Growth curve 

In 2019, the island established service trade partnerships with 123 countries and regions around the world. Last year, 220,000 new companies were set up in Hainan, up 71 percent year on year. Paid-in foreign investment growth doubled that in the previous year and Hainan notched up a service trade surplus of 653 million yuan ($92.3 million).

Well-known service enterprises from home and abroad are settling down on the island.

The four leading accounting firms in the world, PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte, have opened their offices in Haikou. iFlytek, a Chinese artificial intelligence service giant, has established a branch in the city of Sanya, offering services in smart city development, education and interpretation and translation.

Hainan is courting investors in insurance, construction, maritime transport, new-energy vehicles and other emerging industries with incentive measures. Foreign investors are treated on par with domestic investors in the pre-establishment period and are given access to industries except those on the negative list.

Medical haven 

On April 10, a special international exhibition showcasing more than 300 kinds of medical devices that were yet to hit store shelves in China opened in the Lecheng International Medical Tourism Pilot Zone, an initiative of the local government to build a world-class medical and wellness destination. The pioneering exhibition offers a channel for foreign medical device makers to enter the Chinese market. Thirty international medical equipment providers took part in it with products such as advanced artificial lungs and ear implants.

Massachusetts-based Boston Scientific showcased 24 items, including a disposable duodenoscope, a lighted tube used to inspect the small intestine. The new device was released in the U.S. late last year. "It appears on the Chinese market less than 100 days after its debut in the U.S. It's unimaginable in the past!" said Yan Xiaoliang, the company's marketing director for its digestive endoscopy department in China.

Established in 2013, the medical tourism pilot zone lies close to the permanent venue of the Boao Forum for Asia Annual Conference. It offers healthcare services including rehabilitation and cosmetic surgery and is the only medical pilot in China where medical equipment and drug imports enjoy lower tariffs, foreign doctors are given extended employment contracts and foreign-funded hospitals are allowed.

Last year, Hainan rolled out policies to open the island up wider to the international medical market. They include accepting survey and clinical trial data to assess the efficacy of new medicines and medical equipment to be imported into the province. Thanks to the policy, a long-term eye implant for glaucoma, produced by American biopharmaceutical company Allergan, was approved for the pilot zone on March 26. It was the first medical product to enter the Chinese market based on real-world clinical data. The company has submitted application for introducing another product in the same way.

"About 600,000 Chinese go abroad to seek medical treatment every year, to access better medical solutions," Shen Xiaoming, Governor of Hainan, said at a press conference in September 2019. With this policy, he hoped such medicines and treatment would be available at home.

By the end of last year, 51 medical devices had been approved for trial use in Lecheng, which benefited nearly 300 patients. The medical pilot zone received 75,000 medical tourists, generating revenue of 640 million yuan ($90.5 million).

Hainan is also opening it door wider to foreign visitors. People visiting from 59 countries for a wide range of purposes can avail of a 30-day visa-free policy since May 1, 2018. More than 771,800 overseas visitors had entered Hainan visa-free as of April 8.

The island is also more connected to the rest of the world. As of 2019, it was linked to 62 overseas cities via 103 international air routes. In 2019, the number of inbound tourists reached 1.44 million, up 14 percent year on year.

From FTZ to FTP 

The year 2020 is the first one to start building the Hainan Pilot FTP, according to a briefing by the Hainan Provincial Government in December. However, there are some challenges.

The impact of the novel coronavirus pandemic is the most immediate challenge. Xia Feng, a research fellow with the School of Politics and Public Administration of Hainan University, told Beijing Review that in the short term, social distancing enforced to contain the outbreak would impact Hainan's pillar industries, including tourism, medical care and exhibition. In the medium and long term, it would affect the global supply and industrial chains.

Internally, compared with other pilot FTZs and Hong Kong, the only full-fledged FTP in China, Hainan's economy is weak, Xia added. And finally, with the rise of trade protectionism and anti-globalization, some countries are considering localizing their supply and industrial chains. "This will undoubtedly have a negative impact on Hainan's opening up," he said.

Xia said that the Hainan Pilot FTP needs institutional innovation, high-level opening up and effective risk prevention and control. Hainan should speed up opening its service market, shorten its negative list for foreign investment, and reduce trade barriers in the service sector to transform into an innovation-driven FTP with flourishing service trade.