Being approved to be a free trade pilot zone throughout the region and with the future plan to develop into a free trade port is of great significance to Hainan. It should be pointed out that Hainan Province is already one of China's special economic zones (SEZs). Now, together with the free trade zone (FTZ) policy, Hainan will be undoubtedly one of the SEZs with the most policy concessions in China. With increasing international trade friction and downward pressures on the Chinese economy, can Hainan be successfully developed as an SEZ? This will be an important indicator and has high policy significance in China.
Anbound's chief researcher Mr. Chan Kung pointed out that whether the Hainan SEZ can be developed successfully depends on the definition of the term "success". When discussing this "success" standard, Mr. Chan Kung believed that the issue is quite complicated. In an internal discussion, he said the success of Hainan SEZ has five major standards. In fact, this is also the five development scenarios that Hainan may face in the future.
The first type is the "success" as understood by the Chinese central government. This is the success of the policy, and it is most difficult to achieve. As an SEZ in China, Hainan enjoys the policies and conditions that others do not and can achieve success effectively. For example, Hainan does not rely on real estate, but on the industries to achieve success. Another example is that Hainan's air quality has reached the historical best, retaining excellent ecological environment resources. If it achieves success in this sense, it will become a nationwide example and a success model completely different from other SEZs like Shenzhen; this can be called the New SEZ Model.
The second type is the "success" in the local sense. In this sense of success, the standard is not very high; the key point is to be able to generate money to benefit the area. If this type of "success" is achieved, the local governments can generate money under the SEZ policy, attract various investments, and substantial help to local finances, without destroying the environment and ecology of Hainan. Objectively speaking, it is not easy to achieve this level of success in China; this type of success is better than the past developments that destroyed the environment.
The third type of "success" would be the sense of the traditional SEZs'. This was what had been practiced in China's past reform and opening up, and some people think that this model can continue to be carried out. The old SEZ model is to sacrifice most areas and return to the planned economy era. Most of these areas are unable to do anything; only the SEZs can do everything; this puts "special" back to SEZs, and the leaders would have less to worry about because most areas cannot do anything. However, judging from the development history of China, this type of SEZ model is a thing of the past, and that era is over.
The fourth is geographical new SEZ. This kind of construction is a summary of the history of the SEZs, which is mainly about establishing SEZs through special geo-advantages. Dubai in the United Arab Emirates is such an SEZ. From the perspective of geographical factors, Dubai has similar distances to Europe, East Asia, Australia, and Africa. It can engage in aviation and finance. Chengdu is another example; it is the western gateway to China and can connect Western China and Southeast Asian countries, and has great prospects for development. Some border trade cities also have geographical advantages. If Hainan can exert its unique geographical advantages and the policy of marketability, it will become an SEZ of the new era. Anbound has suggested that Hainan should take advantage of the financial innovation of the free trade zone and the construction of the Belt and Road Initiative, and the global financial service platform jointly built by China and the EU can be considered to be located in Hainan. Based on its natural advantages of trade, port and logistics in the free trade zone, the financial service radius of bulk commodity trading and pricing will be effectively expanded.
The fifth is the most backward special zone. Being backward means having lower cost, which is also an advantage; as long as the cost is low, the industries will naturally come to that area. For example, Cambodia in Southeast Asia and Bangladesh in South Asia are beginning to take advantage of lower cost and begin to attract some low-cost, labor-intensive industrial agglomerations, gradually gaining a place in the relevant industries around the world. Of course, this type of SEZ seems to be inappropriate for China's current stage of development, at least in most coastal developed areas. Hainan is still relatively backward compared with Shenzhen and Xiamen, but it is not appropriate to choose the SEZ model of the early stage of China's reform and opening up decades ago.
Of course, the five modes of SEZ development mentioned above are actually different scenarios for the development of the Hainan SEZ, as well as different alternatives under different development ideas and goals. Although the Hainan SEZ is relatively backward compared with other developed regions in China, Hainan currently has a good comprehensive research package, and there is also strong support from the state. As long as it clearly defines its positioning, clarifies its development ideas, and determines the development goals, does its best to promote the SEZ, Hainan will do well.
Final analysis conclusion:
The Hainan Province has the special advantages of being a free trade zone and a special economic zone. To successfully develop into a special economic zone, there are different development goals and paths; so long as it is clearly positioned, the resources are gathered, and the ideas are clarified, Hainan is quite likely to succeed.
