On December 18, the Hainan Free Trade Port (hereinafter referred to as "Hainan Free Trade Port") officially closed off the entire island.
Industry insiders generally believe that this is a landmark measure demonstrating China's unwavering commitment to expanding high-level opening-up and promoting the construction of an open world economy. "The implementation of full island-wide customs closure in the Hainan Free Trade Port and the accelerated construction of a free trade port with Chinese characteristics are concrete actions demonstrating to the world that China has made a major choice to further expand its opening-up. China's door to the outside world will not be closed; it will only open wider," said Huang Hanquan, president of the Macroeconomic Research Institute of the National Development and Reform Commission.
Since the release of the "Overall Plan for the Construction of Hainan Free Trade Port" in 2020, the People's Bank of China has continuously improved the financial policies and systems adapted to the Hainan Free Trade Port, and has solidly carried out various tasks related to financial reform, development, and stability, effectively supporting the formation and development of the Hainan Free Trade Port. Under the guidance of the central bank, banking financial institutions have also accelerated their efforts to help Hainan build a new highland for financial opening-up.
Supporting the construction of infrastructure software and hardware
According to Huang Hanquan, the full island closure of the Hainan Free Trade Port is a strategic choice to align with high international standards of trade and economic rules and steadily expand institutional opening-up.
For Hainan, the full island-wide customs closure marks the beginning of a new stage in the opening and development of the Hainan Free Trade Port, and is also a long-term and continuous task. In this process, ensuring the construction of the necessary infrastructure (both hardware and software) for customs closure has been one of the key tasks that Hainan has focused on in recent years.
To guide the banking and insurance industries in the region to provide financial support, at the end of 2024, the Hainan Financial Regulatory Bureau issued the "Guiding Opinions on Hainan Banking and Insurance Industries Fully Supporting the Customs Operation of Hainan Free Trade Port", which specifically put forward requirements such as supporting the construction of hardware facilities for the customs operation of Hainan Free Trade Port and strengthening the construction of financial infrastructure.
Against this backdrop, banking financial institutions are fully integrating into the overall development of the Hainan Free Trade Port, helping Hainan become an important gateway for China's new era of opening up to the outside world.
"The Agricultural Bank of China's Hainan Branch has earnestly implemented the financial regulatory authorities' requirements for 'digital foreign exchange management,' actively building a cross-border financial service platform covering multiple smart scenarios such as trade and tax filing verification, enterprise cross-border credit information authorization verification, and domestic ocean freight payment," said a relevant person in charge of the Agricultural Bank of China's Hainan Branch in an interview with the Financial Times. The bank has also continuously improved the functions of the "single window" system, achieving full coverage of remittance, letter of credit issuance, and document submission under the "single window" system.
At this critical juncture as the Hainan Free Trade Port moves towards full customs operation, efficient and smooth local government financing channels are crucial for consolidating the foundation for development and ensuring the implementation of major projects.
"The Hainan Branch of Bank of China, leveraging the resources of the entire group, is going all out to implement the comprehensive strategic cooperation agreement signed with the Hainan Provincial People's Government. It is developing implementation plans annually and formulating supporting policies for the construction of the Hainan Free Trade Port, allocating resources in areas such as credit, fees, talent, technology, and performance evaluation mechanisms," said a relevant official from the Hainan Branch of Bank of China.
"CITIC Bank's Haikou branch has fully leveraged its professional advantages and resource integration capabilities to accurately address the financing needs of local governments, focusing on guiding funds towards key areas such as infrastructure construction and improvement of people's livelihoods." According to a relevant person in charge of CITIC Bank's Haikou branch, since 2022, the bank has served nearly 190 local government bond projects, with a total scale of nearly 15 billion yuan.
Provide comprehensive financial services to resident companies
Industry experts interviewed generally believe that the full island customs closure of the Hainan Free Trade Port will lead to a significant expansion of trade finance business, creating new development opportunities for banking and financial institutions.
"After the customs closure, Hainan will become a key hub connecting the domestic and international dual circulation, with new business models such as entrepot trade, offshore trade, and bonded maintenance flourishing," said Zeng Gang, chief expert and director of the Shanghai Financial and Development Laboratory. He added that banking financial institutions can deeply participate in the restructuring of the industrial chain through products such as supply chain finance, trade finance, and letters of credit, especially serving key areas such as tourism, modern service industries, and high-tech industries.
"Following the timetable for the Hainan Free Trade Port's customs clearance operation, the Hainan Branch of the Bank of China has developed a customized 'cross-border finance + industrial chain' service solution. Leveraging the Regional Comprehensive Economic Partnership (RCEP) and Middle East cooperation background, this initiative aims to encourage more local enterprises to engage in cross-border RMB settlement, investment, and financing," a representative from the Hainan Branch of the Bank of China told the Financial Times.
Based on the core institutional design of "five freedoms and conveniences, and one safe and orderly flow," Bank of Communications released its cross-border financial service plan for the Hainan Free Trade Port. "This plan constructs a distinctive cross-border service system covering five major areas: cross-border trade, cross-border investment and financing, cross-border treasury management, cross-border asset management, and personal cross-border services," said a relevant official from Bank of Communications' Hainan branch.
Meanwhile, with multinational corporations establishing regional headquarters in Hainan, the economic benefits of regional headquarters will also extend to banking institutions. "Banks can provide comprehensive financial services such as cash management, fund pooling, and cross-border mergers and acquisitions, forming an ecosystem for institutional clients," Zeng Gang said.
To support the implementation of island-wide customs clearance in the Hainan Free Trade Port, the Hainan Branch of the Agricultural Bank of China has reached a comprehensive strategic cooperation agreement with Stonewood Obsidian (Hainan) Private Equity Investment Fund Management Co., Ltd. "We will join forces with non-bank financial institutions to create synergy in services, jointly improving the efficiency and effectiveness of services for enterprises 'going global' and 'attracting investment,' and moving cross-border financial services from single-point breakthroughs to a win-win ecosystem," said a relevant official from the Hainan Branch of the Agricultural Bank of China.
