MNI INTERVIEW 2: Hainan To Act As CPTPP Test Zone

China will use Hainan as a testing ground for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade rules before it considers rolling them out across the country, the head of the province’s fiscal department told MNI.

Hainan will also serve as a testing ground for applying Digital Economy Partnership Agreement rules in China, Cai Qiang said in an interview after Premier Li Qiang said in his work report last week that the province would act as a “pace-setter” for a new economic era.

CPTPP members have been evaluating China’s application since 2021, with media outlets citing sources close to Australian Prime Minister Anthony Albanese last year saying Canberra would not oppose China joining a bloc which Institute of International Economics director Li Chunding says could boost growth by 0.7% a year. Some member countries have raised concerns regarding China’s suitability given its subsidies to state-owned companies.

Hainan Party Secretary Feng Fei told reporters during the two sessions the province will take the lead in exploring liberalised trade including goods, services trade, digital, and personnel exchanges.

Hainan will operate outside of China Customs' jurisdiction by the end of 2025, with 0% import tariffs on most goods, and a 15% corporate income tax rate, Cai said. He mentioned Hainan had studied the success of Hong Kong and taken lessons in institutional design and tax levels.

At the same time, the province could leverage its regional comparative advantages and resource endowments to develop new productive forces and a modern industrial system rather than overly relying on tourism.

Cai also told MNI the province would lean heavily on local government special bonds to fund construction of the world's largest free-trade port. (See MNI INTERVIEW: Hainan Bonds To Fund World's Largest Freeport)