Impact on international transport industry
Hainan is the southernmost province of China, covering a total area of 35,400 square kilometres and bordering 2 million square kilometres of the South China Sea. Its advantageous geographical location has gradually made Hainan province integral to China's imports and exports.
As the government has attached great importance to Hainan's construction and development, in 2018 it decided to start establishing the China Hainan Free Trade Port (the Hainan FTP). On 10 June 2021 the Hainan Free Trade Port Law of China was completed and Hainan province was authorised to develop a series of regulations to support the operation and management of the Hainan FTP.
Impact on international transport industry
The establishment of the Hainan FTP is exciting news for the international transport industry, as the import and export of goods can now proceed more freely and at a lower cost. This article summarises a few important policies on this matter.
Simplified customs' clearance procedures
Except for goods for which inspection and quarantine or licensing documents are legally required, customs will release goods entering the Hainan FTP directly, in accordance with the relevant provisions, to streamline customs' clearance services for market participants.
All goods and articles, apart from the goods and items listed as prohibited or restricted from import and export, may be freely imported and exported between overseas areas and the Hainan FTP under the supervision of customs, in accordance with the law.
However, this does not mean that goods and articles can be circulated randomly within the Chinese territory. For goods entering other areas in China (ie, the mainland) from the Hainan FTP, in principle, the relevant formalities will still be completed according to the import provisions. Articles entering the mainland from the Hainan FTP will be subject to supervision according to the relevant provisions.
With the assistance of these rules and provisions, the Hainan FTP is expected to become a globally influential and high-level free trade port in the next 30 years.
Unrestricted storage time and location
To satisfy environmental protection and work safety requirements, the Hainan FTP will not set any storage time for imported and exported goods. In addition, the storage location of goods may be freely selected.
Negative list management system
The Hainan FTP will implement a negative list management system for cross-border trade in services, as well as a matching fund payment and transfer system. Cross-border trade in services not on the list will be managed under the principle of equal footing – namely, these international market participants will be likely to enjoy the same treatment as national market participants.
Special ship registration system
According to the relevant registration procedures, only ships sailing international routes or routes towards Hong Kong, Macao or Taiwan can be registered. After the registration is completed, the port of registration will be shown as "Yangpu Port, China".
Registered ships can enjoy all benefits of policies associated with the Hainan FPT, including the export tax rebate policy and bonded oil refilling policy.
Air transport services
The government is supporting the opening of the seventh freedom of the air in Hainan province, which allows foreign carriers to operate flights between two foreign countries without the need to touch down in the airline's home country.
To build the Hainan FTP as a new land and sea corridor for western trade, international shipping hub and aviation hub, China is accelerating the study of legal issues relating to international air transport concerning passenger and cargo transit, as well as air transport carried out by foreign airlines from Hainan to other countries. Recently, China has successfully opened the Haikou-Singapore-Jakarta fifth freedom of the air goods' route, and Hainan Boao Airport has been upgraded to an international airport.
Despite the global economic downturn brought by the covid-19 pandemic, the establishment of the Hainan FTP will bring market participants more opportunities and boost the economic development of Hainan island and China. The business environment in the Hainan FTP benefits from China's national strategies and institutional design, and is supported by various policies. It is creating fertile ground for the development of many industries, especially in the retail travel industry. With more policies issued and developed, it may be the case that the Hainan FTP will soon become a free trade centre with a first-class business environment and world-leading levels of openness.
For further information on this topic please contact Jin Yu-Lai at KaiRong Law Firm by telephone (+86 21 5396 1065) or email ([email protected]). The KaiRong Law Firm website can be accessed at www.skrlf.com.