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Building the Hainan Free Trade Zone (Port) and Contributing to the Asian Community of a Shared Future

2019-05-18 11:08:43       source:NISCSS

Speech at the Session on Sharing Experience on Asian Governance of

the Conference on Dialogue of Asian Civilizations


Wu Shicun, President of National Institute for South China Sea Studies &

Vice President of China Institute for Free Trade Ports with Chinese Characteristics


The Chinese Government’s decision to build Hainan into a pilot free trade zone and free trade port with Chinese characteristics (herein after referred to as “Hainan free trade zone (port)”) is an important initiative to open China wider to the rest of the world and actively promote economic globalization. It is also a crucial step in realizing the general goals of China’s diplomacy: to practice the idea of building a community with a shared future of mankind, and especially an Asian Community of Shared Future.


Acting in line with the requirement of top-level design, Hainan is concentrating its efforts on liberalizing market access for foreign capital, facilitating trade, fostering an open and innovative finance environment and promoting international cooperation under the Belt and Road Initiative (BRI), in order to build a new and open economic system as a Free Trade Zone (Port). Hainan will also endeavor to strengthen its connection and integration with Asia and its sub-regions in terms of economic cooperation and people-to-people exchanges, so as to provide impetus to the region’s sustainable development and co-prosperity.


First, the significant role that Hainan Free Trade Zone (Port) will play in building a South China Sea community of shared future.


To begin with, the development of Hainan Free Trade Zone (Port) will speed up the transformation and upgrading of industries in Asia and its sub-regions, thus putting regional development in a more favorable position in the global industrial chain. East Asia and the Pacific Region have been the major source of economic recovery since the 2008 financial crisis. These two regions’ combined contribution to global economic growth even once reached a staggering record of one third in the past decades. However, the late mover advantage of emerging economies and developing countries of both regions started to wane as intraregional economic competition grows intense, against a background that the global economy is stuck on a long slog to recovery. Therefore, China and other countries in Asia strives to spur the innovation of science and technology, accelerate industry upgrading, liberalize market access, improve business environment, thus to increase our core competitiveness. And building Hainan as a free trade zone (port) represents China’s effort in those regard. On the one hand, Hainan will focuse on the development and implementation of cutting-edge technologies such as bio-tech, new energy, aerospace industry and deep-sea exploration; on the other hand, it aims at administrative and managerial reform and innovation, such as to facilitate intra-border capital flow, deepen regional cooperation, and remove limits on local market entry for foreign investors, etc. These two efforts combined plus a large market size would give regional players a comparative advantage, which would facilitate their industrial transformation, and help Asian states (especially littoral states of the South China Sea) to win a favorable position in the race of the new wave of globalization and the fourth industrial revolution.


Second, the development of Hainan Free Trade Zone (Port) will help to accelerate the cross-border flow of production factors such as talents, capital and technology, optimize the allocation of regional resources, and expedite investment and trade liberalization. One of the development goal of Hainan Free Trade Zone (Port) is to build itself as a key gateway of opening up facing the Pacific and Indian Oceans, and the Southeast Asian countries are an essential part of this region. On the one hand, the functioning of Hainan Free Trade Zone (Port) will expide the flow of goods and services between China and Southeast Asian countries, and for Southeast Asian countries this will help to expand both the Chinese market and foreign investment. On the other hand, with the upgrade of China - ASEAN Free Trade Area and the acceleration of regional economic integration, Hainan Free Trade Zone (Port) will help China and Southeast Asian countries to attract foreign capital, technology and talent, serving as an important platform for the free flow of production factors. Meanwhile, Hainan Free Trade Zone (Port) can also gradually promote and enhance cooperation between itself and Southeast Asian countries in various fileds such as deep-sea exploration, high-efficiency tropical agriculture, and aerospace science and technology.   


Third, Hainan Free Trade Zone (Port) will further strengthen the connectivity between China and other South China Sea littoral countries bring about new progress in people-to-people exchanges and cooperation. Efforts will be made concentrating on deepening exchanges and cooperation in tourism, environmental protection, humanity, maritime culture, and entrepreneuriship under the framework of BRI. And I believe these efforts will further inspire regional countries’ passion and confidence in buiding a South China Sea community of shared future.  


Second, how to contribute to the community of shared future for the South China Sea


Along with the steady progress in the construction of the Free Trade Zone (Port), Hainan, in the future, can contribute to the win-win cooperation in the South China Sea region by following means.


To start with, the Hainan Free Trade Zone (Port) can use the Boao Forum for Asia and related sub-forums to promote exchanges and interactions between educational institutions, think tanks, media, and non-governmental organizations, thus creating favorable public opinion. The Hainan Free Trade Zone (Port) can make use of the mechanisms and platforms provided by the Boao Forum for Asia, such as “ASEAN-China Governors/Mayors’ Dialogue”, "South China Sea Sub-Forum", "Inter-Island Tourism Policy Forum", "China-ASEAN Academy on Oceans Law & Governance”, "China-Southeast Asia Research Center on the South China Sea (CSARC)” and “China Institute for Free Trade Ports with Chinese Characteristics” to provide intellectual support for regional cooperation and directly promote people-to-people exchanges and interactions within the region. At the South China Sea Sub-forum of the Boao Forum for Asia Annual Conference 2019, under the theme “Maritime Security in the Asia-Pacific: Cooperation, Order and Rules”, we exchanged ideas and reached quite some consensus on issues like “Maritime Security in the Asia-Pacific: Order and Rules”, “Further Cooperation at the New Stage of 21st Century Maritime Silk Road: Challenges and Opportunities”, “Cooperation on Marine Ecological Protection and Fishery Management: Possible Arrangements, Mechanisms and Roadmaps”, “Hainan Free Trade Zone (Port) Development and Economic Cooperation of the Greater South China Sea” and “Exploring New Opportunities for the Cooperation of the Greater South China Sea Region”. This has proved to be a meaningful exploration of a community of shared future for the South China Sea.


Second, the “Economic Cooperation Circle of the Greater South China Sea Region” could be a good start for building a community of shared interests between China and the ASEAN countries. The Hainan Free Trade Zone (Port) is bound to strengthen China’s cooperation with the rest of the world, especially with countries around the South China Sea in the fields of marine economy, marine science and technology, marine resource protection and development, and marine tourism, etc. In this sense, Hainan can contribute a lot by participating in the interaction, exchanges, cooperation and integration with littoral countries and regions of the South China Sea in marine industry, port economy, maritime interconnectivity, and marine environmental protection, etc. Countries in the South China Sea can seize this positive momentum and engage in building the “Economic Cooperation Circle of the Greater South China Sea Region” and setting up a closer regional cooperation mechanism.


Third, Hainan can, through promoting interconnectivity in the air transportation, build a Hainan-ASEAN air economic corridor. The interconnected infrastructure is an important carrier for strengthening mutual exchanges. Hainan should seize the opportunity provided by the Pilot Free Trade Zone building, in particular, by the policy of further opening the traffic right, to increase direct air routes between Hainan and the ASEAN countries, build a convenient, 3-4 hours air route system covering major airports in ASEAN countries and set up an aviation hub in the Greater South China Sea Region so as to strengthen the exchanges between Hainan and ASEAN countries.


Fourth, Hainan can make full use of its advantages while participating in BRI project cooperation with characteristic industries and resources and enhancing the level of industrial development in the South China Sea region. For example, by 2018, Hainan has established overseas research and breeding bases in countries along the “Belt and Road” and expanded rice cultivation to 90 million mu, or 6 million hectors, in tropical countries and regions such as the Philippines. In the future, Hainan can further leverage its scientific and technological advantages in tropical agriculture and off-season seed cultivation, so as to deepen cooperation in tropical agriculture with Southeast Asian countries, optimize resource allocation and enhance integrated development.