In June last year, while pushing its national security law in Hong Kong, China announced a master plan to build Hainan, the southern island province of the country, into a free trade port by 2025.
Local authorities recently released a progress report, claiming that the institutional framework for a free trade port system has been “fundamentally established”, and Hainan will become another Hong Kong when the facilities become “more mature.”
Hainan free trade port must ‘join socialism’
When announcing the master plan at a press briefing on June 8 last year, Liu Cigui, Party leader of Hainan, pointed out that unlike many existing free trade ports around the world which are under a capitalist system, the port of Hainan would be under “the system of socialism with Chinese characteristics.” “
“From any ideological perspective, we will not allow any movement that endangers national security or hinders [Chinaâs] socialist construction, âLiu said.
Hainan cannot become another Hong Kong
Chinese authorities have also formulated 60 key policies to attract foreign investment. However, Chinese experts stressed that the regime’s plan to turn Hainan into another Hong Kong was just a dream.
Current affairs commentator Liu Ruishao told The Epoch Times that the Chinese Communist Party (CCP ) repeats its past mistakes.
âThe Hainan Free Trade Port is actually not much different from the free trade zones promoted by Beijing in the past. In a country lacking the rule of law, it is almost impossible for a free trade port to develop. What happened with the Shanghai and Shenzhen free trade zones? Neither has become successful, âLiu said.
Frank Xie, professor of business administration at the University of South Carolina-Aiken, says the Hainan free trade port is a joke because it cannot replicate the success it has seen in Hong Kong before the former British colony was strangled by Beijing. .
In an interview with The Epoch Times, Professor Xie pointed out that Hainan’s trade policies are basically in line with Hong Kong’s, such as no tariffs on imports or exports. However, for a free trade port to be successful, it takes more than zero tariffs.
âHong Kong succeeded because Hong Kong once had a well-established legal system,â he said. âPreviously, the SAR enjoyed freedom of expression and judicial independence, which was a very successful social system left by the UK. The Chinese Communist Party basically destroyed Hong Kong, destroyed its status as a free trade port. And now he plans to build another free trade port [in Hainan]. Isn’t that a joke?
According to Professor Xie, Hainan will be separated from the rest of the country, which means residents of other provinces will have to go through customs to enter the island. But despite the separation, there are several problems with the CCP’s plan to turn Hainan into a free trade zone, he said.
âWhat kind of legal system will be adopted in Hainan? Who will arbitrate if there are legal disputes? Does Hainan have independent arbitration rights? If there is a dispute pending in the Supreme Court of Hainan, will the local Supreme Court have the final say or can the case be continued in the Supreme Court of China? If the latter is true, Hainan is still a province of China, not a free port, âProfessor Xie said.
Another potential problem is currency, Professor Xie said.
âIf products from all over the world can be freely imported and exported, what currency should be used for trade?â He asked.
âIf the Chinese yuan is used and allowed to be freely converted into other currencies, Hainan will become a money laundering haven for senior CCP officials,â said Professor Xie.
âIn this case, the yuan will suffer rapid and substantial depreciation. The current exchange rate of the US dollar against the Chinese yuan is around 1: 6. But we can see the yuan depreciating at 1:30 or even 1:60. China will have to adopt two exchange rates and a two-track system, âhe added.
Prof Xie pointed out that the decision makers involved are very ignorant as they try to replicate the success of Hong Kong in Hainan without understanding what made Hong Kong so successful.
In conclusion, Professor Xie said, âThe essential prerequisite for Hong Kong’s prosperity was an independent judiciary, including a fair trade legal system. The CCP is not clear on this basic fact, nor does it want to recognize it. He thinks a free trade zone is as simple as reducing tariffs. I would say they are dreaming and talking nonsense.