China Legislates to Transform a Province Into Free Trade Hub, Wants to Protect Military Bases: Economist

By Nicole Hao
Nicole Hao
Nicole Hao
Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.
July 7, 2021 Updated: July 8, 2021

The CCP (Chinese Communist Party) passed a law to change its far southern province, Hainan, into a gigantic free trade port (FTP). But an economist pointed out that the actual intent behind creating the FTP (areas with little to no tax to encourage economic activity) may be to protect military bases.

“The intention should include protecting its military bases. There is a naval base that harbored nuclear submarines in Sanya [in southern Hainan],” Henry Wu Chia-lung, macroeconomist and Taiwan AIA Capital lead economics researcher, told The Epoch Times on June 28. “Once Hainan becomes an FTP, other countries will be reluctant to launch missiles to target the bases on the island.”

He also said, “If [the Chinese regime] really wants to build a pure FTP, it should further develop the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), which is easy and simple.”

Military Purpose

Hainan Island is important to the Chinese military, especially for two strategic navy bases: One for aircraft carriers and another for nuclear submarines.

The submarine base, located very close to the South China Sea, is the largest in Asia and is the home port of China’s Jin-class Type 094 strategic nuclear submarines. Type 094s carry JL-2 intercontinental-range submarine-launched ballistic missiles with a maximum range of 7,456 miles. Chinese media reported that the Type 094 could attack the entire United States.

The base, named Yalongwan Base, has four 751-foot-long piers and can dock a total of 16 submarines. Chinese media reported that since the South China Sea is a busy commercial gateway, submarines can quietly operate underwater without being detected by the United States and Japan.

Epoch Times Photo
China’s manned submersible Shenhai Yongshi (or Deepsea Warrior), on board the exploration ship Tansuo-1, returns to port after completing deepsea testing in Sanya, a city on Southeast China’s Hainan Island, on Oct. 3, 2017. (Sun Qing/Getty Images)

Sanya’s aircraft carrier base is the home port of Shandong, China’s first domestically built aircraft carrier and the smaller type-075 landing helicopter dock ship.

This base is critical to the Chinese regime’s push into disputed areas in the South China Sea, where another half dozen countries also claim rights, including: Brunei, Taiwan, Indonesia, Malaysia, the Philippines, and Vietnam.

Epoch Times Photo
China’s first domestically manufactured aircraft carrier, known as “Type 001A” or “Shandong,” returns to port in Dalian in China’s northeastern Liaoning Province after its first sea trial on May 18, 2018. (-/AFP via Getty Images)

Largest FTP

“After the CCP transforms the island into a free trade zone, other countries like the United States will not be able to easily attack the island if there are conflicts,” Wu said.

The Chinese rubber-stamp legislature passed the Hainan Free Trade Port Law on June 10, making Hainan Island the largest FTP in the world.

The island is 12,822 square miles, which is similar in size to the state of Maryland or to the island of Taiwan. The province governs the island and about three hundred small islands in the South China Sea.

The law restates the regime’s plan to set up a free trade system on the island by 2025, build the island into the country’s economic leader by 2035, and transform the island into an internationally influential free-trade port by 2050.

However, the Chinese regime already started to develop the Greater Bay Area in 2015, which covers nine cities in China’s prosperous Guangdong Province, Hong Kong, and Macao.

By contrast, Hainan Island, an agriculture-based tropical resort island, is ranked near the bottom of China’s economy.

Epoch Times Photo
A cargo ship loaded with containers is leaving a port in Haikou in China’s southern Hainan Province on May 17, 2021. (STR/AFP via Getty Images)

The new law stipulates several distinct economic benefits to consumers and foreign investors. Specifically, it provides for: a zero tariff to all materials that are imported to the FTP, an easy process for service operation permission in the FTP, a relatively transparent investment environment, a flexible cross-border capital flow, a relatively loose control on people’s movement, which includes releasing work visas to businessmen and no visa requirement for tourists who stay on the island for less than 15 days; and convenient transportation, which includes building more airports and roads.

Luo Ya contributed to this report.

Nicole Hao
Nicole Hao
Nicole Hao is a Washington-based reporter focused on China-related topics. Before joining the Epoch Media Group in July 2009, she worked as a global product manager for a railway business in Paris, France.