China’s tropical island province of Hainan will have an independent customs regime by the end of the year, the central government announced on Wednesday.
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Starting from December 18, a separate customs zone will be established in Hainan, which Beijing wants to transform into a free-trade port, as well as a centre for offshore financing and duty-free shopping that will lure tourists and businesses with an internationally competitive tax regime and relaxed visa requirements.
A key part of the country’s “dual circulation” economic strategy that aims to boost domestic consumption, the island’s much lower tariffs on imports could also see it serve as a buffer zone in the ongoing trade war between China and the United States.
The new customs regime will allow around 6,600 types of goods into Hainan with zero tariffs, with the exceptions being those listed in an official catalogue of taxable items, officials said at a news conference in Beijing. The tariff-free items cover 74 per cent of all taxable imports, up from the current level of 21 per cent.
The island will adopt more relaxed trade regulations, with certain goods that are prohibited or restricted from being imported in the rest of the country to be granted exemptions in Hainan, said Wang Changlin, a vice-chairman of the National Development and Reform Commission.
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Imported goods will be able to circulate tax-free within the island, and those with value-added processing exceeding 30 per cent will be able to be sold tariff-free in the rest of mainland China, Wang said.
It will help extend local industrial chains, enhance competitiveness, and foster industrial clustering effects