China to remove trade barriers, cut tariffs to support Hainan port

China will take orderly measures in cutting tariffs and removing non-tariff barriers to enhance trade liberalization and facilitation at the Hainan free trade port, officials said on Monday.

The country will support free trade of commodities by granting zero-tariff treatment in an orderly manner and remove non-tariff barriers such as permits and quotas, Vice Commerce Minister Wang Shouwen told a press conference in Beijing.

The briefing was called by the State Council Information Office to expound on the master plan for the Hainan free trade port that was released on June 1.

In the first stage, certain goods will be exempt from import duties, import value-added tax and consumption tax before 2025, including production equipment for enterprises’ own use and qualified transport and tourism vehicles, raw and auxiliary materials and consumer goods for the island, said Vice Finance Minister Zou Jiayi.

Import duties will be exempt on all imported goods other than those listed in the catalog of imported taxable commodities after 2025, Zou added.

Wang also noted that China would make a pioneering negative list this year for cross-border service trade at the port to facilitate cross-border delivery, overseas consumption and the flow of people.

Cross-border service trade not on the list will be granted free entry into the port.

The port will further relax the policy on duty-free shopping by raising the limit of purchase from 30,000 yuan (US$4,230) to 100,000 yuan per person each year and expanding the categories of duty-free goods, Zou said.

Shen Xiaoming, governor of Hainan, said market entities will enjoy a batch of benefits in investment, tax and market access when doing business at the Hainan free trade port.

License application and government approval will not be required for industries that are not prohibited by law or mandatory standards.

Foreign investment will be subject to a management system combining pre-establishment national treatment and a negative list designated for the free trade port, further reducing restrictions and prohibitions on the basis of free trade zones, Shen said.

Domestic firms registered in the free trade port will be encouraged to raise funds by issuing shares abroad.

The free trade port will also offer tax benefits for firms operating in sectors such as tourism, modern services and new and high technology by exempting enterprise income tax for the income from their direct investment overseas.

The southern island province will further open the tertiary industry by significantly reducing restrictions on market access.

Efforts will be made to deepen opening-up in the sectors such as shipping, telecommunication, business services, finance, medical care, education, culture and sports, said Shen.

Foreign securities, futures and fund management institutions are encouraged to establish wholly owned or joint-venture financial institutions, while overseas universities or vocational colleges specializing in engineering, technology, agriculture and medicine can independently run schools in Hainan, Shen said.

The master plan for Hainan free trade port aims to build the southern island province of 9.5 million people into a globally influential high-level free trade port by the middle of the century.