As the official noted, Russia has been a major source of tourist inflow to the Island of Hainan and its key foreign partner. According to the politician, the province's authorities intend to implement a few hundreds programs for attracting foreign capital, including investors from Russia.
— Xi Jinping during his visit to the region announced the creation of a free trade zone across the Island of Hainan and a free port. Could you summarize the work the authorities have done in this direction? Has the work been successful?
First of all, I am very grateful to TASS for all the attention and support the agency is giving to the Island of Hainan. I am very glad to present Hainan's position to the world through such an agency.
As you have already mentioned, China's president has granted Hainan an opportunity to deepen reforms as well as a task to imolement a free trade zone and a free port on the island. We rightfully consider this task a historic mission as it will once again allow Hainan to become a frontrunner inconducting the police of openness and reforms. We have grasped this historic opportunity and began working enthusiastically. We tripled our efforts to fulfil the assignment the central authorities had tasked us wiith to deepen reforms and boost openness in our region.
— Could you please highlight a number of programs?
Firstly, we fully implemented the so called 1+N for the free trade zone on Hainan: it stipulates that in order to reach one goal, several institutions generate a number of ways of getting there. Furthermore, er have declared a year of comprehensive reforms and openness, as well as tasked the authorities on all levels to do their utmost to conduct the political course in various areas.
Secondly, we paid special attention to institutional upgrade. Institutional innovations were a key task in creating the pilot free trade zone. We will deepen the regulations reform, set up a unified system for commercial enterprises' registration, simplify the closing procedure for companies and consideration process for projects in construction.
There are 25 institutional updates in total, among which are the creation of the country's first system for securitizing intellectual property assets (providing financing for an enterprise through granting the right to own stakes in intellectual property — TASS), as well as establishing an advanced insurance system and fees for imported tourist yachts. This year we chose twelve such key areas.
Thirdly, we focused on bettering business environment for investors. In accordance with the standards of the World Bank, we have drafted a plan to implement a total of 40 measures to optimize business environment, and also prepared special programs to attract foreign capital, promote private business development and maximally simplify the procedure of obtaining a permission to do business. This experience will later expand throughout the country to ensure the rule of law in China, internationalize its market and improve business climate.
— How long does it take now to register a company on the island? Did those measures help to increase business activity on Hainan?
The procedure for registering an enterprise is reduced to five working days, and it will now take not 20, but only ten working days to obtain a work permit for foreign citizens. Last year, more than 140 thousand new business entities appeared on the Hainan market, with the annual growth reaching 15.5%. In the first four months of 2019, at least 53,000 new enterprises registered in the province, which is 45.14% more compared to the same period last year.
We pay great attention to attracting investors. We implement two programs "100 days of big investments" and "Attracting a million highly qualified specialists to Hainan." At the same time, along with attracting capital from abroad, we also keep tabs on meeting the program's requirements for ensuring efficient development.
— However foreign investors would often like to bring in their own team as well. What can you tell us about attracting foreign specialists and their employment on the local market?
Attracting highly qualified personnel from abroad, technical and experienced specialists is one our priorities. We have already been able to attract 27 companies from Forbes 500 list to our market, as well as the Big Four companies (Deloitte Touche Tohmatsu, PricewaterhouseCoopers, Ernst & Young and KPMG).
In the first four months of 2019, the volume of actually used foreign investment in Hainan increased approximately by 20 times. To date, we have already attracted 4,500 foreign citizens to our labor market.
In order of deepening the policy of openness, we simplified the visa regime for 59 countries, and we continue to expand the duty-free program. The number of international flights from the province's airports has been increased. We are also doing everything we can to accelerate the creation of new channels for land and maritime trade.
Now let's talk about construction. Currently, 18 projects are underway, including the creation of a unified window service for international trade in the Hainan Province, the construction of a new Haikou-Jiangdong district, the Sanya General Economic Department and the central business district of this city, an international intellectual property exchange.
At least 458 projects worth 211,3 billion yuan (about $30,7 bln) are underway at the moment with 233 more pending worth 302,3 billion yuan ($43,88 bln). These projects will enable Hainan to set up an industrial base for efficient development.
We also pay great attention to infrastructure, including the development of the lighting network, the supply of electricity, water, gas, and road construction, including high-speed autobahns. In addition, we are building a ring gas pipeline around the island’s perimeter, and irrigation facilities. The best Chinese and foreign educational and medical institutions, including the Harrow elite school for boys, are expanding to Hainan, which allows us to create better conditions for investors and expatriates.
Another priority is the leveling and containment of risks. We carry out programs on ecological and coastal line protection, we take all the necessary measures to better the environment. We are also making efforts to ensure that the average concentration of PM2.5 particles remains at single-digits level, and our free port was being built in a world-class environment.
At the same time, the government takes measures to maintain security, wages war against crime, drug trafficking and illegal gambling business. The authorities are promoting the development of Big Data analysis systems and social management platforms in order to not only support the growth of passenger, cargo and financial flows, but to simultaneously control them.
— According to the Hainan authorities, by 2020, they plan to establish the core features of the free trade zone. What's in store for the future?
By 2020, certain indicators should indeed be achieved. This is not only the central government's requirement to regional authorities, but also a necessary condition for creating a free port with Chinese features in the province.
We have less than two years left before this deadline. We intend to do our utmost and work selflessly in order to fully implement everything that was planned, so that our region would become a new example of deepening the reforms and the policy of openness in a new era.
First, we intend to build a new, open economic system. The authorities will implement an active strategy on bolstering the policy of openness to the highest degree. More impetus will be given to attracting foreign investment from all over the world. We intend to present even more industrial projects and market players who will work in accordance with our country's conditions and Hainan in particular, and will also meet the requirements of a high-quality development strategy.
— How do the authorities intend to foster international trade and economic cooperation?
The provincial government will use the Asian Forum for Boao to boost cooperation with countries and regions of the One Belt One Road Initiative. We will also encourage these countries to open consulates on Hainan, as well as the headquarters of international organizations.
Another key area is attracting professionals from abread. We vow to continue updating the labor regulations and establish an employment practice for foreigners that meets all international standards.
What is more, we plan to accelerate the construction of civil aviation airports, fully implementing the so-called third, forth and fifth freedoms of the air space, take measures to grant the carriers the sixth freedom. The authorities intend to consolidate the existing routes network and launch new destinations. We will do our best to launch four-eight hour flights to turn Hainan into the Pacific and Indian oceans' transportation hub.
— Which tasks will be set for the free trade zone on the Island of Hainan?
Chinese ministeries and departments are currently working out the free port zone draft; the necessary documents have already been submitted to legislators for consideration. We are supporting all the initiaves as well.
The next step is innovations. It is necessary to draw some kinds of investments from a so-called negative list (a number of industries, where foreign capital's participance is either restricted or prohibited), and also gradually lift restrictions on the admission of foreign capital to the investment market. We are currently working on a mechanism for regulating cross-border payments and stimulating foreign demand for goods and services as part of a program to transform the region into an export hub.
We also draw foreign financial institutions to Hainan in order to reduce the region’s financial market weaknesses. We are working to optimize the system of regulating bank accounts. Furthermore, within the framework of the course for introducing innovations and financial freedom, we are eyeing a trading exchange with Hainan features, separately developing services for financing environmental and scientific projects.
As I have already stated, we are also simplifying visa requirements and planning to gradually raise the period of stay.
— Do you plan to open new industrial parks and business-centers on the island?
We pay close attention to this, too. We invite world-class designers and architects for the Haikou-Jiangdong project, the Sanya General Economic Department and the central business district of this city.
We also set up industrial parks according to different areas: among those I would name economic regulation, design, new industries, IT, healthcare, finance, exhibition business, logistics, science and technology, education and humanitarian projects. The authorities encourage new projects to join industrial parks, but the clusters and their administration usually have the last say in it. Relying on the capabilities of the two leading cities - Haikou and Sanya, as well as on Yangpu Economic Development Zone and Lecheng International Medical Tourism Pilot Zone, we intend to introduce advanced technologies to get highest returns from these projects.
Another priority is high-quality development. We use the “three regions, one center” strategy, which focuses on the development of tourism, the services sector and hi-tech. Also among the leading industries are tropical high-edfficiency agriculture, the internet, healthcare, logistics, the marine industry, financial services, exhibition business, education, culture and sports.
We intend to launch an international center for tourism and consumption, as well as establish a proper state tourist zone. The authorities will also fully exploit the potential of the duty-free and will implement the free yacht port project and develop the cruise sector.
Mutual integration of cities and rural settlements is also a priority. Rural development is an important precondition for the creation of a pilot free trade zone and a free port with Chinese features.
— How will these measures effect the population's welfare?
We intend to revive rural areas in order to fully exploit the potential of 2,757 local settlements and eradicate poverty. This year we expect those who still remain on the brink of the poverty threshold to overcome the trend, which will allow us to proceed with the early development of 80% of the province’s territory and 60% of its population.
Our next priority is environmental protection. The eco-culture program is progressing as planned. We are successfully establishing an experimental zone and a national rainforest park at an accelerated pace. The government is focusing on protecting the environment and resolving related environmental problems, as well as facilitating the transition to alternative sources of energy. We are taking steps to ensure that the new projects have no negative impact on the environment, the ecology is preserved and the natural resources are used efficiently.
The key areas I've highlighted are very promising. We welcome the participation of Russian international organizations and companies in unlocking Hainan's potential. We urge them to take part in the creation of an international and regional economic base on the island and to deepen pragmatic cooperation within the framework of the One Belt One Road Initiative.
—Russia is Hainan's major source of tourist inflow. Many Russians visit the island's resort city of Sanya annually. What can be done to boost the Russia-Hainan cooperation more?
This year marks the 70th anniversary of the diplomatic ties establishment between China and Russia. The year 2019 was also declared the year of regional cooperation by our two leaders — Xi Jinping and Vladimir Putin. China's leader is now in Russia on a state visit and will take part in the St. Petersburg International Economic Forum.
We are certain that Xi's visit will prove to be fruitful, and that it will provide new historic opportunities for bilateral cooperation. The next step will be for the two states to implement the deals aimed at boosting regional cooperation and economic growth.
Now let's talk more about boosting cooperation between regional authorities. Since 2010, the Hainan Province has signed protocols of intent with the Murmansk, Vladimir and Kaliningrad regions, as well as with St. Petersburg. In 2011, Sanya and Khabarovsk became twin cities. In 2016, Qionghai signed a letter of intent with the city of Domodedovo. This has created a good basis for cooperation between the two sides.
In order to deepen cooperation, we plan to use the potential of the Russian-Chinese ties, the Boao Forum for Asia, and also the twin cities for cooperation agreements between the Hainan Province and Russia's regions . Boosting cooperation and improving the quality of exchanges contributes to the development of the Russian-Chinese relations.
— What are the steps the Hainan authorities are taking to develop tourism and attract visitors?
Russia is the most important source of inflow of foreign tourists for Hainan. In 2017, a record number of 284, 000 Russians visited our resorts. Currently, there are 11 international flights between Russian cities and Sanya. The prospects for the development of cooperation and exchanges are still very broad.
The authorities of the region are planning to establish a special institution — the Consultative Committee for the development and maintenance of the Russian tourist market — and to invite big Russian travel agencies. This will support the internationalization of the tourism sector of the province, and will also contribute to the development of inbound tourism on the Hainan Island and its recognition in the Russian-speaking countries.
— What do the authorities plan to do to promote Hainan on the Russian tourist market?
Hainan intends to sena a delegation to participate in the Moscow International Tourist Exhibition, recreational expos and other important events. We will continue to better the level of tourist products and services we provide, increase the number of direct flights, and do our best to meet the needs of Russian tourists. The provincial authorities will help Russia's best travel agencies to enter the Chinese and global markets.
Medicine is also a promising area. In May 2017, the Hainan Health and Family Planning Committee, Russia's National Medical Chamber and the Beijing University of Chinese Medicine held a medical symposium for the One Belt One Road member-states where an agreement on medical and healthcare cooperation was signed.
Hainan intends to cooperate with the National Medical Chamber of Russia on the project to create a center of traditional medicine, the establishment of the Russian-Chinese Medical Forum, and the Russian-Chinese medical tourism forum. This will enhance cooperation in the field of medical and scientific practices, as well as in personnel training and other areas. We will continue to develop Chinese medicine and physiotherapy, as well as recreational tourism in cooperation with the Boao Lecheng International Pilot Zone of Medical Tourism and the Hospital of Traditional Chinese Medicine in Sanya.
— Which areas of cooperation with Russia are, in your opinion, most promising?
I'd say bolstering energy and airspace cooperation. We hope that Russia will use its advantage in the energy sphere and help to turn Hainan into an international energy and trade center.
We also count on the Russia's relevant institutions to cooperate with China's biggest spaceport Wenchang in airspace to foster the development of space industry on the Island of Hainan.
The Hainan provincial government will help strengthen cooperation between the Hainan Resort Software Community and the Russian Silicon Valley - the Skolkovo Technology Park - by establishing joint innovative enterprises, incubators and international associations. This will improve the quality of services in finance, technology implementation and training for bilateral hi-tech ventures.
— Will the Hainan authorities boost education and humanitarian cooperation?
We will create conditions for attracting experienced professionals from various Russian universities, so that they can work and conduct research at Hainan's higher education institutions. The government will take measures to draw young talented Russians to the island, bearing in mind that the younger generation will study at Hainan University or other universities and get jobs there afterwards.
We also call on Russian sports teams to come to Hainan to continue training during winter. The authorities plan to hold a Russian-Chinese agitation week, establish a Russian-Chinese art forum, and organize youth camps on the island.
We will also do our best to expand media cooperation between the regional news outlets and TASS. Let's tell the world about the Russian-Chinese friendship, and about the Island of Hainan, together.
Interviewed by Roman Balandin