{"text":[[{"start":13.84,"text":"A tropical Chinese island is pushing through the country’s most ambitious free-trade experiment since Beijing established its first special economic zones in the 1980s. "}],[{"start":25.78,"text":"Hainan, a palm-fringed island roughly the size of Belgium and long a destination for domestic tourists, is betting that lower taxes and looser investment rules will help transform it into the world’s largest free-trade port."}],[{"start":41.43,"text":"After years of groundwork, Hainan’s customs regime was hived off from the mainland’s in December, in a move that Chinese leader Xi Jinping has touted as evidence of the country’s continued reform momentum and sustained efforts to open up its markets to foreign businesses. Xi said the “landmark” project was “a key gateway driving the country’s opening up”."}],[{"start":66.93,"text":"Since 2013, China has launched dozens of free-trade zones nationwide. The projects build on the special economic zones of the late 1970s and 80s, luring investors with tax and other fiscal incentives as well as looser rules for investment and trade. "}],[{"start":86.21000000000001,"text":"The Hainan project is distinguished by its size — the initiative covers the entire island — and officials hope it will boost the island’s economy, which has been plagued by decades of property boom-and-bust and anti-corruption investigations into senior officials. "}],[{"start":103.74000000000001,"text":"But some experts question how effective such projects have been at attracting overseas businesses, especially as foreign interest in investing in China has waned, and whether they really offer substantially better access to the country’s vast markets. Hainan’s relatively remote location and limited internal market will sharpen the challenge, they say."}],[{"start":127.12,"text":"Following the customs seal-off in December, Hainan scrapped import taxes on most items. Under the new customs policy, items that undergo processing that adds value worth 30 per cent can be re-exported to mainland China tariff free, which officials hope will boost local manufacturing. "}],[{"start":147.76,"text":"The province has also introduced China’s loosest restrictions on foreign investment, a 15 per cent cap on corporate and personal income tax for some companies and individuals and a range of policies that allow it to offer everything from medicines not yet approved on the mainland to freer access to the internet in pre-approved zones. "}],[{"start":169,"text":"“Although our industrial base is not yet big enough . . . we will seize upon these application scenarios . . . to actively attract domestic and foreign enterprises,” Jiang Hong, deputy director of the provincial economic planning agency, said at a press conference in February. "}],[{"start":188.93,"text":"Officials say that in the first six weeks of the new customs policy, Rmb857mn ($124mn) in goods saved Rmb129mn in duties, while 5,700 foreign trade enterprises registered in the province. "}],[{"start":208.73000000000002,"text":"“With the Free Trade Port as a bridgehead, our products are quickly being exported to more than a dozen countries and regions and this number is still increasing,” said Cao Youhua, deputy general manager at Ausca International Oils and Grain. "}],[{"start":226.86,"text":"The policy helped the company to buy raw materials, such as Brazilian soyabeans, more cheaply, he said. The beans are then used to make cooking oils in a Hainan plant. "}],[{"start":238.64000000000001,"text":"But Cao added that the biggest difference the customs seal-off had made was easing the company’s exports, rather than its sales to the mainland. He said that Ausca now exported half of its Hainan output, having only started selling to overseas markets late last year as the province updated its customs policy."}],[{"start":260.87,"text":"Further growing the island’s manufacturing base will be difficult, warn some."}],[{"start":266.3,"text":"Capital intensive industries were unlikely to succeed given the island’s limited port infrastructure and its separation from the mainland by 20 miles of ocean, said Alicia García-Herrero, chief Asia Pacific economist at Natixis."}],[{"start":280.69,"text":"“It doesn’t make sense . . . you create a free-trade zone that’s far away from anywhere,” she said. “The rationale is not there.”"}],[{"start":289.34,"text":"It will take much wider reforms to bring Hainan in line with standards in rival trading hubs such as Singapore and Hong Kong, which have freely convertible currencies and independent judiciaries, critics say."}],[{"start":303.78999999999996,"text":"“If you look at the free-trade port policies it is the most advanced in legal terms in the entirety of China other than Hong Kong,” said Ngeow Chow Bing, a China expert at the University of Malaya. "}],[{"start":318.34,"text":"“My assessment is still that it suffers from being a peripheral region for the Chinese people themselves . . . Foreign investors will generally be much more sceptical.”"}],[{"start":328.78999999999996,"text":"There was a compelling case for the island to boost services-heavy sectors such as tourism and medicine, noted Garcia-Herrero, given its lower costs and pleasant surroundings. "}],[{"start":341.11999999999995,"text":"Representatives have also been making overtures to financial services companies across Asia, particularly Singapore and Hong Kong, pitching Hainan as a hub for cross-border investment and wealth management. "}],[{"start":355.35999999999996,"text":"As well as its income tax cap, Hainan has looser requirements for granting licences to domestic funds investing overseas and foreign partnerships investing in China."}],[{"start":367.4,"text":"On a tour of the island organised by the Communist party-affiliated All-China Journalists Association, the FT was also shown a medical tourism site, the world’s largest duty-free shopping mall, an office park where companies can apply for access to blocked foreign websites such as Google and the Yangpu port, where the government is hoping to quadruple annual container volume by 2035."}],[{"start":393.5,"text":"Delegates attending the annual session of China’s rubber-stamp parliament last month appeared concerned that central authorities were losing interest. Central government funding allocated to Hainan within the budget had declined last year, they noted, appealing for renewed support."}],[{"start":412.54,"text":"In his pitch for greater central government support, Cai Qiang, head of the island’s department of finance, told reporters: “As everyone knows, the take-off stage of an aircraft requires the most fuel.”"}],[{"start":435.65999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775979002_7212.mp3"}