three batches of 285 outstanding officials to work temporarily in Hainan as well as sent four batches of 400 Hainan officials to study in relevant central Party and government departments and developed provinces. Following the instructions of General Secretary Xi Jinping to mobilize the strength of the whole country and attract talents extensively to support the comprehensive deepening of reform in Hainan, we have brought in 233,000 talents for the province since 2018, up by 675% over the preceding period. Among the talents, over 50% were introduced in less than a year after the release of the master plan. Therefore, the first phase of the action plan's goal of attracting 1 million talents to Hainan has been fulfilled. We have also set up one-stop service windows for talents, released administrative measures for overseas personnel to practice and take professional qualification exams in the Hainan FTP, put in place preferential income tax policies for enterprises and individuals, and set salary as the main indicator for evaluating talents. Through these measures, Hainan has become a much better place for talent development.

Fifth, Hainan's environment has seen constant improvement. Hainan's environment is a treasure not only for Hainan people but also for all Chinese people. We have taken solid steps to advance the building of the national pilot zone for ecological progress in Hainan. The pilot program to establish a national tropical rainforest park system has been launched and passed national assessment. The proportion of new energy vehicles owned in Hainan has reached 4.2%, 1.3 times higher than the national level. We have also launched a ban on the production, sale, and use of disposable non-degradable plastic products. Additionally, the use of prefabricated buildings has doubled for three consecutive years; a "zero landfill" model for domestic waste was achieved on the island by the end of last year; the percentage of good air quality days reached 99.5% in 2020 with the average concentration of PM2.5 decreasing to 13 micrograms per cubic meter. The water ecosystems of rivers, lakes, reservoirs, and offshore areas were among the best in China.

Sixth, Hainan's business environment has become increasingly better. By regarding the business environment as the "golden bowl" for the Hainan FTP, we have promoted integrated policy innovation as a key focus and released 12 batches of 116 policy innovation cases. We have strengthened Hainan's one-stop service window for international trade, cutting approval time by 70-80%. Our extremely simple approval procedures are welcomed by all types of market entities.

Seventh, a modern industry landscape is taking shape. We have sped up efforts to form a "3+1" modern industry system (tourism, modern service, high-tech, and high-efficiency tropical agriculture). In terms of tourism and modern services, by making good and full use of the offshore duty-free shopping policy, we have encouraged Chinese consumers to purchase high-end, medical, and educational products and services in Hainan instead of overseas. From May 7 to 10 this year, the first China International Consumer Products Expo will be held in Hainan. In terms of high-tech industry, construction of the Nanfan Agricultural Silicon Valley has made substantial progress; a number of deep-sea projects have been launched at the Yazhou Bay Science City represented by the deep-sea manned submersible Fendouzhe; and China's Mars mission Tianwen-1 and lunar probe Chang'e-5 were launched at the Wenchang International Aerospace City. In the past three years, the number of high-tech enterprises in Hainan has increased by 273%, internet industry revenues have risen by 192% and the supporting role of the high-tech industry has become more and obvious. Regarding high-efficiency tropical agriculture, while we continue to grow rubber trees, betel nut trees, and coconut trees, we have also actively introduced seeds for new varieties of tropical fruit from around the world. Meanwhile, we have encouraged traditional maritime fisheries to move their business onshore or to deep-sea areas and to engage in leisure fishing. The structure of the agricultural industry has been further optimized.

Eighth, risk prevention and control have been forceful and effective. We always believe that "opening up" must be guaranteed through "effective management." The information platform for social management has been put into full use, offering 24-hour monitoring over the flow of people, materials, and capital in offshore areas, along the coastline, and on the island. We have also adopted provisional anti-trafficking regulations to crack down on fraudulent purchases taking advantage of the offshore duty-free shopping policy in accordance with the law.

Ninth, people's sense of gain has steadily been enhanced. We have secured a high-quality victory in the battle against poverty. All five impoverished counties, 600 impoverished villages, and 650,000 registered poor have shaken off poverty. We have accelerated the implementation of a commodity housing program to meet the housing demand of local residents and talents introduced from elsewhere. We have taken forceful steps to curb the rise of consumer prices. We now have 102 schools set up in cooperation with quality educational resources brought in from elsewhere in China. We have also introduced 49 quality medical institutes from other Chinese provinces. With these measures, we have basically achieved the goal of enabling locals to "attend a good school at their doorway" and "get their ailments treated without going to town and their serious illnesses treated without leaving the island."

Tenth, a law on the Hainan FTP is in the making. We are actively cooperating with the National People's Congress (NPC) to make the law so as to give Hainan greater legislative power and power to carry out reforms. Now the NPC Standing Committee has completed the first review and a collection of public opinion.

On April 13 three years ago, General Secretary Xi Jinping made an important speech to welcome worldwide investors to invest in Hainan, participate in the construction of the Hainan FTP, and share China's development opportunities and the fruits of its reforms. Three years on, Hainan has proven by practice that the free trade port is indeed an opportunity for the whole world and we welcome everyone to Hainan. Thank you.

Chen Wenjun:

Thank you, Mr. Shen. Now the floor is open for questions. Please identify your news outlet before asking questions.

CCTV:

General Secretary Xi Jinping has stressed on different occasions that lucid waters and lush mountains are invaluable assets. How will Hainan protect its unique environment as a matter of national importance and ensure that the environment will only improve and never get worse?

Shen Xiaoming:

General Secretary Xi Jinping said during his inspection tour in Hainan that the lucid waters, lush mountains, blue sea, and azure sky are Hainan's strongest advantages and best assets. They are precious objects that can neither be bought nor borrowed. We understand that the lucid waters, lush mountains, blue sea, and azure sky in Hainan are not only precious for Hainan people but also for all Chinese people. Therefore, to best protect Hainan's unique environment is a matter of national importance and one that we must be fully aware of.

To ensure that the environment will only get better and never get worse is something we are resolved to accomplish and these efforts are being led by the construction of the national pilot zone for ecological progress in Hainan. To protect the environment, we will uphold two important concepts. First, we must simultaneously improve the "three environments" (ecological environment, policy environment, and business environment) to support the building of the free trade port. Second, in the development of the free trade port, all other issues must give way to environmental protection. If any issue conflicts with environmental protection, the latter prevails. In other words, we will by no means seek development at the cost of the environment.

Guided by the two concepts, we will mainly focus on three tasks. First, by setting a goal: that Hainan's environment will rank among the best in the world by 2035. Second, we must prioritize governance. We have strengthened governance in the process of rectifying the problems found by the central environmental supervision task force and the national marine supervision task force. We won't rest until these problems are thoroughly resolved. Third, we will launch flagship projects to lead environmental protection efforts. After General Secretary Xi Jinping's April 13 speech, the CPC Hainan Provincial Committee and the Hainan provincial government have planned a number of flagship environmental projects. For example, we have designated 4,400 square kilometers in central Hainan island as a national tropical rainforest park to protect China's only tropical rainforest. We have made a new energy development plan which aims to raise the share of clean energy in Hainan's installed power capacity to about 85% by 2030, a very advanced level even around the world. We also announced that Hainan will no longer sell petrol-fueled vehicles after 2030 and instead promote clean energy vehicles. We have also adopted a ban on disposable non-degradable plastic products which is now gradually being expanded across the island. Additionally, we have vigorously promoted the use of prefabricated buildings and their number has doubled for three years in a row.

Hainan's environment is good. This is a feeling shared by everyone who has been to Hainan. However, we in Hainan are fully aware that a good environment does not mean good environmental protection. Therefore, we need to keep working hard and strive to leave the lucid waters, lush mountains, blue sea, azure sky, and a gradually mature free trade port to the generations to come. That's all I'd like to share on this question. Thank you.

China Reform Daily:

Mr. Cong, in your opening remarks, you introduced the development of policy framework in the Hainan FTP. As one of the main leading departments, what has the NDRC done in this regard? Can you elaborate a little? Thank you.

Cong Liang:

Thank you for your question. Just now, I gave a general overview of the development of the policy framework in the Hainan FTP, which is the result of the joint efforts by all departments and Hainan province. Since 2020, the NDRC has fully grasped and put into practice the principles from General Secretary Xi Jinping's major addresses and instructions, and implemented the decisions and arrangements of the CPC Central Committee and the State Council. We have innovated methods, fully performed our duties, and lost no time in making important policies and advancing major projects. Alongside Hainan province and other departments, we have jointly promoted the construction of the policy framework in the Hainan FTP.

The NDRC's work can be summarized as "three specials and one major." We have rolled out three special policies for the Hainan FTP, and boosted the construction of major projects in the Hainan FTP.

The first special policy is the Special Administrative Measures for the Access of Foreign Investment in Hainan Free Trade Port (Negative List). To further increase the liberalization and facilitation of investment in the Hainan FTP, accelerate the forming of globally competitive opening-up systems and policies, and turn the Hainan FTP into a flagbearer and window for opening-up in the new era, on Dec. 31, 2020, the NDRC and the Ministry of Commerce released the Special Administrative Measures for the Access of Foreign Investment in Hainan Free Trade Port (Negative List) (2020 Edition). Compared with the negative list with 30 restricted items for pilot free trade zones released in 2020, the negative list for the Hainan FTP was shortened to 27 items. The prohibitions and restrictions for some other items were also reduced, aiming at supporting the Hainan FTP to take a lead in further opening-up. Going forward, according to the requirements of the master plan, we will continue to shorten the negative list, and gradually allow more convenient and freer investment in Hainan.

The second special policy is the Catalogue of Encouraged Industries of Hainan FTP. In order to guide the industries in the Hainan FTP to develop in the right direction, and promote the clustering of domestic and international high-quality enterprises, on Jan. 27, 2021, the NDRC, the Ministry of Finance and the State Taxation Administration jointly introduced the Catalogue of Encouraged Industries of Hainan FTP (2020 Edition). Based on the current National Industrial Catalogue, it has added 14 more major categories and 143 sub-industries, basically covering all major industries and sectors in the Hainan FTP. The catalogue not only includes a wide range of items, but also highlights the development needs of the tourism industry, the modern service industry and the high technology industry. Next, we will make appropriate adjustments to the catalogue according to the needs in the construction of the Hainan FTP.

The third special policy concerns the special measures to ease market access in the Hainan FTP. In order to better leverage the distinct advantages of the Hainan FTP, which is positioned to experiment with the highest level of policies, and to explore a market access policy system, a supervision model and a governance institution with more flexibility and efficiency, several days ago, the NDRC and the Ministry of Finance jointly rolled out a series of special measures. Focusing on the functions of the Hainan FTP, we have proposed 22 measures for special market access that will deliver greater benefits in sectors including medical care, finance, culture and education. We will effectively promote the concentration of high-quality production factors, and speed up the fostering of new advantages with Hainan characteristics in cooperation and competition.

The "one major" refers to advancing the construction of major projects in the Hainan FTP. We have studied and made an action plan for the construction of major projects in the Hainan FTP, and established a reservation system for major projects. We have released the Regulations on the Management of Projects within Central Government Budget under Major Regional Development Strategies (Advancing Overall Reform and Opening-up in Hainan), and allocated 10 billion yuan to support the software and hardware infrastructure construction in the Hainan FTP. We have issued the Smart Hainan Plan and the Plan for Hainan to Build a Modern Comprehensive Transport System, so as to advance the construction of major projects in new-type infrastructure, transport and energy. We have included Hainan into the pilot project of the real estate investment trusts in infrastructure — the REITs pilot project — in a bid to support Hainan in vitalizing its existing assets, and expand financing channels in constructing major projects.

CRNTT:

Talent is the crucial foundation for constructing the Hainan FTP. Since June 1, 2020, when the CPC Central Committee and the State Council published the Master Plan for the Construction of the Hainan Free Trade Port, relevant departments have introduced a range of policies to attract talent to Hainan. How has the implementation progressed? And what measures will be taken to enrich the talent team in Hainan?

Shen Xiaoming:

As General Secretary Xi Jinping proposed at the celebration of the 30th anniversary of the founding of Hainan province and the Hainan Special Economic Zone on April 13, 2018, deepening overall reform and opening-up in Hainan is a major national strategy, which requires rallying support from the entire country as well as global talented people. We must realize that in deepening Hainan's reform and opening-up, and constructing the FTP, talent remains the top priority resource. Since April 13, 2018, the central government and relevant departments have fully supported Hainan in pooling talent. Hainan has rolled out a series of policies concerning talent, and has preliminarily founded a talent-related policy system that is scientific and effective. I mentioned earlier that during the last three years since April 13, 2018, Hainan has introduced 233,000 professionals. The number increased 675% over 2018. What delighted us more is that over half of these 233,000 professionals were introduced in less than a year since the master plan was released. That is to say, the speed of introducing talent has increased.

Next, as you mentioned, we will further enlarge the talent team in Hainan. However, as I always tell my colleagues in Hainan, it is important to both introduce talent as well as foster talent. We need both talent introduced from outside and local talent. The master plan runs until 2050, and I often feel that we are lucky to be the first generation in its construction. Where is the last generation or those who will make the final sprint in the campaign? Perhaps they are still in kindergarten. As such, developing education in Hainan is of strategic significance in expanding the talent team there. Thank you.

CNR:

We have noticed that the Master Plan for the Construction of the Hainan Free Trade Port mentions gradually opening up and achieving initial results before 2025. The Ministry of Finance has released a series of supporting policies. What role have these supporting policies played? Thank you.

Zou Jiayi:

Thank you for your question. The master plan has proposed an arrangement for fiscal and tax policies. That is, to implement a simplified tax system with zero tariffs and low tax rates by phrases. Before launching island-wide special customs clearance operations, we will focus on zero tariffs and low tax rates. Specifically, we will exempt tariffs for some imported goods, and implement low income tax rates for enterprises and individuals that meet relevant requirements. Meanwhile, we will implement value-added tax policy for relevant shipping vessels. In total, 12 taxation policies are involved.

In the past year, nine of the 12 policies were introduced as they matured. The first was the offshore duty-free shopping policy. The second was the zero-tariff policy for raw and auxiliary materials. The third was the zero-tariff policy for vehicles and yachts. The fourth was the zero-tariff policy for production equipment imported by enterprises for self-use. The fifth was the preferential policy for corporate income tax. The sixth was the preferential policy of individual income tax for high-end and urgently-needed professionals. The seventh was the value-added tax policy for international shipping vessels. The eighth was the tax refund policy for ports of departure. The ninth was the policy for domestic ships with both domestic and foreign trade goods on board, allowing them to refuel with bonded fuel oil required for the voyage, or claim tax refund if they refuel with locally produced fuel oil for the voyage. These nine policies have contributed to the early results in constructing the Hainan FTP.

The policies will play roles in four aspects. First, they will support the construction of an international tourism consumption center. Offshore duty-free shopping policies have been improved. The duty-free shopping quota has been raised to 100,000 yuan per person per year. The categories of duty-free goods have been expanded to 45. The duty-free limit for a single product and the single-purchase quantity limit on most goods have been cancelled. That means, within the 100,000-yuan quota per year, people can buy a watch, or multiple lower-priced items.

Under most circumstances, there is no limit on the quantity of items that can be bought in a single purchase, except for a small number of goods such as cosmetics, cell phones and alcohol. Meanwhile, to make it more convenient for tourists to purchase goods, besides picking up purchases in the restricted areas of airports, train stations and ports, there are two more collection methods, namely, express delivery and pickup after returning to the island.

Pickup after returning to the island is designed for Hainan residents who depart for business or travel, allowing them to collect their duty-free purchases after returning to the island. Express delivery is for the convenience of tourists, so that they don't have to carry the goods themselves, but can instead leave an address and have the shop mail the goods to their home. In addition, six offshore duty-free stores have been added — three in Haikou and three in Sanya. With the four previous stores, there are now a total of 10 offshore duty-free stores in Hainan.

Second, optimization and upgrade of the industrial structure will be supported. We have issued a zero-tariff policy for raw materials, transportation and yachts, and self-used production equipment, as well as preferential income tax policy for enterprises. The zero-tariff policy for raw and auxiliary materials is applied to positive list management, which means raw and auxiliary materials in the positive list that are imported into and used for production within the island, or consumed in the processing trade and service trade of which final products would be exported to overseas are exempted from custom duties, import value-added tax and consumption tax. The zero-tariff policy for transportation and yachts is also applied to the positive list management, which means vessels, aircrafts, vehicles, yachts and other transportation in the import manifest used for transport and tourism in the island are exempted from custom duties, import value-added tax and consumption tax. The zero-tariff policy for self-used production equipment is applied to negative list management, which means equipment excluded from the negative list, or not belonging to commodities that laws, regulations and relevant provisions have clarified are not exempted from tax and not allowed to import, are exempted from custom duties, import value-added tax and consumption tax. The preferential income tax policy for enterprises refers to reducing the enterprise income tax of encouraged industries registered and substantively operated in Hainan FTP by 15%. Income from newly increased overseas direct investment of enterprises related to tourism, the modern service industry and high and new technology in Hainan FTP will be exempted from income tax. Qualified capital expenditure of enterprises may apply for a one-time pretax deduction or accelerated depreciation and amortization in the current period when the expenditure occurs.

Third, we will support the introduction of high-caliber, high-tech, and urgently-needed talents. Just now, a Hong Kong journalist asked a question about the talent introduction policy in Hainan, which also involves fiscal policy support. We have issued a preferential policy for individual income tax. For high-end and urgently-needed talents working in Hainan FTP, the portion exceeding 15% of the actual tax burden of their individual income tax will be exempted.

Forth, the construction of an international shipping hub for the new land-sea transit routes in the western region will be supported. We have issued three policies in this area. First, added-value tax will be rebated when domestic ship building enterprises sell qualified ships to transportation enterprises. Second, domestic ships using Yangpu Port as their transit port and engaging in domestic and foreign trade by the same ship are allowed to refuel with bonded oil required for the voyage at Yangpu Port. Export tax will be rebated when ships refuel locally-produced oil required for the voyage at Yangpu Port. Third, port of departure tax will be rebated for container goods that have been declared and exported by export enterprises at customs at the port of departure; taken direct routes to or stopped at designated ports during waterway custom transfer; and that are departing China from Yangpu Port in Hainan. Thank you.

ITAR-TASS:

I'd like to ask a question about cooperation between Hainan FTP and Russia. Recently, Hainan FTP issued policies on attracting foreign investment. What are the fields with the greatest potential for cooperation between Hainan FTP and Russia? What are the most important advantages of the bilateral cooperation? Thank you.

Feng Fei:

Thanks for your concern about the construction of Hainan FTP. In the past three years, the explosive growth in foreign investment has become a highlight in the construction of Hainan FTP. Hainan has become a "new favored place" for global investment. Specifically, I'd like to explain this through three areas in which we've witnessed exponential growth. First, Hainan's actual use of foreign capital has doubled annually for three years in a row, with the aggregate exceeding half of what the island province had accumulated over 30 years since it became a special economic zone in 1988. Second, the number of foreign investment entities has multiplied. The number of newly established foreign-invested companies in Hainan reached 1,005 last year, surpassing the 1,000 mark and nearing three times that of 2019. It was not easy to achieve such results since last year was severely impacted by the pandemic. Third, the number of sources of foreign investment grew exponentially. At present, more than 80 countries and regions including Russia have invested in Hainan.

Why has Hainan become a "new favored place" for global investment? I would use two points to sum up its favorable policies. First, Hainan has the lowest number of items on its foreign investment negative list. There are 33 items on the national list, 30 on the list of free trade zones, and 27 on the list of Hainan. Second, Hainan has the lowest tax and that might be what foreign-invested companies care most about. Take corporate income tax as an example. Companies in industries encouraged by Hainan enjoy a preferential corporate income tax rate of 15%. High-end talents pay income tax no higher than 15% of their gross income. Those two policies are exclusive to Hainan.

Regarding cooperation with Russia, we have considerations in two areas. First, we will deepen tourism cooperation. In 2019, 330,000 Russian travelers visited Hainan, which means among every four foreign visitors, one was from Russia. After the pandemic, we hope the flights between Russia and Hainan will soon be resumed, and more Russian friends will visit Hainan. Meanwhile, the fitness and elderly-care industry and shopping will bring new experiences for Russian travelers. Second, we will expand cooperation with Russia in the areas of culture, sport and technology, but especially culture. Russia is famous for its rich and colorful culture. Take art performances as an example. China's central government has approved foreign investment to establish commercial performance brokerage firms in Hainan. We hope to deepen bilateral cooperation in this field, and achieve mutual benefit and win-win results. Thank you.

China News Service:

To promote trade liberalization and facilitation is always the key point for the construction of Hainan FTP. What has the Ministry of Commerce (MOC) done in this area? What are the latest considerations and plans for the future? Thank you.

Wang Shouwen:

Thanks for your question. Trade liberalization and facilitation is a common feature of international advanced free trade ports, and also a key point for the construction of Hainan FTP. On June 1, 2020, the CPC Central Committee and the State Council released the Master Plan for the Construction of the Hainan Free Trade Port, which systematically designed the policies and regulations in the field of foreign trade, and clarified the goals expected to be achieved by 2025 and step-by-step arrangements. Since the construction of Hainan FTP began, the MOC has actively implemented the master plan and the relevant institutional arrangements of trade policies. We have already carried out the following measures.

First, we have studied and drafted the negative list of cross-border service trade for Hainan FTP. Currently, the drafting of the list has been completed and the corresponding procedures are under way.

Second, we drafted and reported to the State Council to release relevant replies on comprehensively deepening trials for the innovative development of service trade last August. A three-year trial will be launched in Hainan and other places to deeply explore new systems for the innovative development of service trade.

Third, the MOC and Hainan provincial government will co-hold the first China International Consumer Products Expo on May 7-10, which is now in intensive preparation.

Moreover, the MOC and other relevant departments are busy working to promote policy adjustment for duty-free shopping on offshore islands, the zero-tariff list for several imported goods, and the supervisory measures of duty-free shopping for goods with 30% added-value at Yangpu Bonded Port. Mr. Zou gave us a detailed introduction about this area just now. I'd like to emphasize that in order to implement the master plan, especially based on the new development stage and new development philosophy, and in line with the needs of the construction of Hainan FTP, the MOC and 19 other relevant departments have proposed a number of measures to advance trade liberalization and facilitation in Hainan FTP. The measures have been authorized by the State Council and formed into documents. Next, the MOC and 19 other relevant departments will release the documents, which contain 28 items of policies and measures relating to liberalization and facilitation of trade in goods and service. You can learn more specific content after its release, and here I'd like to briefly introduce these 28 items.

First, we will implement specific tasks of the Master Plan for the Construction of the Hainan Free Trade Port. For example, in the area of trade in goods, we will adhere to the principle of free flow through the "first line" and efficient control at the "second line." (The "first line" refers to the demarcation line between Hainan FTP and other countries and overseas regions while the "second line" refers to the dividing line between Hainan FTP and other regions on the Chinese mainland.) We will allow certain regions to relax their control of import and export qualifications for and quantities of commodities such as crude oil, refined oil and sugar, and cancel their licensing systems for imports such as mechanical and electrical products. In the area of trade in services, in accordance with the requirement of "allowing both access and operation," foreign institutions are explicitly allowed to independently hold foreign-related economic and technological exhibitions with names other than "China," "Chinese," or "national." Business activities related to technological import and export will no longer need to record registration for foreign trade operators. We are exploring ways to cancel examination and permission for auction enterprises and records of commercial franchise.

Second, we will serve the construction needs of the Hainan FTP. The supporting measures will include: delegating refueling permission of bonded bunker fuel for ships engaged on international voyages; greenlighting Hainan for the export of secondhand vehicles; piloting accreditation of trade in goods-related commodities, management and service certification bodies; encouraging Hainan to develop new trade patterns such as offshore global trade, digital, technological and cultural trade, as well as the exhibition economy; welcoming the establishment of trade bases of cultural goods; vigorously innovating models of international cooperation in the trade in service sector; and expanding trade by focusing on market entities, so as to build Hainan into a new global and regional offshore trade center as well as an exhibition center.

Third, we will optimize supporting policies in the trade sector. The following measures will be taken: improving risk warning and rapid response supervision capabilities for the quality and security of imports and exports; strengthening innovation of the customs supervision model; implementing multi-level approval models; facilitating prescribed examination procedures; supporting Hainan to participate in establishing recommended national, regional or group standards; establishing work stations to deal with trade frictions and mechanisms for trade adjustment and assistance; and improving the statistical monitoring system and other measures in a bid to realize integrated innovation in trade systems.

Next, the MOC will work with relevant departments to expedite trade liberalization and facilitation at the Hainan FTP. Thank you.

Guangming Daily:

With regards to China's efforts in fostering a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other, what is the positioning of the Hainan FTP, and how will it play its role? Thank you.

Shen Xiaoming:

I will summarize the two questions. The first is regarding the positioning of the Hainan FTP within the new development paradigm, and the second involves how it will play the role. I will start by answering the first question.

We have positioned the Hainan FTP at the intersection between domestic and international circulations. If dual circulation is shaped like the figure "8," Hainan province is situated right at the point the two loops intersect. Some may ask why. There are three reasons: First, at an institutional level, after the island-wide customs clearance operation in 2025, it will become a special region for importing and exporting commodities. Second, at a policy level, the main policy aims to facilitate free trade and investment, and almost all its policies are made for fostering international investment and making free trade more convenient. Therefore, the policy puts Hainan at an intersection linking domestic and international circulations. Third, with its special geographical location, Hainan connects the world's two most vibrant markets — the Chinese mainland and Southeast Asia — making it a natural intersection of the "dual circulations." Based on these three reasons, I think Hainan's positioning is highly important and significant in China's new development paradigm.

As for how the Hainan FTP will play its role, our consideration is as follows: it will follow the most advanced international trading standards, and will make full use of its investment and trade facilitation policies to attract talents, resources and capital in the process of "dual circulation." We hope the convergence will go beyond the material level to cause a knock-on effect, with macro and long-term significance. For instance, in the current context, COVID-19 is still raging around the world, hindering the easy flow of people, goods and capital globally. However, we can seize the opportunity against such a background to boost consumption at home, mainly in the following three aspects: first, the pandemic has stopped many consumers who wanted to buy luxury and high-end goods abroad. We adjusted our offshore duty free rules in a timely manner under the support of such departments as the Ministry of Finance, the GACC, the State Administration of Taxation, as well as the NDRC. The total amount of offshore duty-free sales last year was double that in 2019, reaching 30 billion yuan, and we expect the amount to exceed 60 billion yuan this year. This is the first aspect we will work on: bringing consumption back from abroad.

Our second effort aims to bring medical services back from abroad. This refers to patients who intended to travel overseas for medical treatment but couldn't, like those with cancer, after receiving the first period of targeted therapy abroad, they couldn't continue with the second phase treatment overseas as the pandemic halted international travel. The Boao Hope City in Hainan stepped in. Here patients can legally access new foreign drugs in Hainan that cannot be found in the domestic market. This explains what bringing back medical services is.

Our third effort aims to provide quality educational resources. Since the outbreak of COVID-19, some Chinese students have been unable to go abroad to study and their parents are worried about their children in case another pandemic hits in the future. Can students access high-quality international or even top-quality educational resources? Overseas universities which boast large numbers of Chinese students are also seeking ways of mitigating against similar emergencies and hope to open branches in China. Hainan is targeted to become an island for international education innovation. Through the introduction of top education resources from abroad, the domestic need for quality education can be well addressed. At present, Harrow International School is now open in Haikou and will followed by others this fall in Lingshui Li'An International Education Innovation Pilot Zone, while a large number of other projects are also underway.

We have taken the initial steps in promoting bringing back consumption. Compared with the 1 trillion yuan overseas consumption on commodities, the 800,000 patients receiving treatment abroad, and the 800,000 Chinese students studying overseas, the proportion is not high. However, its future has received much attention from market players. What I said is only one example of how the Hainan FTP can play its role, and there are many more examples. Thank you.

Hong Kong Economic Herald:

My question is for Mr. Shen. I remember a previous report saying that in terms of building an international business environment, Hainan was inefficient in providing professional services, as it lacked professional service institutions. And, it was not very competitive in attracting foreign investment. What has changed? What shortcomings does Hainan need to address? And how much does Hainan need to do in order to achieve a more ideal business environment?

Shen Xiaoming:

Mr. Feng will answer this question.

Feng Fei:

Thank you for paying attention to Hainan's business environment. Mr. Shen just mentioned a very important point, which is that business environment, ecological environment, and policy environment should become the core competitiveness of Hainan. We will strive to combine these three environments to optimize Hainan's development environment. In General Secretary Xi Jinping's important speech on April 13, he urged Hainan to expedite plans to foster a law-based, international, and convenient business environment as well as a fair, open, unified, and efficient market environment. These are also the ways in which Hainan can strive to improve its business environment.

In the Master Plan for the Construction of the Hainan Free Trade Port, we clarified our development goals in different stages. By 2025, we will have built an overall first-rate business environment in China. By 2035, the business environment will be further improved. Over the past years, Hainan has made great efforts to improve its business environment and fostered many renowned, national brands. Particularly, we have paid attention to the integrated and systematic innovation. For example, we led the country in implementing reforms of combining different types of plans into a single plan within the province. We have also regulated the use of all territorial space in a unified way, reflecting the need for a single blueprint to lay out all projects, a single form for application materials, and a single system for approval and inspection services. These efforts effectively solved problems that previously arose from excessive planning and met the needs for land, sea, and forest s of construction projects. For example, we promoted minimum approvals in key parks of Hainan Pilot Free Trade Zone, the replacement of project initiation approval with planning approval, and the replacement of single project assessment with regional assessment. We cut the number of approval items from 70 to four and the time needed for approval by over 80%. We also updated the single-window system for international trade, cutting the time needed for clearance to half the time needed three years ago. We continue to carry out innovative approaches for easier clearance such as "internet + appointments," post-release duty payments, and consolidated duty collections. Additionally, the "release after inspection" model allows imported products to pass through clearance if they meet inspection requirements. Another example is the "one seal approval" model, which allows the transfer of around 300 administrative items in a centralized, unified way. Finally, companies and individuals can now access government services via a single office, without turning to multiple offices.

Generally speaking, Hainan has achieved great progress in improving its business environment. We can see from Mr. Shen's examples of market entities, companies, and foreign investment, that Hainan's favorable business environment is widely recognized by companies. Objectively speaking, there is still room for improvement when compared to the master plan, specifically concerning the requirements of creating a market-oriented, law-based, and internationalized business environment, and other developed provinces and cities in the country.

Therefore, we will ramp up efforts to further optimize the business environment in three aspects, which are as follows. First, we will set goals for guiding the reform of the business environment. For example, we proposed improvements to government services by letting people access them in any region within the province and complete the process without the need for a second trip. Second, we will make quantitative goals in line with the standards of the World Bank, making our annual work quantified and specified across cities and provinces. Third, we will build a mechanism for assessing the business environment that enables the market to play its decisive role and allows participation from all companies and customers.

Again, a law-based environment is the best business environment as well as the most stable and predictable. Mr. Shen just discussed how the Hainan Free Trade Port Law will be implemented. This year, we will accelerate the formulation of laws and regulations on fair competition, social credit, and business registration and deregistration. In the meantime, we will push forward the building of a law-based government in all respects and regulate activities between the government and market in a law-based manner and through law-based procedures and approaches, protecting the legitimate rights and interests of investors.

I also want to take the initiative to respond to the recent incident which happened in Sanya involving tourists who recently complained that the sea urchin steamed eggs that they ordered at a restaurant did not contain any sea urchins. The Hainan Provincial Committee of the CPC and the Hainan provincial government attach great importance to the order of the tourism market and over the years have taken a series of strict measures in three aspects, including changes to the supervision system, complaint mechanisms, and special campaigns. We will carry out a thorough investigation, address the matter in line with the law and respond to public concerns in a timely manner. Thank you.

Red Star News:

Since July 1, 2020, new policies on duty-free shopping for travelers leaving Hainan Island have aroused a great deal of public interest, increasing the public's enthusiasm for tourism and shopping in Hainan. Since Feb 2, 2021, two new pick-up methods have been added: delivery by post and pick-up on the island. This has facilitated the shopping experience for travelers but has also further increased the regulatory pressure on customs. What are the considerations in preventing the purchase and resale of duty-free goods on the mainland (known as "tao daigou")? Thank you.

Zhang Jiwen:

Thank you for your question. The GACC resolutely implements the instructions given by General Secretary Xi Jinping on the construction of the Hainan FTP and the decisions and plans made by the CPC Central Committee and the State Council. We are actively exercising our functions, strengthening supervision, and improving our service to fully support the construction of the Hainan FTP.

Policies on duty-free shopping for travelers leaving Hainan Island is one of the major achievements in the initial stage of the construction of the Hainan FTP. Starting from July 1 of last year, Hainan increased its annual tax-free shopping quota from 30,000 yuan to 100,000 yuan, expanding the range of duty-free goods from 38 to 45 categories. To ensure the smooth implementation of these new policies, customs are actively participating in timely policy creation and the adjustment of clearance procedures according to the new annual quota and categories. We also created targeted regulations based on their supervision and updated the customs' information management system. All of these efforts effectively guaranteed the implementation of new policies.

Implementation of new policies has greatly promoted Hainan to build itself into an international tourism consumption center and boosted growth in Hainan's foreign trade. Data from customs show that, between July 1, 2020, and April 6, 2021, Hainan reported duty-free sales of 34.7 billion yuan, up 244% from the same period last year. Duty-free shops in Hainan received 4.96 million customers and sold 43.26 million products during the same period, up 215% and 101% year on year, respectively. It is obvious that stimulus in consumption was brought about by preferential policies. On Feb 2, 2021, to make it more convenient for travelers to shop and maximize policy effects, methods were added for duty-free shoppers leaving Hainan Island, allowing them to pick up goods through delivery by post and after their return to Hainan Island. Customs attaches great importance to the new policies and on Feb 3, we published the Announcement on Issuing the Supervisory Requirements for the Methods of Picking up Goods through Delivery by Post and after Return to Hainan Island for the Duty-free Shopping of Travelers Leaving Hainan Island, clarifying the specific requirements for supervision. In the meantime, we will work actively to publicize and explain the supervision methods of customs. From Feb 3 to April 6, Hainan's offshore duty-free companies reported 400-million-yuan's worth in duty-free shopping sales via delivery by post, involving 100,000 customers and 530,000 products. They also accepted applications from the island's residents to pick up products after return to Hainan island, involving 2,216 duty-free products worth 2.62 million yuan purchased by 406 travelers.

We continue to improve and update the regulatory models and facilitate our services. In the meantime, we will crack down on illegal smuggling activities, such as "tao daigou," which exploit duty-free shopping policies. Customs has always taken strict measures to crack down on such practices by solving major crimes and dismantling smuggling gangs and networks. This has helped to ensure the stable and orderly implementation of policies for duty-free shopping and protected the legitimate rights and interests of most travelers.

In the past two years or so, Haikou Customs, under the guidance of the GACC, has carried out 11 rounds of special campaigns against smuggling through offshore duty-free channels. A total of 66 smuggling gangs were eliminated, involving cases worth about 200 million yuan. From July 2020 to now, more than 8,000 people who violated offshore duty-free shopping regulations were banned from enjoying the duty-free policies for three years. At the same time, in order to fully leverage the advantages of regional collaboration, Zhanjiang Customs and Haikou Customs have carried out joint operations against smuggling through offshore duty-free channels since January. So far, four rounds of joint campaigns against smuggling activities have been carried out and five criminal cases have been filed, involving illegal goods worth 26.84 million yuan.

In the next step, by adhering to the premise that opening-up can only serve its purpose when supported with enhanced oversight, customs will continue to make targeted crackdowns on various smuggling crimes during the construction of the Hainan FTP. Through these measures, we will ensure that the decisions and deployments of the CPC Central Committee and the State Council can be implemented to support the healthy development of the Hainan FTP. Thank you.

Cover News:

Since the release of the master plan, how are the relevant policies issued by the Ministry of Finance working out? What are your considerations in expanding the range of duty-free products in the future? Thank you.

Zou Jiayi:

Thank you for your questions. I just introduced that nine of the 12 fiscal and tax policies have so far been implemented. These nine policies, which have been in place for a significant amount of time, have achieved remarkable progress so far. The other policies, which were implemented more recently, are so far paying off and their effects will become clearer with time.

The policies yielding remarkable results include the offshore duty-free policy we repeatedly mentioned just now. The policy took effect on July 1 last year and duty-free sales had already exceeded 30 billion yuan by the end of March, registering a growth rate more than double that of the previous year. Sales under the supervision of the General Administration of Customs, as Mr. Zhang Jiwen just described, reached 34.7 billion yuan, with both the number of shopping trips and the quota for per capita shopping increasing significantly year-on-year. In June last year, I also introduced Hainan's offshore duty-free policy. At that time, journalists said that I was live-streaming e-commerce for Hainan. Now it seems that they no longer need me to do so. As Mr. Shen Xiaoming said, sales of offshore duty-free goods are expected to exceed 60 billion yuan this year. As the Chinese saying goes: peaches and plums, without speaking, form a path under them. The policy has indeed played a role in attracting visitors to Hainan, which stimulated the vitality of local tourism, the consumption market and promoted the development of related industries. In addition, the preferential policies for enterprise income tax and individual income tax that have been in place since Jan 1, 2020, reduced the tax burden of enterprises and attracted high-end talents to Hainan when they were in short supply. The number of new market players in Hainan has increased rapidly and all kinds of talents have continued to come to Hainan.

Additionally, policies that have been implemented for a relatively short time are slowly seeing benefits. For example, since the zero-tariff policies for raw and auxiliary materials, vehicles and yachts, and equipment for enterprises' use were adopted starting last November, the value of goods from these preferential policies has reached nearly 900 million yuan, while tax exemptions have exceeded 100 million yuan, effectively reducing the import cost of enterprises. I believe, with the steady implementation of these policies, more market players will benefit and the positive effects of these policies will further be unleashed.

On the whole, the adoption of the above fiscal and tax policies has delivered notable progress, boosted the confidence across all sectors involved in the construction of the Hainan FTP, and attracted more people, logistics, and funds to Hainan, laying a good foundation for the smooth start of the Hainan FTP construction.

The journalist also asked what are the future considerations in expanding the categories of duty-free goods? Nine of the 12 fiscal and tax policies just mentioned have been adopted and the other three policies are yet to be adopted. Next, we will step up efforts to speed up the adoption of the three policies: the zero-tariff policy for imported goods purchased by island residents, the duty-free policy for overseas exhibits at the China International Consumer Goods Expo to be held from May 7 to 10 in Hainan, and the policy to allow flights in and out of Hainan to refuel with bonded aviation fuel. We will work for the adoption of these three policies as soon as possible and closely follow the implementation of the nine policies that have already been adopted, assessing their effects promptly and make dynamic adjustments and improvements. Regarding the zero-tariff policies for list management, in particular, we will continue to expand the positive list categories and narrow the negative list categories to promote the steady progress of the Hainan FTP construction. Thank you.

Hainan Broadcasting Group:

What progress has the PBC and the SAFE made in promoting the construction of the Hainan FTP and facilitating the free cross-border capital flow since the release of the Master Plan for the Construction of the Hainan Free Trade Port last year? Thank you.

Wang Chunying:

Thanks for your question. It is stated in the master plan that "we should stick to the principle that finance serves the real economy; focus on trade and investment liberalization and facilitation to open capital accounts in phases; and promote the Hainan FTP and cross-border flow of funds in an orderly manner." According to the schedule laid out in the master plan, the PBC and the SAFE have adopted policies on the liberalization and facilitation of cross-border capital flow to support the development of the Hainan FTP. To sum up, the policies and their progress are mainly as follows:

First, the policy to promote the development of the accounting system. We support Hainan to launch free trade accounts, also known as FT accounts, to support enterprises' ability to handle local and foreign currency settlement of cross-border transactions and overseas financing business. The funds in FT accounts can be exchanged in the offshore market. In addition, we piloted the bank settlement account system in some regions, combining local currency with foreign currencies. Last September, Hainan was included as a pilot region and preparations for its launch sometime in the near future have been made.

Second, the policy to raise the facilitation of RMB settlement for cross-border investments. In September 2019, we began to support the offer of RMB settlement of cross-border goods and service trade at the banks in Hainan, upon the cross-border receipt and payment instructions submitted by the high-quality enterprises in the region. Additionally, we made the use of RMB capital account income more convenient within China. Last December, the PBC and the SAFE, together with the National Development and Reform Commission, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), and the China Banking and Insurance Regulatory Commission (CBIRC), jointly released a notice covering 15 articles in five aspects to further improve cross-border RMB policies. These policies mainly focus on the needs of the real economy, ways to promote higher levels of trade and investment of RMB settlement facilitation, means to further simplify the cross-border RMB settlement process, improving cross-border RMB investment and financing management, and facilitating the RMB receipt and payment under the current individual accounts and foreign institutions' use of RMB bank settlement accounts. Last year, cross-border RBM settlements in Hainan increased by nearly 50%.

Third, the policy for cross-border investment management in response to new forms of market demand, including implementation of the foreign investment management system of "pre-entry national treatment" plus the "negative list" in terms of foreign investment management. The exchange business related to foreign investment can be handled at the banks. The SAFE sets no limits on foreign investment not included in the negative list. Direct investments can basically be exchanged. Last December, the SAFE approved the launch of a pilot foreign investment by qualified domestic limited partners (QDLP) at the Hainan FTP and granted a pilot investment quota of $5 billion. At present, the Hainan branch of the SAFE has formulated the QDLP pilot management measures and is organizing and advancing specific pilot work.

Fourth, the policy of improving cross-border investment and financing exchange management. This policy was adopted mainly to meet the needs of investment and financing in Hainan's real economy, supporting the development of Hainan's specialty and relatively competitive industries and giving further priority support to overseas listings. Last September, we spearheaded a pilot reform of overseas listing registration for domestic companies in Hainan, which improves related registration procedures and allows companies registered in Hainan to go directly through overseas listing registration procedures at banks.

In general, the PBC and the SAFE actively implemented the master plan and specific planning work. We gave full play to the role of the Hainan FTP as an opening pilot zone at the forefront of reform. The implementation of pilot policies has been timely and effective and the policy support, including reducing processing hours and costs to enterprises, well meet the needs of Hainan's market players.

Recently, the State Council, the PBC, and the SAFE, together with the CBIRC and the China Securities Regulatory Commission (CSRC), jointly released the Guidelines for Financial Support for Hainan's Comprehensively Deepening Reform and Opening Up. The guidelines state the general principles and policy measures in six aspects on financial support for comprehensively deepening reform and opening up. These policy measures mainly include enhancing the convertibility of RMB to support the liberalization and facilitation of cross-border trade, investment, and financing; improving Hainan's financial market system; expanding the opening up of Hainan's financial industry; boosting the innovation of financial products and services; improving financial services; and strengthening financial regulation to prevent and defuse financial risks. The objective of these guidelines aims to promote the establishment of financial policies and an institutional framework suitable for the Hainan FTP and to consolidate the financial foundation of Hainan.

Next, the PBC and the SAFE will further follow the Master Plan for the Construction of the Hainan Free Trade Port to arrange key tasks step by step in phases by 2025; implement the guideline that finance serves real economy; continue to improve related policies while keeping them in line with actual economic needs and reducing risks; and further expand financial support for the reform and opening up of the Hainan FTP to promote the free and facilitated orderly flow of overseas funds. Recently, we are stepping up efforts to promote a pilot program for the higher-level opening up of cross-border trade and investment to boost innovation in cross-border investment and financial systems; improve the efficiency of market-based resource allocation; and strive to stimulate market vitality to better serve the new development paradigm. This is my response to your question. Thank you.

Chen Wenjun:

As time is limited today, our press conference ends here. Thanks to all speakers and friends from the media. Goodbye!

Translated and edited by Wang Yiming, Wang Wei, Yuan Fang, Wang Qian, Liu Jianing, Chen Xia, Lin Liyao, Fan Junmei, Zhang Tingting, Li Huiru, Cui Can, Liu Qiang, Duan Yaying, Zhang Rui, David Ball, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.