FTP Policy Focus Series——
Policy Interpretation on Opinions on Special Measures to Support the Construction of Hainan Free Trade Port and Relax Control over Market Access
On April 7, 2021, National Development and Reform Commission and Ministry of Commerce jointly issued the Opinions on Special Measures to Ease Market Access for the Support of Hainan FTP Construction, specifying relevant departments will further support Hainan in creating a free trade port market access system and market environment with Chinese characteristics, promoting the free and facilitative flow of production factors, speeding up the cultivation of international competitive industries, and constructing a free trade port of high quality in high standards. To help you understand the background and practical meaning of the measures, we hereby provide the policy interpretation.
I. What aspects make the Special Measures special? What is the significance of the implementation of the Special Measures for supporting the construction of Hainan Free Trade Port?
General Secretary Xi Jinping has expressed high expectations for the construction of Hainan Free Trade Port and made important instructions on many occasions. According to the overall plan and requirements for Master Plan for the Construction of Hainan Free Trade Port, subject to consent by the Party Central Committee and the State Council, the Commission has jointly issued the Special Measures with the Ministry of Commerce, which is another major bonus policy to support the construction of Hainan Free Trade Port, a breakthrough exploration of market access policies and mechanisms in Hainan and even the whole country, and a new institutional arrangement. Its policy connotation requires deep understanding and accurate grasp.
First, special measures will directly serve the special positioning of the Free Trade Port to promote the development of Hainan in a targeted manner. What makes the special measures special is that they are tailored for the construction of Hainan Free Trade Port. Focusing on the strategic positioning defined by the country for Hainan construction as a pilot zone for comprehensively deepening reform and opening up, a pilot zone for national ecological civilization, a center for international tourism consumption and a service zone for implementing national major strategies, giving full consideration to the unique geographical location of Hainan, emphasizing precision, effectiveness and pioneering, and identifying the key points of the active intention of social capital for market entry and the urgent need of breaking down barriers, the Special Measures will provide important institutional support for Hainan Free Trade Port to build an open economy at a higher level.
Second, with no restrictive rules and featuring bold innovation, special measures are intended to substantially ease the access threshold. Giving first priority to breaking down barriers to the vitality of various market entities, on the premise of “the government taking control”, efforts are made to relax the entry and licensing barriers to the cultural, medical, education and other industries, and every endeavor is made to break down barriers, and effectively and fully stimulate the vitality of market entities. In particular, pioneering explorations are made in areas such as the online sale of prescription drugs, commercial aerospace, and new energy infrastructure. Industry access and regulatory mechanisms are reconstructed in a comprehensive way, and market entities are encouraged to try what they cannot and dare not try in Hainan. The Special Measures will fully encourage Hainan to further improve its stance, carry forward the spirit of daring to try and daring to be a trail blazer, and foster a stronger and more dynamic atmosphere for reform and innovation in the construction of the market access system in accordance with the arrangements of the Party Central Committee.
Third, focus on pooling global resources to demonstrate China’s responsibility as a major country to open wider to the outside world and support economic globalization. In the face of profound changes unseen in a century and complex domestic and international situations, the formulation and introduction of special measures to support the construction of Hainan Free Trade Port and relax market access will demonstrate to global investors and consumers the charm of openness of China’s economy with high standards. The Special Measures will build Hainan into a benchmark for market access in the world, creating a very attractive market environment. The market access standard system and market environment of the Free Trade Port with Chinese characteristics will greatly promote the efficient convergence of high-quality global capital, talent, technology and other resources, thus forming a strong driving force for reform and development.
II. What is the difference between the market access relaxation measures of Hainan Free Trade Port and the negative list for market access adopted nationwide? What is the relationship between the two?
The negative list is the main part of the reform of the negative list system for market access. The special measures are an important step to further relax market access within the framework of this reform. The two are related to each other as generality and particularity. Specifically, it is mainly reflected in three aspects.
First, the Special Measures are formulated based on a close research of the negative list for market access. Each special measure will be matched by a relaxation of restrictions on access to items on the negative list. For example, Article 3 of the Special Measures, “Increase support for drug market access”, is aimed at Item 25 of the Negative List for Market Access (2020 edition), “Without authorization or inspection, a company shall not engage in the production, sale, import or export of drugs (item code 203008)”; Article 16 “Encourages Hainan to vigorously develop vocational education” is aimed at Item 92 of the List (2020 edition), “Without permission, no school or kindergarten shall be established, divided, merged, changed or terminated (item code 216001)”. There are also measures that correspond to multiple items on the list. Overall, the introduction of 22 special measures means that 30 items listed in the List (2020 edition) will be relaxed on a pilot basis in Hainan.
Second, the Special Measures put forward supporting policies while relaxing access. As I mentioned before, in order to effectively remove the hidden barriers to market access such as “allowing access but prohibiting business operation”, the Special Measures not only relax the restrictions on items on the list, but also address the objective existing institutional barriers, institutional obstruction and lack of policy innovation in the upstream and downstream of the industrial chain. From the perspectives of systems and mechanisms, institutional guarantee, financial support, talent guarantee and other aspects, coordinated supporting policies are put forward to support industrial development, in order to create a good environment for industrial development, so that market entities can really gain benefit from reform.
Third, the Special Measures are an important exploration to further reduce the national version of the negative list for market access. Since 2018, with the approval of the CPC Central Committee and the State Council, the National Development and Reform Commission and the Ministry of Commerce have released three versions of the negative list for market access, reducing the number of items on the list from 151 in 2018 to 123 in 2020, and continuously easing restrictions on market access. At the same time, it is widely expected that the negative list for market access will be further compressed and market access will be eased in more industries and sectors, calling for a more targeted, complete and ground-breaking policy path for relaxing restrictions on market access. As the first pilot to relax market access, the Special Measures coordinates efforts to relax and standardize market access, streamline and optimize administrative examination and approval, strengthen and innovate market supervision, and put forward a package of policies and measures, as well as a clear reform plan. Among them, those that have proved to be effective and have promotion significance will be released in the national list according to procedures, which are mutually complementary and reinforcing with the construction of a unified national market and a new development paradigm.
III. What are the outstanding highlights of the Special Measures to look forward to? In which areas should we focus on making more efforts in advancing pilot programs?
Some items in the Special Measures are particularly groundbreaking for the reform in fields that serve China’s major strategies and open up new prospects in China.
In the medical field, there are measures to facilitate Internet sales of prescription drugs. In view of the difficulties existing in prescription mutual recognition, patient privacy protection, medical insurance settlement, etc., efforts are made to promote the establishment of electronic prescription centers. In the form of Internet + medical care, the information barriers between medical institutions, sales platforms, medical insurance institutions and commercial insurance institutions are broken down. At the same time, more efforts are made to strengthen the management of high-risk drugs, promote the comprehensive improvement of governance efficiency, and make a breakthrough attempt to ease the access restrictions in this field. More measures are taken to increase market access support for drugs, encourage innovative drugs that have obtained marketing licenses to be directly used by qualified Hainan medical institutions in accordance with the principle of “entry with approval”, which opens up the last threshold for innovative drugs to enter the market and will further encourage outstanding pharmaceutical companies to strengthen R&D and innovation, providing guarantee and support for Hainan patients to use high-quality Chinese medicines at an early date. Measures are implemented to relax the access restrictions of CRO (Contract Research Organization) in an all-round way, clinical trials and post-marketing re-evaluation of traditional Chinese medicine in Hainan are conducted, and the requirements of formulating drug evaluation standards according to the principles of safety and effectiveness have been clarified for the first time, which will effectively simplify the launch process of traditional Chinese medicine, improve the launch efficiency of traditional Chinese medicine, and promote excellent traditional Chinese medicine to be put into clinical use faster. Support measures intended for promoting the development of the high-end medical beauty industry in Hainan, comprehensively optimize every access step of the medical and beauty industry, such as approval of the establishment of institutions, doctors’ practice, import of medicines, medical devices and cosmetics, support Boao Lecheng to further gather international high-quality medical beauty resources, accelerate the cultivation of new advantages of high-end medical beauty industry clusters, and build a high-end medical beauty industry chain that is internationally leading and enjoy Hainan characteristics.
In the financial field, there are measures to support the development of the entire agricultural industry chain, and through the introduction of geographic information system (GIS), satellite remote sensing technology, unmanned aerial vehicle (UAV) information acquisition technology and other information-based methods, promote the data collection and integration across the whole agricultural industrial chain, carry out a risk assessment and credit evaluation. The policy also takes into account that Hainan is still a large agricultural province. The formulation of Special Measures is based on the reality of Hainan, featuring a careful study of the urgent needs of accelerating the development of Hainan’s agriculture and increasing farmers’ income. Starting with solving the problem of financial support for agriculture in Hainan, the policy makes coordinated plans and layout, intended to accelerate the overall transformation of the traditional way of agricultural management towards modern agriculture, and promote agricultural efficiency, farmers’ income and rural prosperity.
In the cultural field, there are measures to encourage the development of the cultural performing arts industry. On the basis of giving full play to the role of social organizations such as trade associations and strengthening industry self-discipline, the focus is put on optimizing the examination and approval methods and standardizing the examination and approval standards for commercial performances, which will further stimulate the vitality of the cultural performing arts industry in Hainan, promote the gathering of various resources such as performance, creation, capital, science and technology of the highest quality cultural performing arts industry across China, countries along the “the Belt and Road” initiative and even the whole world, and help build Hainan into a new window showing the openness, inclusiveness and self-confidence of a socialist cultural power.
In the education field, there are measures to support domestic renowned universities in establishing international colleges in Hainan. We are intended to create an international first-class undergraduate education platform for Hainan Free Trade Port at a national strategic level, and define the school establishment, school-running orientation, discipline and specialty setting, enrollment scale and sources, scholarships, etc., which will help Hainan to further gather international first-class talents.
In other fields, there are measures to optimize the environment of access to the commercial aerospace market. They are intended to introduce innovation into the access and management mechanism of commercial aerospace, focus on overcoming multiple restrictions faced by domestic commercial aerospace enterprises in obtaining launch stations, filing launch applications, handling relevant approvals, etc., and promote the development of supporting industrial chains in a coordinated manner to support Hainan in building an open and international Wenchang International Aerospace City. There are measures to relax market access of the seed industry, where the natural isolation conditions and excellent breeding conditions of Hainan Island are fully utilized, to relax the restrictions on seed industry access, streamline the approval process of seed industry import and export, encourage international cooperation on breeding research, strengthen the protection of intellectual property rights of the seed industry, create conditions for excellent seed industry enterprises at home and abroad to settle in Hainan, and help build “Nanfan Silicon Valley” in Hainan. In view of the characteristics of huge investment on the preliminary stage and long return period, the relevant measures for charging and switching infrastructure of new energy vehicles support competitive enterprises in setting up investment, construction and operation companies in a market-oriented manner, drive the construction of new energy infrastructure, effectively stimulate the enthusiasm of market investment, and accelerate the establishment of an “integrated network” operation mode in Hainan Island. The measures to carry out pilot programs of innovative development of rural tourism and leisure agriculture are designed in response to practical difficulties faced by tourism development in Hainan, such as a lack of unified planning, major obstacles to the development of idle farmhouses and homesteads, incomplete service standards and difficulty in the financing, to strengthen government guidance and policy support, and coordinate all forces to provide important foundational support for the development of the industry.
Ⅳ. In the process of implementing the special measures, how can various departments of the Central Government and Hainan Province divide their work and coordinate their efforts to form synergy?
During the formulation of the Special Measures, the opinions of the Central and state organs and relevant functional departments of Hainan Province were fully solicited, and the opinions of relevant industry associations, market entities, experts and scholars were consulted. Great value was put on mobilizing the enthusiasm of all parties at the national, local, social and market levels. The policy measures were carefully polished based on coordination across upper and lower levels and integration of departments and regions at different levels. On the premise of ensuring the essential value of reform, all efforts were made to seek the greatest consensus of opinions from all parties and make reforming measures more scientific, standardized and coordinated, which has laid a solid foundation for policy implementation. In Special Measures, the content and implementation standards of each measure have be refined and clarified as far as possible. At the same time, responsible agencies and participating agencies are listed to facilitate operation and implementation.
After its issuance, Hainan Province will implement the Special Measures jointly with various departments and units. As the main subject of implementation, Hainan Province should establish a high-level coordination mechanism and make solid efforts in implementing each measure. All the responsible and participating agencies will work together according to their responsibilities and give relevant authorization and support to Hainan Province. The National Development and Reform Commission will step up coordination with the Ministry of Commerce and other relevant departments, strengthen supervision and inspection, and ensure that the Special Measures are implemented effectively in accordance with the requirements of the CPC Central Committee and the State Council.
V. The CPC Central Committee and the State Council issued the Action Plan for the Construction of High Standard Market System, which mentioned that “special measures for relaxing market access, such as the construction of Hainan Free Trade Port, the construction of the pilot demonstration zone for building socialism with Chinese characteristics in Shenzhen, and the construction of Hengqin Guangdong-Macao Deep Cooperation Zone, etc. shall be developed and adopted”. Does this mean that more special measures will be introduced?
At present, the National Development and Reform Commission and the Ministry of Commerce are studying this arrangement with relevant departments and local governments. The main consideration can be summarized as “three building upons”.
First, build upon China’s major regional strategies. Shenzhen and Hengqin are important areas for the construction of the Guangdong-Hong Kong-Macao Greater Bay Area. Regions bearing major national regional strategies have a good foundation and conditions for reform and development, and implementing special measures for relaxing market access in these places will be more conducive to exploring experience in groundbreaking reforms, facilitating the implementation of China’s major regional strategic goals and promoting development through reform. Through easing market access, the overall regional strategic goals will be achieved in a more effective way. Special Measures will be very limited in quantitative terms, and applicable regions will be selected from the best of the best to ensure that they are aligned with national strategies and achieve the desired results.
Second, build upon local reality. The selection of items in Special Measures takes full account of the Central Government’s positioning of relevant regions, local resource and factor endowments, and the existing foundation for reform and development. The Special Measures of Hainan will focus on the industries and fields that have a significant impact and role on the construction of Hainan Free Trade Port, such as medical education, finance and culture, and the forward-looking and strategic fields that are of great significance for Hainan’s future development, such as commercial aerospace, seed industry and new energy infrastructure. In the next step, other regions will adopt Special Measures in accordance with this principle, proceeding from local conditions and integrating national strategies with local conditions in a more effective way.
Third, build upon the law of market economic development. The research and formulation of special access measures must take into account the requirements of the integration of market system. In particular, China has entered a new stage of development, which requires not only the integration of commodity market, but also the integration of factor market. The Fifth Plenary Session of the 19th CPC Central Committee put forward the “construction of a high-level socialist market economic system”, requiring the construction of a high-standard market system. The General Office of the CPC Central Committee and the General Office of the State Council issued the Action Plan for Building a High-standard Market System. The high standard of the market system and the unification of the national market are the first priorities that will be taken into consideration in formulating Special Measures. In addition, it is necessary to give special consideration to and respect the willingness of market players, and fully listen to their opinions and suggestions. The research, formulation, implementation and specific connotation of some measures will fully reflect the opinions and suggestions of market players, and the greatest efforts will be made to achieve mutual promotion and comparison between the central strategy and local reality, between market system and market players, so as to form a joint force for market development.