There have been robust discussions since President Xi announced that Hainan would be developed as a free-trade port with Chinese characteristics. This is unlike past instances where a province develops itself as one of the mainland’s special economic zones. The success (or failure) of Hainan will not only affect its standing within the nation, but also implicates the central government and its policies. As China’s only provincial-level international tourism island, there is great impetus for Hainan to spearhead breakthroughs on the international arena, and while the province can always fall back on being the backyard for domestic tourists, Beijing has set its sight on higher aims.
The central government’s decision to develop Hainan as a free-trade port can be assessed as being as important as building Xiongan New District in Beijing. This reflects the fortitude and determination the country has in further deepening its economic reform and opening up.
In Hong Kong, we tend to view the move to turn the island province into a pilot free-trade zone as a potential threat to our economy with all the hype about horse racing and sports betting on the island, but most of us might have missed that China has a higher strategic objective for Hainan.
At a broader level, Hainan’s development is integral to key national initiatives including the consolidation of the country as a maritime power, the “Belt and Road Initiative” as well as building closer bonds between the military and the people. In the work report of the 18th National Congress, it was put forth that the nation will “improve the development capacity of marine resources, develop the marine economy, protect the marine ecological environment, resolutely safeguard the nation’s maritime rights and interests, and build a marine power”.
Making the leap from a maritime country to a maritime power is a calling we must heed and the only way for the Chinese nation to thrive. The South China Sea not only possesses rich fishery resources and deep-sea marine plant and animal resources, but more importantly, the seabed contains a wealth of oil and gas resources. It connects the Indian Ocean and the Pacific Ocean, East Asia and Southeast Asia. It is one of the world’s major maritime transport passageways and an important sea trade lifeline for major economic countries including China, Japan, and South Korea. Maritime transport in the region accounts for 33 per cent of the world’s total. The oil and gas in the South China Sea account for about a third of China’s such resources, 70 per cent of which are in deep sea areas. Hainan is also an important logistics and military base for strengthening the ability to safeguard rights and develop services in the sea.
At one point in time, Vietnam, Malaysia and the Philippines all had disputes on the South China Sea. However, such relations have warmed recently. For example, the Philippines announced that it will jointly explore and extract oil with China, putting aside previous differences. I think this signals a good start, which can pave the way for working with other nations.
As the province deepens its reform and opening up, more talent is needed in sectors such as hospitality, business services and tourism, and Hong Kong has a huge pool of such talent. Hong Kong can leverage its strong brand equity to participate in Hainan’s development of niche service sectors. With its marvellous tropical landscape and year-round warm weather, Hainan has enormous potential to foster medical tourism, and this is an area where Hong Kong’s private hospitals and health care and medical professionals can play a vital role because of their international standards and training.
Hainan has to continue to increase its exposure to the international market or else it should not claim to be a free-trade port. To make this work, Hainan and Hong Kong can collaborate to achieve a win-win outcome.
Ken Chu is the group chairman and chief executive of Mission Hills Group and a national committee member of the Chinese People’s Political Consultative Conference