SCIO briefing on master plan for Hainan Free Trade Port

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Economic Daily:

The master plan proposes to build a risk prevention and control system to specifically address risks in key areas. What risks are there in promoting the development of the Hainan FTP? How will Hainan enhance its risk prevention? Thank you.

Liu Cigui:

Thank you for your question. The Hainan FTP, which emerges in an era of China's national rejuvenation with the most profound changes of a century, has become a distinctive feature of China's opening-up and reform. Hainan is just getting started as a free trade port. As a free trade port, Hainan is now pulling off a great undertaking as it will be the only free trade port on the Chinese mainland. Nobody has ever experienced this before. Despite that, we will make sure to give top priority to the risk prevention and control measures you just mentioned. There is a saying that goes, "any regulatory streamlining can only serve its purpose when supported with enhanced compliance oversight." There are some risks that can be expected. Mr. Zou just mentioned the negative list and three positive lists. We have analyzed the risks and developed measures to prevent and control them. There are also risks that may come up during development. We will prepare for these too. 

First of all, it must be made clear that the Hainan FTP is administered under the socialist system with Chinese characteristics, which means it will follow the path of socialism with Chinese characteristics. In other words, despite many free trade ports around the world existing in capitalist countries, Hainan's free trade port will exist under a socialist system. Hence, we will uphold the leadership by the CPC and follow the path of socialism with Chinese characteristics. There are some acts that will not be allowed. These include any acts to endanger national security; ideologically undermine the socialist system; smuggle goods and pornography; gambling, drug abuse and trafficking; any act that destroys Hainan's ecological environment; and finally, corruption during construction. We will formulate and make corresponding prevention and control measures to deal with these matters. 

For more than a year, the Hainan Provincial Party Committee has attached great importance to the risk prevention and control of free trade port, and has done a careful analysis, broadly summarizing 13 categories. There are more than 100 risks, large and small. There may be others we can't think of in the development process, but fear not! As long as we have a strong sense of prevention and resolution, we will continue to improve our ability to prevent and resolve risks and improve social governance.

Many are concerned about Hainan's real estate. One has to work in Hainan for at least one year before getting qualified to buy a house there. The Hainan island-wide purchase restriction was implemented gradually. As a matter of fact, it is also a process of risk prevention and control. Earlier in 2015 when General Secretary Xi Jinping presided over the meeting of the Central Commission for Deepening Overall Reform, Hainan was designated to be a pilot zone for integrating multiple regulations. From then on, we suspended land use approval and building approval for real estate developers. At that time, real estate developers had tens of thousands of hectares of land resources that could be used for the construction of commercial housing. Later, we abolished the assessment of fixed asset investment and fiscal revenue in two thirds of local cities and counties, a move which actually served as a fundamental restriction to the local real estate industry. We did this based on the principle that "houses are for habitation not speculation" and given the facts that there were more than 20,000 real estate developers then in Hainan and that many local cities and counties had their taxes and fixed assets investments rely on selling land for real estate development. After General Secretary Xi Jinping delivered an important speech on April 13, we made a tough decision of implementing home-purchase restrictions across the island in June 2018. Now it seems that we have experienced a great pain, but we believe that the risks historically emerging from real estate with several big ups and downs will not appear again after the release of the free trade port policy. That's why we said some risks can be expected and should be prevented in advance. There are many in this case, so we will start with a mechanism for managing risks.

Second, legislatively speaking, Hainan is implementing its anti-smuggling ordinance with clear provisions against smuggling. After a zero-tariff policy is adopted, the free trade port will enjoy the free flow of goods at the frontline of the territory of China while efficient controls must be put in place at the secondary line of the Customs of China. The control measures mainly target smuggling of goods. Hence, the Standing Committee of Hainan Provincial People's Congress has formulated relevant regulations. As for risks from anti-corruption and integrity I mentioned just now, there will not be a good business environment if these risks cannot be controlled as the public power expands with more projects and investments. In this regard, the provincial commission for discipline inspection and supervision and the auditing office of Hainan has formed a group to supervise over the whole bidding and tendering process of all investment projects in Hainan. 

We have established a social management information platform, not just talking about what we can manage, but also being our hardware. Online anti-smuggling controls have been put in place 12 nautical miles out to sea. This covers 1,944 kilometers of coastline. Our entire shoreline can be monitored seamlessly via satellites, shore-based radar and remote capturing. This is our managing mechanism for controlling risks and anti-smuggling. Thank you.

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