Services' first negative list goes to Hainan

Cross-border trade policy promises higher level opening-up, transparency

China on Monday unveiled its first negative list for cross-border trade in services. The list will be implemented in the Hainan Free Trade Port.

It is a major breakthrough in the country's opening-up for trade in services, said senior government officials.

Called the Negative List of Hainan Cross-Border Trade in Services, it is scheduled to take effect on Aug 26.

The document is different from the past liberalization arrangements scattered in specific sectors, said Wang Shouwen, vice-commerce minister.

A negative list specifies the prohibited economic activities, thereby implying that activities not listed are deemed to be allowed.

The Hainan FTP negative list specifies 70 special administrative measures for 11 sectors, including shipping, retail, logistics, finance and education, for overseas service providers.

Domestic and foreign service providers will enjoy equal access to sectors beyond the list in Hainan FTP, with greater openness, transparency and predictability, according to the information released by Wang's ministry.

In addition to removing the restrictions on foreign individuals participating in the qualification examinations for engineers in many fields in the Hainan FTP, the negative list allows representative offices of overseas law firms in Hainan to engage in part of Hainan-related commercial non-litigation legal affairs.

Through institutional opening-up, this measure will further liberalize trade in services, enhance the general level of liberalization in China and serve the creation of new development dynamics throughout the country, the vice-minister said.

As a driver of Hainan's economy, the services sector accounts for more than 60 percent of the province's GDP. Recent data showed the development of the services sector has paid rich dividends. The sector contributed 95.8 percent to Hainan's economic growth last year, data from the ministry showed.

The vice-minister said the new negative list widens market access in trade in services and paves the way for higher level opening-up in professional, transportation and financial services, among others.

"Its liberalization level goes beyond China's WTO accession commitments and its main effective FTAs (free trade agreements) in corresponding areas," he said.

Tang Wenhong, director-general of the ministry's department of pilot free trade zone and free trade port, said, "In the next step, we will push forward the implementation of this negative list and summarize and evaluate practices and experiences in a timely manner."

He said the government will also explore ways of expanding the administrative model of the negative list of cross-border trade in services to pilot free trade zones first and the whole nation later.

Ni Qiang, vice-governor of Hainan province, said that focusing on the key role of Hainan FTP in building new development dynamics, a series of opening-up measures were taken. These included a measure that liberalized the application process for yachts registered overseas.

"The measures will give Hainan a distinct edge in international cooperation and promote the high-quality development of the free trade port," Ni noted.

Yann Bozec, president for Asia-Pacific of the US-based Tapestry Group, the parent company of US luxury and fashion brands, Coach, Kate Spade and Stuart Weitzman, said with the new government policy now in place, the company will look forward to working with more partners in the growing market, thus jointly promoting the consumption upgrade and creating more value in the area of retail service.

"The booming and rapid development of the duty-free market in Hainan FTP has been a wonder to behold. We have all witnessed the tremendous injection of growth and vitality this has brought to the market," said Bozec, who is also the president and CEO of Coach China, the local subsidiary.

China's 21 pilot free trade zones attracted 100.88 billion yuan ($15.56 billion) in overseas investment in the first half of 2021, accounting for nearly 17 percent of all foreign capital that flowed into China, according to data released by the Ministry of Commerce.

The amount of capital used and new overseas investment companies established in Hainan FTP surged 5.7 times and 3.9 times, respectively, during the first half.