In the over half a year since the publication of the “Master Plan for the Construction of Hainan Free Trade Port” on June 1, the development of the FTP has made several excellent accomplishments, creating quite a buzz in the international community. However, since the start of the FTP development, the topic of “The Hainan FTP replacing Hong Kong” has popped up again and again, and recently it has been rehashed once more by the media. This, though, is a misinterpretation of the original intention and direction of the establishment of the Hainan Free Trade Port.
“As Hainan rises, Hong Kong diminishes” - this saying has appeared before, as early as the 2018 publication of the “The CPC Central Committee and the State Council on Supporting the Comprehensive Deepening of Hainan’s Reform and Opening Up”, when similar ideas surfaced in Western opinion, speculating that the development of the Hainan FTP threatened Hong Kong’s position. In fact,the “Guidance Opinion” and the “Master Plan” are both quite clear that Hainan is to become a Free Trade Port with Chinese characteristics, and does not target anyone, does not seek to counterbalance anyone, and does not replace anyone. The Hainan FTP instead seeks to provide beneficial experience for China in further deepening the nation’s reform and opening-up to the outside world.
In fact, several experts have already performed a careful analysis of the situation, and the majority of them believe that Hong Kong and Hainan’s economies will work together, not compete, that the economies are different and have an excellent opportunity for cooperation, and they reject the narrow-minded minority opinion that Hainan poses any threat to Hong Kong.
On June 8, 2020, the State Council Information Office of the People’s Republic of China held a news conference on the current situation of the “Master Plan for the Construction of Hainan Free Trade Port”, and a reporter raised the following question: “In the future, will Hainan function as a replacement for Hong Kong?” In reply, the PRC National Development and Reform Commission Deputy Director Lin Nianxiu stated that the Hainan Free Trade Port has a different development direction than Hong Kong, emphasizing that Hainan’s key industries are also different, which means that the two should be able to work together instead of competing, and that Hainan will not pose any kind of threat to Hong Kong. He pointed out that Hong Kong, Singapore, and Dubai are excellent examples of modern high level free trade ports. As the Hainan Free Trade Port develops, it will study the previous experiences of these successful international free trade ports, adhering to high international trade regulation standards, and developing an internationally competitive, open system. At the same time, he also pointed out that during the development of the Hainan FTP, the joint development of the Guangdong - Hong Kong - Macao Greater Bay Area will also be strengthened, and that the entire region will work together, ensuring Hong Kong’s long-term peace and stability as well as prosperity.
Meanwhile, Zhao Jinping，President Emeritus of Hainan Institute of Open Economic System has also responded to the question of the different development directions of the Hainan Free Trade Port and Hong Kong. Zhao Jinping pointed out that Hong Kong is an international freight transportation distribution center and transfer hub, as well as a finance center with a strong global influence, while Hainan, which benefits from zero-tariff and 15% personal income tax cap policies, is focused on the development of the key industries of tourism, modern service, and high-tech. This shows that Hainan and Hong Kong possess complementary strengths. In his view, the development of Hainan and Hong Kong is not a zero-sum game, and the rumor that “Hainan will replace Hong Kong” is spreading online due to an insufficient understanding of the very different circumstances of Hainan and Hong Kong.
The “Master Plan for the Construction of Hainan Free Trade Port” clearly positions Hainan as “Tightly centered on the strategic national mission orientation of developing Hainan’s Pilot Zone for Comprehensively Deepening Reform and Opening Up, a Pilot Zone for the Country’s Ecological Civilization, an International Tourism Consumer Center and a Zone Offering Services and Support for the Country’s Major Strategies, fully developing Hainan’s plentiful natural resources, unique geographic location, and with the support of the super-sized domestic market & advantages of the mainland economy, taking advantage of the important opportunities afforded by the first stage of the new global science and technology revolution and industry transformation, focusing on the development of the key tourism, modern service, and new technology industries, and rapidly developing new cooperative and competitive advantages with unique Hainan characteristics.”
From this positioning it is clear that the development of the Hainan Free Trade Port will work to create the above-mentioned “Three Zones and one Center”, focusing on the development of the key tourism, modern service, and new high-tech industries. This makes it very clear that the development direction of the Hainan FTP and Hong Kong are very different, and that their key development industries are also different. The development of the Hainan FTP will expedite the assembly of a local Asia-Pacific industry value chain. Due to these differences in industry development direction, Hainan and Hong Kong will work together instead of competing, and as a result, the Hainan FTP will not challenge Hong Kong’s position, but instead offer even more development opportunities for Hong Kong.
Additionally, as it is well known, Hong Kong is politically and culturally unique, and has its own unique history as well. Hong Kong operates under a capitalist economy, and its political & legal systems, as well as social norms, form complex conditions that are impossible to replicate anywhere else in China. Hong Kong is currently an international finance and transportation center, as well as a transit trade hub.
It is clear that Hainan and Hong Kong have ample room for cooperation and significant mutually-beneficial development opportunities. Making use of Hainan’s geographic advantages and beneficial policies as well as Hong Kong’s unique economic situation, advantages in East-West exchange, and distinct market economy, the two areas are deeply complementary, and joining hands in solidarity, will jointly create the world’s top local Asia-Pacific business environment platform, bringing all-new economic growth opportunities to the entire globe.