Hainan to boost China-ASEAN exchanges
China Daily


The first working meeting of the Hainan Free Trade Port-ASEAN Think Tank Network held on May 13 focused on how to help strengthen China-ASEAN economic and trade cooperation and enable the Hainan Free Trade Port to play the role of a strategic hub promoting trade, investment and cooperation.

At the second working meeting held recently, we discussed how the network can better carry out its work in the future.

A core objective of building the Hainan Free Trade Port is to transform Hainan into an important hub and market for comprehensive cooperation between China and the Association of Southeast Asian Nations, and make full use of its geographical and opening-up advantages, so it can play a pivotal role in promoting broader, higher-level cooperation and exchanges between China and ASEAN, better connect the two most dynamic markets, and advance the process of regional economic integration.

Chinese firms eager to invest in ASEAN

Many Chinese enterprises want to use the Hainan Free Trade Port as a base to invest, and deepen cooperation with their counterparts, in ASEAN member states. According to a survey on Chinese companies, 56 percent of the respondents said they are planning to enter the ASEAN market, and 60 percent said they want to increase investment in the ASEAN market and expand cooperation with ASEAN companies in the next 12 months, indicating that Chinese enterprises are still very eager to consolidate their presence in ASEAN member states.

In fact, the percentage of Chinese companies planning to enter the ASEAN market is likely to increase to 66 percent in the next three years or so, and their investment in ASEAN could increase by 25-50 percent.

In view of this demand, the China Institute for Reform and Development said in March that building "two headquarters bases" in the Hainan Free Trade Port should be considered a major task — one for helping Chinese companies enter the ASEAN market, the other for ASEAN companies to enter China's market.

The feasibility of Chinese enterprises using the Hainan Free Trade Port as a base for investing in ASEAN states and boosting cooperation with their ASEAN counterparts is immense, as the free trade port's opening-up policies such as the "15 percent corporate profits tax rate policy", the "foreign investment income tax exemption policy" and the "zero tariff policy for importing important commodities and parts" are attracting an increasing number of Chinese companies to set up base in Hainan.

Integrating Chinese and ASEAN markets

In the coming years, a more realistic and pragmatic way to stabilize the China-ASEAN industrial and supply chains and achieve higher-level integration of the Chinese and ASEAN markets would be to use the free trade port as a base to provide facilitating services for Chinese enterprises to invest in the ASEAN market.

How to provide intellectual support for Chinese companies to enter the ASEAN market?

Hainan has been exploring specific measures, and policy and institutional arrangements for building "headquarters bases", but it is yet to resolve some knotty issues. For instance, which Chinese companies can meet the specific needs of which ASEAN member's industries and therefore should invest in the ASEAN market or establish cooperation with ASEAN companies? How large is the ASEAN market space? How can the advantages of the Hainan Free Trade Port in promoting China-ASEAN cooperation be better utilized? What kind of policies will help ASEAN companies to increase their share in the Chinese market through the free trade port?

Objectively speaking, in the short run, the lagging construction of the financial services system remains a weak point of the Hainan Free Trade Port in that it cannot yet ensure Chinese enterprises' entry into the ASEAN market.

Firms can use HK to invest in ASEAN

Hong Kong is the top financial center in the Regional Comprehensive Economic Partnership zone, and its stock market owes about 80 percent of its value to Chinese mainland companies, and more than 80 multinational companies headquartered in ASEAN are already listed on the Hong Kong Stock Exchange. So to enable Chinese enterprises to enter the ASEAN market using the Hainan Free Trade Port as a base, the network should help integrate the Hong Kong Special Administrative Region's financial services with China-ASEAN industrial chains.

There is also a need to intensify joint research on the issue and make the needed policy arrangements and standard alignment.

As a bridge between governments and enterprises, the network's fellow think tanks are urged to conduct policy research especially aimed at helping enterprises meet their business needs and provide them with the necessary help to formulate industrial guidelines for making full use of the free trade port as a platform for helping Chinese and ASEAN enterprises achieve better cooperation results.

How to build institutionalized platforms to help Chinese enterprises enter the ASEAN market?

To begin with, it can be done by the Hainan Free Trade Port and ASEAN co-organizing regular forums on exchange and cooperation. As a matter of fact, the China Institute for Reform and Development, with the support of the China Ocean Development Foundation, is preparing to hold an international forum on "Exchange and Cooperation between Hainan Free Trade Port and ASEAN" at the end of October. The forum will discuss how best the free trade port can be used as a base to facilitate Chinese enterprises' investment in the ASEAN market. The institute is also preparing to hold an offline forum on "Global Free Trade Port Development" at the end of this year or early next year.

Move to realize potential of SMEs

Small and medium-sized enterprises in China and ASEAN states account for more than 90 percent of all enterprises. To mobilize the talent resources of the network and ensure the SMEs fulfill their full potential, and contribute more to regional development and China-ASEAN cooperation, the network aims to co-organize capacity-building training seminars.

As for the China Institute for Reform and Development, it is preparing to hold a training seminar on capacity building for the development of the blue economy under the RCEP framework. We hope the experts attending these forums and seminars will suggest how the governments and enterprises of ASEAN states can better develop their blue economy and boost their capacity building.

The Hainan Free Trade Port-ASEAN Think Tank Network and the China Institute for Reform and Development also suggest that mutual academic visits and exchanges between visiting scholars be organized, and camps for young talents from member think tanks be set up.