Hainan FTP's tax exemption policies save costs for enterprises

The island-wide special customs operations in the Hainan Free Trade Port (FTP) are expected to save costs for enterprises through tax exemption policies.

China on Thursday launched the island-wide special customs operations in the Hainan Free Trade Port (FTP), the world's largest FTP by area, allowing freer entry of overseas goods, expanding zero-tariff coverage and more business-friendly measures.

Officials describe the special customs system as "freer access at the first line," referring to freer trade between Hainan and areas outside China's customs borders, and "regulated access at the second line," which involves applying standard customs controls for goods moving from Hainan to the mainland.

According to the regulations, zero-tariff goods processed in Hainan may be sold to the mainland duty-free if their local processing generated an added value of 30 percent or more.

That's why Zhong'ao Soup, which produces a condensed version of broth, set up a factory in Hainan.

The factory requires 240 tons of pork bones among other ingredients for its daily production. Since many of the raw materials and ingredients are imported, the company expects to save a significant amount of money under the tax exemption policies.

"The bones are from Brazil, Argentina, Uruguay, Russia and Australia," Liu Peng, general manager of Zhong'ao Soup Industry, told reporters at a warehouse.

The materials would be taxed if they were imported to the mainland. However, the Hainan factory allows the company to process the materials in the FTP and sell the products duty-free to the mainland.

"We spend between 600 and 700 million yuan on raw ingredients every year. We expect to save the 12 percent tariffs on the materials under the beneficiary tax policies," Liu said.

When the factory produces at full capacity, it is able to save costs up to 84 million yuan, or over 10 million U.S. dollars a year.

Since the announcement of the Hainan Free Trade Port in 2018, 80,000 new foreign trade companies have set up in the island.

In addition to tariff exemptions, the proportion of zero-tariff products in the Hainan FTP has been raised from 21 to 74 percent, expanding the list of related items from 1,900 to over 6,600, covering nearly all production equipment and raw materials.

Hainan FTP's tax exemption policies save costs for enterprises

Spanish students have expressed their expectation that a healthy China-U.S. economic and trade relationship will inject greater stability into the global economy and create greater opportunities for Spain.

On Sunday, Chinese and U.S. delegations convened in Paris, France for talks on economic and trade issues. Guided by the consensus reached by the two heads of state in Busan and their subsequent phone talks, the two sides will conduct consultations on economic and trade matters of mutual concern.

Ahead of the talks, members of the public in Madrid, Spain, shared their views on China–U.S. economic and trade relations with China Media Group (CMG). They agreed that reaching an agreement between the world’s two largest economies would have a direct impact on the global landscape.

"They are the two countries that contribute the most economically, in a manner of speaking, to the rest of the countries. They are major importers and exporters. So I think that a satisfactory relationship between them can be very beneficial for all other countries," said Claudia, an engineering student.

Noting that both sides are important trading partners of Spain, the interviewees stated that a healthy, stable and sustainable China-U.S. economic and trade relationship also affects various aspects of the Spanish society, and that agreements between the two countries would help promote Spain's economic growth.

"I do think that it could have a certain effect on the Spanish economy, both in terms of prices, and I would dare say employment as well. Because I think that if those two great powers reach an agreement, Spain could also get in on the action. It would create quite a few jobs in Chinese and American multinationals for all Spaniards," said Claudia.

"Spain is caught in the middle; it has good relations with both the U.S. and China. If it gets on the bad side of either one, it could be hit hard, because Spain mainly relies on tourism -- well, other things too, but essentially tourism, construction and agriculture. It's very important to have more help and trade with all countries around the world," said Denis, a law student.

Spanish students say stable China-US ties benefit global economy