China last Monday released a master plan for the Hainan free trade port, aiming to build the island province into a globally influential free trade port by the middle of the century.
This marks China's latest efforts in championing and practicing free trade and multilateralism. Between September 2013 and August 2019, China approved 18 pilot free trade zones in different parts of the country. Last year, the country unveiled the development plan for the Guangdong-Hong Kong-Macao Greater Bay Area, which also calls for free trade and market-oriented reforms, among other measures.
China's drive to deepen its opening up and reform in recent years presents a stark contrast to the United States and some other countries that have seen a setback of globalization following the Trump administration's shift to protectionism that cumulated in a trade war with China. The COVID-19 pandemic has also prompted countries to seek to move production of certain products back home, in an effort to avoid over-reliance on supply chains in other countries, dealing a double blow to globalization.
The master plan for Hainan features a string of bold steps, such as zero tariffs, low tax rates for companies and individuals, and free cross-border flows of capital. The Central Government regards that the building of the Hainan free trade port is of vital importance for pursuing an open economy, deepening market-based reform and improving the business environment.
The plan comes as the world is confronted with rising protectionism and unilateralism, and with economic globalization facing greater headwinds.
While Trump has threatened withdrawal from the World Trade Organization (WTO) on a number of occasions, and his administration has even crippled the WTO's Appellate Body by blocking the appointment of new judges, China has consistently supported the 25-year-old institution, and sought to iron out regional free trade arrangements.
Speaking to the press after the conclusion of the annual session of the National People's Congress on May 28, Premier Li Keqiang said that China is willing to consider joining the Comprehensive Progressive Trans-Pacific Partnership Agreement (CPTPP), an 11-nation Pacific region trade pact that emerged after Trump pulled out of the original Trans-Pacific Partnership (TPP) in January 2017.
"For regional free trade agreements, including CPTPP, China has a positive, open and welcoming attitude," said Commerce Ministry spokesman Gao Feng on June 4, noting that agreements like the CPTPP are in line with WTO rules.
The CPTPP is a trade agreement signed in March 2018, between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
China has also been seeking a larger regional trade deal, the Regional Comprehensive Economic Partnership (RCEP), which, if negotiations are successful, will cover Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Australia, China, Japan, New Zealand and South Korea.
As the world is mourning the near death of globalization, and Trump is trying to decouple the world's largest and second-largest economies, China's continuing commitment toward free trade will provide fresh impetus for its economy as well as opportunities for the world.
It remains true today that free trade enables countries to specialize in those goods where they have a comparative advantage, and that reducing tariff barriers leads to increased trade, economy of scale and consumer welfare. The growing wealth divide and losses of manufacturing jobs in some countries, regarded by some as negative effects of globalization, should be tackled by more equitable tax regimes and economic restructuring.
(The author is a deputy editor-in-chief of Shenzhen Daily.)