Q&A on Free Trade Zones And Trade Disputes
Q:At a celebration of the 30th anniversary of Hainan becoming a special economic zone，President Xi Jinping announced the strategy of establishing the island as a free trade port. The US has been pushing China to open its economy at an accelerated pace. Was this statement by the president a response to US pressure? Is it a signal that China is worried about a possible trade war with the US?
A:The establishment of free trade ports has already been stated in past government reports. What we have here is just a statement of the location. China has been actively working on opening up its economy in accordance with established guidelines，paths，and schedules. Hainan is a provincial level administrative region. Thirty years ago it was added to the list of special economic zones，joining Shenzhen，Zhuhai，Shantou，and Xiamen，which had received that designation almost a decade earlier. These decisions were based on the advantages of all of these areas.
Q:What is the management model for the free trade port of Hainan? How much of an opening will we see for the financial sector?
A:The free trade port draws on an internationally accepted operating model. It is designed to give greater freedom to market players，free up their trading methods，and expand the permitted scope of business. Full decentralization at the level of national ministries and commissions，and the gradual implementation of the provincial government’s policies will help promote the opening up in a steady and gradual manner，instead of in a chaotic opening all at once. In the financial sector，pre-access national treatment and negative lists are policies that can be anticipated.
Q:What are the similarities and differences between the free trade port of Hainan and the Xiongan New Area?
A:In order to understand the difference between the free trade port of Hainan and the Xiongan New Area，attention should be paid to the two core words -- freedom and quality. The free trade port of Hainan is positioned as an important window of reform and opening up. It is an experimental area，a pioneer. It will attract investors from all over the world and provide all-round free and convenient services，including financial services needed to support trade. This will be accomplished through experimentation and development. The Xiongan New Area is positioned as a model for economic development. It has been chosen for this role because of its advantages in its location in the Beijing-Tianjin-Hebei Bohai Gulf region. This will speed the nation’s industrial transformation from a fast and quantity-based form of development into a one based on efficiency and quality. Both concepts are similar in the sense that they are experimental in nature and being made in a relatively closed area. Mature experiences serve as exemplary institutional models. They help us achieve sustainable development of China’s economy.
Q:Would you say that foreign investors should seize this opportunity to register a legal entity in these two regions at this time?