General

According to the observation report of Huacheng Import and Export Data, the construction of the island wide customs closure operation project is a landmark and fundamental project in the construction of Hainan Free Trade Port. The relevant person in charge of Hainan Province introduced that as of now, all preparatory work tasks for the island wide closure operation have made phased progress, and the island wide closure operation will be launched in a timely manner by the end of 2025.

First line liberalization, second line regulation, and freedom within the island

What is a barrier? The entire island of Hainan has become a "domestic and foreign" region, implementing a "first line liberalization, second line management, and free import and export management system for goods within the island".

The "first line" refers to the border line, that is, from overseas to within the free trade zone (port). This means that the connectivity between Hainan and the world will be smoother, and the island will implement more free and convenient trade and investment policies.

The "second line" refers to the spatial division line between the free trade zone (port) and other areas within the territory. It is to carry out moderate regulation between Hainan Free Trade Port and the mainland, with the aim of ensuring the unity of national trade control policies and ensuring a good connection with the domestic tax system gap. The main objects of management are goods, commodities, and transportation vehicles, but there will be no changes in personnel exchanges with mainland China.

Li Shijie, president of the open economy Research Institute of Hainan Province, said that the "front-line liberalization" allows international commodities, ships, goods, etc. to enter and leave Hainan freely, but when entering other regions in China from Hainan, they should be managed according to the same customs management system as other regions in China. Huacheng Import and Export Data Observation Report.

According to Wang Bin, Minister of the Propaganda Department of the Hainan Provincial Party Committee, Hainan has fully launched preparations for the operation of customs clearance throughout the island, mainly including 64 work tasks, 31 construction projects (port construction, customs inspection equipment, etc.), and 27 pressure testing items. Currently, efforts are being made to ensure that the hardware conditions for customs clearance are met this year, all preparations for customs clearance are completed next year, and the entire island's customs clearance operation is completed by the end of 2025.

The first batch of 25 island wide customs clearance operation projects led by our province have all started construction and are currently progressing smoothly. Wang Bin said that the total investment of these 25 island wide customs clearance operation projects is about 11.7 billion yuan, involving 8 open ports, 10 "second line ports", 73 ship management stations in non customs areas, 15 hardware facilities construction of maritime police workstations, and the construction of information supervision platforms. After the completion of the project, it will effectively meet the software and hardware facilities requirements for the island wide closure operation of Hainan Free Trade Port, providing important support for achieving security supervision with multiple means and fewer procedures, as well as precise supervision with low intervention and convenience.

Bringing comprehensive and multi-level benefits

This year is a crucial year for promoting the operation of Hainan Free Trade Port's island wide closure. In terms of institutional design for the construction of Hainan Free Trade Port, the "Overall Plan for the Construction of Hainan Free Trade Port" clearly proposes the construction of a special customs supervision area for the operation of customs closures throughout the island, under the premise of achieving effective supervision.

In terms of establishing a tax system that is suitable for high-level free trade ports, the "Plan" clearly stipulates that before the operation of the island's customs closure, some imported goods will be exempt from import tariffs, import value-added tax, and consumption tax. After the operation of the island wide customs closure and the simplification of the tax system, goods that are not included in the list of imported taxable goods and are allowed to be imported from Hainan Free Trade Port will be exempt from import tariffs. Huacheng Import and Export Data Observation Report.

Experts believe that the island wide lockdown will bring comprehensive and multi-level benefits. For Hainan residents, it will be more convenient to engage in economic and trade activities at the entry and exit points. Zero tariffs on import business and free cross-border capital flow will enhance the sense of happiness and confidence of island residents in engaging in import and export trade.

Zhang Jianping, Deputy Director of the Academic Committee of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, analyzed to our reporter that the preferential policies such as zero tariff, low tax rate, and simplified tax system implemented after customs closure will be more comprehensive and detailed. Zero tariffs mean important business opportunities, and with the implementation of low value-added tax and zero customs duties, various costs for enterprises will be further reduced.

Zhang Jianping believes that the superposition of a series of preferential policies is conducive to the development of Hainan's modern service industry, advanced manufacturing industry, and tropical efficient agriculture, resulting in industrial agglomeration and scale effects. In addition, relevant tax exemption policies will attract a large number of tourists and attract more talents to stay in Hainan, further promoting the development of local catering, hotel, tourism and other industries.

Fully promote the construction of island wide closure operation projects

'Sealing off' is not 'sealing off the island'. The closure of the entire island means that the connection between Hainan Free Trade Port and the outside world will be smoother, and it is a higher level of openness. Huacheng Import and Export Data Observation Report.

After the closure of the entire island, trade between Hainan and various parts of the world will become more frequent, which will also encourage Hainan to participate more in international division of labor and further promote the prosperity and development of China's import and export trade. Expert analysis shows that when offshore tax exemption is converted into landed tax exemption, both overseas personnel entering Hainan and those from other regions within the country can enjoy duty-free treatment for imported goods in Hainan, driving a significant increase in import scale. At the same time, the entry of goods from other regions within the territory into Hainan is considered as an export, and the export scale of Hainan will also further increase. Therefore, the closure of customs will have a significant driving effect on the entire import and export trade.

The closure of the entire island of Hainan will play an important role in promoting the construction of a free trade port in Hainan. Zhang Jianping believes that the closure of the entire island will introduce more high-quality goods to Hainan Province, meet the growing consumer demand of the people, and improve the quality and competitiveness of goods on the island; On the other hand, the closure of the entire island is beneficial for Hainan Province to become a cutting-edge highland for opening up to the outside world, attracting more domestic and foreign investment and high-quality resource inflows, and promoting high-quality economic development in Hainan. Huacheng Import and Export Data Observation Report.

Next, we will focus on the goal of island wide customs clearance operation, scientifically coordinate and construct with high standards, fully promote the construction of island wide customs clearance operation projects, ensure the smooth completion of the main project of customs clearance operation in 2023, and lay a solid foundation for high-quality pressure testing and formal customs clearance operation.