China is preparing a package ofpreferential policies to further facilitate free trade and investment, andrelax market access for foreign investors in China's southern Hainan Free TradePort, offering huge growth opportunities for global stakeholders.

They said the preferential policieshighlight the government's ongoing efforts to open wider to the outside world,which is set to attract a growing number of global investors from sectors suchas medicine, healthcare, education, high-tech and culture to invest and developin the Hainan Free Trade Port.

Guidelinesets out 33 detailed measures to further facilitate free trade

The central government on April 9 launcheda series of financial measures to turn Hainan Free Trade Port into a focalpoint of China's deepened reforms, showing the nation's latest efforts tofurther open up to the world, said experts.

The People's Bank of China, together withthree other top financial regulators, released a guideline with 33 detailedmeasures, which are set to further facilitate free trade in Hainan, perfect itsfinancial market system, further open up its financial market, enhanceinnovation, improve financial services and strengthen financial regulation.

The guideline will also help to strengthenHainan's weak links and consolidate its financial base, the central bank saidon its official website.

Under the recently announced guideline, thefinancial market in Hainan should shoulder more responsibility in serving thereal economy. As such, competitive companies in Hainan are encouraged to gopublic or to expand via the multi-tranche equity market in the area, accordingto the guideline. Mergers and acquisitions aimed at transformation andindustrial upgrading are supported, while qualified companies based in Hainanwill be encouraged to issue corporate bonds.

Further financial opening-up is anotherhighlight of the guideline. Banks in Hainan are encouraged to introducequalified overseas strategic investors to improve their equity structure. Byworking more closely with insurers in the Hong Kong and Macao specialadministrative regions, Hainan should seek opportunities in offshorereinsurance businesses. Overseas institutions are allowed to set up whollyowned or jointly held futures companies in the area. Foreigners working inHainan are allowed to participate in domestic securities investment.

Meanwhile, Hainan is allowed to carry outthe outbound investment Qualified Domestic Limited Partner scheme. QualifiedForeign Limited Partners in Hainan are also allowed to freely manage theircapital based on their balance. In addition, the foreign exchange registrationprocess will be simplified.

Experts from Jingtian &Gongcheng LawFirm explained in a note that foreign equity investment firms will meet nothreshold under the QFLP management rules in Hainan, and stand on a totallyequal footing with similar domestic firms. The negative list mechanism is adoptedfor the investment scope of QFLPs in Hainan, which will help more foreigncapital to invest in private equities and venture capital in the area.

A master plan for Hainan Free Trade Portwas released in June, which requires establishing a basic free trade portpolicy system with a key focus on facilitating free trade and investment by2025.

By 2035, the free trade port system andoperations in Hainan will be more mature. By the middle of the century, ahigh-level free trade port with strong international influence will be fullyestablished, according to the plan.

22Measures unveiled to relax Hainan market access

China also announced a number of specialmeasures on April 9 aimed at further relaxing market access in the Hainan FreeTrade Port, showing the country's drive to further open up to the world.

Officials and experts said the move is partof the government's ongoing efforts to build a testing ground for reforms andpursuing opening-up at higher levels. It is also intended to help build HainanIsland into an internationally influential and high-quality free trade port,which will serve as a new growth engine for both the national and the globaleconomy.

The country rolled out 22 measures tofacilitate the free flow of key production factors and cultivate industrieswith comparative advantages internationally, according to a document jointlyreleased by the National Development and Reform Commission and the Ministry ofCommerce.

New measures include supporting onlinesales of prescription drugs, helping the island develop an online games sector,exploring the delegation of the approval of online games to Hainan, supportingHainan in building charging stations for new energy vehicles and pressing aheadwith autonomous driving technologies and boosting the innovative development ofhomegrown high-end medical equipment.

The newly announced measures led shares ofcompanies with links to Hainan free trade port to jump 1.17 percent on April 8,with Huawen Media Group and Lanhai Medical Investment Co both surging by the 10percent daily trading limit, according to Shanghai-based information provider WindInfo.

The plan aims to establish a basic freetrade port policy system with a key focus on enhancing free trade andinvestment by 2025.

Fueled by a package of preferentialgovernment policies, the actual use of foreign investment in Hainan totaled about$3 billion last year, doubling from $1.5 billion in 2019, according to theHainan provincial commerce department.

Hainanfree trade port rises as investment magnet

Hainan province on April 13 witnessed theinking of 104 key projects to inject new impetus into the construction of itsfree trade port (FTP).

The projects, 22 of which areforeign-funded, involve 65.72 billion yuan in total investments ($10 billion)and cover tourism, modern services and high-tech industries.

The deals, signed in Haikou, the provincialcapital of Hainan, also reflect the increasing appeal of the island province atthe forefront of China's opening up to investors.

Previously, the FTP had seen the signing of741 projects with an investment of 519.6 billion yuan in multiple areasincluding intelligent manufacturing, international shipping, education, medicalcare and aerospace.

China proposed setting up a free trade zonein Hainan in 2018 and began construction of the Hainan FTP last year. Over thepast three years, a number of foreign companies have settled in Hainan,including Harrow School from Britain, US electric carmaker Tesla and tourismcompany TUI Group.

Defying the economic headwinds brought bythe raging pandemic, the Hainan FTP has forged ahead with a steady inpour of investments.Authorities said that last year Hainan launched 538 projects with an investmentof 172.5 billion yuan.

The Hainan FTP has become a strong magnetto foreign investment as Hainan accelerates opening up against the backdrop ofglobal economic slowdown and shrinking foreign direct investments due to thepandemic, said Peng Wei, deputy director of Hainan's department of commerce.

In 2020, a total of 1,005 overseas-fundedenterprises were established in Hainan, up 197.3 percent from the previousyear, according to the department.

China's southern island province of Hainanhas seen robust growth in foreign investment inflow and new market entities asit continues to improve its business environment, an official said on April 12.

Total foreign investment into the island,in actual use, amounted to $5.27 billion over the past three years, or overhalf of the total inflow in the last three decades, according to Shen Xiaoming,Party chief of Hainan.

Shen unveiled the data at a news conferenceheld in Beijing about policy and institutional progress for developing theHainan free trade port, highlighting the region's efforts including promoting anegative list-based mechanism to ease market access. Over the past three years,the island also registered some 763,000 new market entities, Shen said.

The booming duty-free shopping sector isthe FTP's another attraction for global brands wishing to explore China's hugemarket.

The first China International ConsumerProducts Expo, scheduled in Haikou in May, has attracted more than 1,100international brands, including L'Oreal, Shiseido and Tesla.

After 2025, the entire island of Hainancould become duty-free and rise as a paradise for the duty-free and tourismretail industry, said Han Shengjian, director of the Hainan bureau ofinternational economic development, adding that "these internationalbrands are preparing for their future opportunities in the Hainan FTP."