China’s massive Hainan free-trade port plan raises questions over global trading rules compliance, experts say

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While the world is dotted with free-trade and special economic zones, few are on the scale of Hainan, China’s most populous island, covering an area only slightly smaller than Taiwan, and home to more than 9 million people.

Beijing’s latest attempt to reinvent the sleepy tropical island as a massive free-trade port have drawn suggestions that it is trying to replace Hong Kong as the trading entrepôt for multinational companies trying to tap the mainland’s manufacturing base or consumer market.

As a World Trade Organisation (WTO) member in its own right, Hong Kong has independent trade and customs regimes and policies to those set in Beijing. Hainan however, does not, and some experts have questioned whether establishing a separate massive customs regime off China’s southern coast might flout global trading rules.

Hainan will offer duty-free treatment for most goods and commodities, lower income tax and relaxed visa requirements for foreign tourists and professionals, but crucially will also allow goods to enter the rest of China duty free, provided 30 per cent of their value is added on Hainan.

It is thought that customs control between Hainan and mainland China would be established by 2025, with the full Hainan blueprint to be rolled out over the following 10 years.

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