FTP Policy Focus Series
Hainan Free Trade Port Law
Hainan Free Trade Port Law of
the People’s Republic of China
(Adopted at the 29th session of the Thirteenth Standing Committee of the National People’s Congress of the People’s Republic of China on June 10, 2021).
Chapter I. General Provisions
Article 1: For the purposes of building a high-level Hainan Free Trade Port (hereinafter referred to as HNFTP) with Chinese characteristics, promoting the formation of a new pattern of higher-level reform and opening-up, establishing a new system of an open economy, and advancing the stable, sound and sustainable development of the socialist market economy, this Law is formulated.
Article 2: The State designates the Hainan Island in its entirety to be within the jurisdiction of the HNFTP, and will establish a system of policies and rules for the HNFTP on a progressive basis to allow free and convenient movement of trade, investments, capital, persons, and transportation, and safe and orderly flow of data, within and into/out of HNFTP. This Law shall apply to all the construction and management activities of HNFTP, and any matters uncovered hereunder shall be subject to related provisions of other laws and regulations.
Article 3: To achieve economic prosperity, social civilization, ecological livability and people’s happiness, Chinese characteristics shall be embodied, international experience drawn on, Hainan’s strategic positioning retained, Hainan’s advantages given full play to, reforms and innovations promoted, risk prevention strengthened, new concepts in favor of innovations, balanced development, environment-friendliness, openness and sharing implemented, and the high-quality development idea, the overall national security concept and the people-oriented principle upheld in constructing HNFTP.
Article 4: HNFTP shall be focused on promoting the liberalization and facilitation of trade and investment by facilitating the free, orderly, safe, and convenient flow of production factors into/out of it and establishing a modern industrial system, be guaranteed with special tax system arrangements, an efficient social governance system and a complete system of rule of law, and commit to constantly improving its law-based, international and favorable business environment and its fair, unified and efficient market environment.
Article 5: HNFTP shall implement the strictest ecological and environmental protection system, prioritize ecological conservation and green development, innovate ecological civilization systems and mechanisms, and build a national ecological civilization experimental zone.
Article 6: The State shall institute a leadership mechanism to coordinate major policies and issues on the construction of HNFTP. Related authorities under the State Council, including development, reform, finance, commerce, financial management, customs and taxation, shall guide and promote the construction of HNFTP based on their respective functions and terms of reference. The State shall institute an administrative management system that is compatible with the construction of HNFTP, and innovate in the regulatory model, and Hainan province shall fully fulfill responsibilities, strengthen organization and leadership and effectively promote the construction of HNFTP.
Article 7: The State shall support the construction and development of HNFTP, and support Hainan Province in exercising its reform autonomy in compliance with requirements from the Central Government and legal provisions. The State Council and its related authorities shall, based on the actual needs of the construction of HNFTP, authorize or entrust the People’s Government of Hainan Province and/or its related departments to exercise relevant management powers.
Article 8: HNFTP shall establish a comprehensive, scientific and effective HNFTP governance system, promote the institutional reform and functional transformation of the government, standardize government service standards, strengthen the mechanisms of preventing and resolving social conflicts, enhance the intelligence level of social governance, and improve the social governance model based on collaboration, participation and common interests. The State shall promote the reform and innovation of the administrative divisions of HNFTP, and optimize the establishment and structural system of administrative divisions.
Article 9: The State shall support HNFTP in proactively adapting to developments of international economic and trade rules and new trends in the reform of the global economic governance system, and actively carry out international exchanges and cooperation.
Article 10: In accordance with this Law and based on specific conditions and actual needs of the construction of HNFTP, the People’s Congress of Hainan Province and its Standing Committee may formulate and implement related regulations on trade, investment and levant management activities (hereinafter referred to as “HNFTP regulations”) in accordance with the provisions of the Constitution and the basic principles of laws and administrative regulations. These HNFTP regulations shall be filed with the Standing Committee of the National People’s Congress and the State Council, and the circumstances and causes of any modifications to this Law and the HNFTP regulations shall be justified. Any regulations on matters involved herein or HNFTP regulations that shall be formulated by the National People’s Congress and its Standing Committee or the State Council by law or administrative regulations shall be submitted to the Standing Committee of the National People’s Congress or the State Council respectively for approval before taking effect.
Chapter II. Trade Liberalization
Article 11: The State shall establish and improve a Special Customs Supervision Zone system in HNFTP, which is based on independent customs operations and applies in the entire Hainan Island. In ensuring lawful and effective supervision, management rules for free, safe and convenient trade in goods shall be established and management measures for trade in services optimized to achieve trade liberalization and facilitation.
Article 12: HNFTP shall build high-standard port infrastructure, strengthen the management and control in public health, bio-safety, food safety, goods quality.
Article 13: Except items on the lists of prohibited or restricted imports and exports, all the goods and articles may freely transfer between overseas areas and HNFTP, but the Customs shall conduct supervision by law. The said lists shall be formulated jointly by the competent commerce authority and relevant departments of the State Council and Hainan Province.
Article 14: Relevant formalities shall in principle be completed for the goods entering other areas within China (hereinafter referred to as the “Chinese mainland”) from HNFTP as required by relevant provisions on import and be subject to supervision by relevant provisions. Simplified import management provisions shall be implemented for the means of transportation from HNFTP to the Chinese mainland, and domestic transportation provisions shall be implemented for the goods, articles and means of transportation entering HNFTP from the Chinese mainland. Specific management measures for the transfer of goods, articles and means of transportation between HNFTP and the Chinese mainland shall be formulated by relevant authorities of the State Council and Hainan Province.
Article 15: Market participants freely engage in trade in goods and related activities in HNFTP by law, and the Customs shall implement low-intervention and high-efficiency supervision. Subject to related requirements on environmental protection and work safety, HNFTP shall not impose any restrictions on imported and exported goods, including storage venues and periods.
Article 16: Facilitated customs clearance policies shall be implemented in HNFTP to simplify the process and formalities for the transfer of goods. Except for the goods subject to inspection, quarantine or license management by law, the Customs clearance to the goods into HNFTP shall be granted by relevant provisions to better serve market participants.
Article 17: The negative list management system and supporting fund payment and transfer systems shall be implemented in HNFTP for cross-border trade in services and the principle of equal footing for both overseas and domestic market participants shall be followed for cross-border trade in services not on the negative lists. The said negative lists of cross-border trade in services for HNFTP shall be formulated by the competent commerce authority and related departments of the State Council and Hainan Province.
Chapter III. Investment Liberalization
Article 18: Policies for investment liberalization and facilitation shall be implemented in HNFTP, the minimum approval approaches of investments followed across the board, investment promotion and protection systems improved, property rights protection strengthened, and fair competition guaranteed so as to foster an open, transparent and predictable investment environment. Except for areas subject to access management involving national security, social stability, off-limits in ecological protection and significant public interests, full access to investments in all areas shall be granted in HNFTP.
Article 19: The system of pre-access national treatment plus negative list management for foreign investments shall be implemented in HNFTP. The special negative lists for foreign investments in HNFTP shall be jointly formulated by relevant authorities of the State Council and Hainan Province, and submitted to the State Council for approval.
Article 20: The State shall relax restrictions on the market access in HNFTP, and the special lists (special measures) for market access relaxation in HNFTP shall be jointly formulated by relevant authorities of the State Council and Hainan Province. The investment facilitation measures focusing on process supervision shall be implemented, and the system of market access upon commitment be phased in HNFTP. The specific measures shall be jointly formulated by relevant authorities of the State Council and Hainan Province.
Article 21: Under the principles of convenience, efficiency and transparency, HNFTP shall simplify the procedures, improve the efficiency, optimize the government services, establish the systems for streamlining market participants’ formation, operation and cancellation, and improve bankruptcy procedures. The specific measures shall be formulated by the People’s Congress of Hainan Province and its Standing Committee.
Article 22: The State shall protect the investment, returns and other lawful rights and interests of natural persons, legal persons and unincorporated organizations in HNFTP in accordance with the law, and strengthen the protection of small and medium investors.
Article 23: The State shall protect the intellectual property rights of natural persons, legal persons and unincorporated organizations in HNFTP in accordance with the law, promote the enhancement of the service capabilities for creation, use, and management of intellectual property rights, establish and improve the mechanisms for credit classification supervision and punishment for dishonest behaviors in the field of intellectual property rights, and strictly hold infringers legally liable by law.
Article 24: HNFTP shall establish a unified, open, competitive and orderly market system, strengthen the fundamental position of competition policies, implement a fair competition examination system, strengthen and improve law enforcement of anti-monopoly and anti-unfair competition, and protect the fair competition on the market. Market participants in HNFTP shall enjoy equal treatment in accordance with the law in access permit, business operation, element acquisition, standard-setting, and preferential treatments. The specific measures shall be jointly formulated by the People’s Congress of Hainan Province and its Standing Committee.
Chapter IV. Fiscal and Taxation System
Article 25: In light of the reality and in consideration of the changes in the tax system, the Central Government shall provide appropriate financial support to the development and construction of HNFTP, and encourage Hainan Province to issue local government bonds for HNFTP development. Hainan Province shall establish and operate a government-guided HNFTP Construction Investment Fund in a market-oriented manner.
Article 26: According to development needs, HNFTP may independently reduce, exempt or postpone the levies of government funds other than those of an ecological compensation nature.
Article 27: Under the principles of establishing simple and scientific tax structures, fully optimizing elements of the tax system, significantly reducing tax burdens, clarifying income attributions and striking a basic balance between fiscal revenues and expenditures and in line with the general direction of the national tax system reforms, HNFTP shall establish a tax system suitable for needs. Taxes and fees, such as value-added tax, consumption tax, vehicle purchase tax, urban maintenance and construction tax and education surcharges, shall be streamlined and combined, and sales tax shall be levied on retailed goods and services before independent customs operations across Hainan Island, and the tax system shall be further simplified after independent customs operations across Hainan Island. Specific plans for simplifying the tax system shall be jointly formulated by the finance authority and relevant departments of the State Council and Hainan Province.
Article 28: Upon independent customs operations across Hainan Island and completion of tax streamlining and combination, HNFTP shall implement the catalog management on taxable imported goods and exempt all other goods not in the catalog from import tariffs. The catalog of taxable imported goods shall be formulated in a timely manner by the finance authority and relevant departments of the State Council and Hainan Province. Before independent customs operations across Hainan Island and completion of tax streamlining and combination, some imported goods shall be exempted from import tariffs, import value-added taxes and consumption taxes, but taxable goods exported to overseas areas from HNFTP shall be subject to export tariffs.
Article 29: Goods entering the Chinese mainland from HNFTP shall be subject to an import tax in principle; however, the goods produced by enterprises in encouraged industries that do not contain imported materials or parts or whose added value reaches a certain proportion after processing even if containing imported materials or parts shall be exempted from the tariff. Specific plans for tax exemptions shall be jointly formulated by relevant departments of the State Council and Hainan Province. For goods entering HNFTP from the Chinese mainland, the value-added tax and consumption tax that has been collected shall be refunded by relevant provisions of the State Council. For the duty-free articles or goods purchased and picked up by travelers before independent customs operations across Hainan Island and completion of tax streamlining and combination, the import tariffs, import value-added tax and excise tax shall be exempted by relevant provisions, and specific tax measures for the articles or goods transferring between HNFTP and the Chinese mainland after independent customs operations across Hainan Island and completion of tax streamlining and combination shall be jointly formulated by relevant authorities of the State Council and Hainan Province.
Article 30: Preferential enterprise income tax shall be levied from qualified enterprises registered in HNFTP, and preferential individual income tax shall be levied for qualified individuals in HNFTP.
Article 31: HNFTP shall establish an optimized, efficient and unified tax collection and management service system, improve the scientific, information-based, international and convenient level of tax collection and management services, actively participate in international tax collection and management cooperation, improve the quality and efficiency of tax collection and management services, and protect the lawful rights and interests of taxpayers.
Chapter V. Ecological and
Article 32: HNFTP shall improve the ecological environment evaluation and monitoring system, develop an ecological environment access list, prevent pollution, and protect the ecological environment; and improve the property rights system of natural resources and paid use system, and promote conservation and efficient use of resources.
Article 33: HNFTP shall promote the territorial space planning system, implement differentiated control of natural ecological space purposes, strictly guard ecological protection red lines, build a nature reserve system consisting mainly of national parks, and promote the initiative of building environment-friendly towns and beautiful villages. HNFTP shall strictly protect marine ecological environments, and establish and improve integrated mechanisms for protecting and restoring terrestrial and marine ecosystems as well as regional coordination mechanisms for pollution prevention and treatment.
Article 34: HNFTP shall implement a strict management system for entry and exist environmental safety access, enhance inspection and quarantine capabilities, prevent the invasion of alien species, and prohibit the import of overseas solid wastes; improve the processing and disposal capabilities of medical waste and other hazardous wastes, improve emergency capabilities for ecological and environmental events, and strengthen ecological risk prevention and control.
Article 35: HNFTP shall promote the establishment of a government-led, enterprise and society-involved, market-oriented, and sustainable ecological protection compensation mechanism, establish a mechanism for realizing the value of ecological products and encourage the use of market-oriented mechanisms to promote ecological environmental protection and realize sustainable development.
Article 36: HNFTP shall implement a target-oriented responsibility system and performance appraisal system for environmental protection. Local governments at or above the county level shall have the veto power over the annual environmental protection performance of responsible departments or persons under the governments at the same level and the governments at a lower level and their responsible persons. No approval of the environmental impact assessment for new projects with an additional total discharge of key pollutants shall be granted to the areas failing to achieve their environmental protection goals within one year, and, except for corresponding punishments by law, no promotion or transfer to higher positions of leading responsible persons in responsible local governments or their relevant departments shall be made within one year.
Article 37: HNFTP shall implement the system of lifelong accountability for damage to ecological environments, and shall hold strictly liable the leading persons in charge, directly liable persons in charge and other directly liable persons at local governments and their relevant departments that have violated requirements of scientific development and have caused serious damage to ecological environments.
Chapter VI. Industrial Development
and Talent Support
Article 38: The State shall support HNFTP in building an open system of ecological and service-oriented industries and actively developing key industries, such as tourism, modern service industry, high-tech industry and high-efficiency agriculture with tropical features.
Article 39: HNFTP shall promote the construction of an international tourism and consumption center, advance the in-depth integration among tourism, culture, sports, health care and elderly care, and develop new businesses and new modes of tourism.
Article 40: HNFTP shall open wider its modern service industry to the Chinese mainland and overseas areas, build an international shipping hub, promote the integrated development of ports, industries and cities, improve the marine service infrastructure, and build an internationally competitive marine service system. High-quality foreign universities and vocational colleges shall be permitted to run their branches of science, engineering, agriculture and medical science in HNFTP.
Article 41 The State shall support HNFTP in developing major scientific research infrastructure and foundation platforms, implementing management systems for scientific and technological innovations and establishing mechanisms of international scientific and technological cooperation in compliance with scientific research laws.
Article 42: HNFTP shall establish management systems for safe, orderly, free and convenient data flows by law, protect the data-specific rights and interests of individuals and organizations by law, enhance the public accessibility of communication resources, businesses and data fields in an orderly manner, and promote the development of the digital economy with data as key elements. The State shall support HNFTP in pioneering regional institutional arrangements for international flows of data.
Article 43: HNFTP shall implement highly free, convenient and open transportation policies, establish a more open shipping system and ship management system, build “Yangpu Port of China” into a port of registry, and implement a special ship registration system; and relax the airspace control and shipping route restrictions, optimize the allocation of traffic right resources, and improve the transportation facilitation and service support capabilities.
Article 44: HNFTP shall deepen the reforms in talent development systems and mechanisms, innovate talent training support mechanisms, and establish a scientific and reasonable supporting mechanism of talent introduction, identification, use and treatment.
Article 45: HNFTP shall establish an efficient and convenient system of exit and entry management, expand the applicable scope of visa-free entry policies, extend visa-free stay periods, optimize the exit and entry check management, and enhance the customs clearance facilitation for exit and entry.
Article 46: HNFTP shall implement more open policies for talents and their residence or stay, more relaxed and convenient policies for temporary exit and entry and work visas, and a negative list management system for foreigners’ work permits to improve its residence system.
Article 47: HNFTP shall relax restrictions on professional qualification examinations for overseas persons, and implement a one-way recognition list system for the accreditation of qualified overseas professional qualifications.
Chapter VII. Comprehensive Measures
Article 48: According to actual needs from HNFTP development, the State Council may authorize the People’s Government of Hainan Province to approve the reclassification of agricultural lands into construction ones as well as related land requisitions on behalf of it; and subject to key requirements in quantity and quality on ecological protection, permanent basic farmland area, cultivated lands, woodlands and construction lands as set forth in the Territorial Space Plan for Hainan Province, may authorize the People’s Government of Hainan Province to approve adjustments to the composition of cultivated lands, permanent basic farmlands, woodlands and construction lands across the province in accordance with related provisions as prescribed by the State. HNFTP shall actively explore new approaches of integrated and balanced development among urban, rural and reclaimed areas as well as new patterns of usage of construction lands for small towns, and promote the capitalization of agricultural and reclaimed lands. HNFTP shall guarantee the demand for sea area use for major national projects in accordance with the law.
Article 49: In the construction of HNFTP, arable lands shall be effectively protected, land management shall be strengthened, and systems and evaluation standards for intensive and economical land use, as well as freeing-up and disposal of existing construction lands, shall be established. Idle lands shall be fully utilized, and idle charges shall be levied for each delayed year on the lands on which the construction fails to be completed more than one year as agreed in land assignment contracts at a certain percentage of the present value of the assigned lands. Specific measures shall be formulated by Hainan Province.
Article 50: HNFTP shall adhere to the principle of finance servicing the real economy, promote financial reform and innovation, and pioneer opening-up policies in the financial industry.
Article 51: HNFTP shall establish the management system of cross-border capital flows suitable for the needs of high-level trade and investment liberalization and facilitation, liberalize capital accounts by stages, enhance the convertibility of non-financial business’s debts, facilitate smooth settlements of cross-border capital flows, and advance free and convenient flows of funds between HNFTP and overseas areas in an orderly manner.
Article 52: Approved financial institutions in HNFTP may engage in offshore financial operations on designated accounts or in designated areas.
Article 53: HNFTP shall strengthen the construction and operation of a social credit system, and establish mechanisms of encouraging honesty and punishing dishonesty.
Article 54: The State shall support the exploration of judicial system reforms relevant to HNFTP development. HNFTP shall establish a diversified resolution mechanism for commercial disputes, improve the centralized trial mechanism for international commercial disputes, and support dispute resolutions through alternative approaches, including arbitration and mediation.
Article 55: HNFTP shall establish a risk warning, prevention and control system to prevent and resolve major risks. The Customs shall conduct routine supervision over ports and customs supervision territories, prevent and crack down on smuggling, and conduct follow-up supervision by law. The coast guard agencies shall investigate and crack down on smuggling and other illegal acts at sea. The People’s Government of Hainan Province shall be responsible for the overall management of anti-smuggling operations across the province, strengthen control over the areas without customs, and establish a joint work mechanism for anti-smuggling with other areas. All persons, goods, articles and means of transportation between HNFTP and overseas areas or the Chinese mainland shall be transferred through ports. HNFTP shall implement the security review system for foreign investments by law and conduct a security review over foreign investments that affect or may affect national security. HNFTP shall establish and improve the financial risk prevention and control system, implement a hierarchical cybersecurity protection system, establish a risk prevention and control system for the flows of persons, and establish a mechanism of monitoring, warning, prevention, control and treatment for infectious diseases and public health events, to ensure the order and security in finance, networks, data, flows of persons, public health and others.
Chapter VIII. Supplementary Provisions
Article 56: For matters uncovered herein, after this Law comes into force and before independent customs operations across Hainan Island, the State Council, together with its relevant authorities and Hainan Province, may, under the principles as prescribed herein and according to the division of functions, formulate specific transitional measures to promote the construction of HNFTP.
Article 57: This Law shall take effect upon its promulgation.