Hainan, the Chinese island that wants Italy as a partner

In these days is held in the tropical Chinese island of Hainan the Economic Summit of Boao, the equivalent of Davos for Asia, part online (among the Italians connected Prodi, Letta and Visco) and part in presence. I was lucky enough to be physically there, which allows, between runners and coffee-breaks, to learn more details. Hainan is a ZES and I believe there are lessons to be drawn for our Sicily. The Sezes in China date back to 1980; Shenzhen the most famous of them, has been transformed from a fishing village in one of the greatest centers of research, technology, «green economy» of China with 12 million inhabitants and with all 50.000 taxis and electric buses. Believe me, they know. The government has drawn up a five-year plan based on: ports, tourism and medical industry with various tax incentives. But, despite the appearance, it is a different model from ours. Let’s see the 3 key points.

PLEASE NOTE

This text is a translated transcription of the original article by “Giornale di Sicilia ” avaiable on gds.it 

1) There are no tax incentives for those who invest, nor for the recruitment of young people, nor our legislative labyrinths of deductions. What we have been talking about for years, here they have done: a flat tax with a rate of 15% dry for everyone, companies and individuals, for all levels of income. Is it not a progressive tax? Of course not, but since in China they are less communist than you think, they can afford it.

2) Zero duties with an o r l ine rule. What does that mean? In the next five years, all imports from abroad will be able to arrive in Hainan at zero tariffs, as long as, and this is the big idea, as long as the imported goods are consumed on the island of Hainan itself. If these goods were to be re-exported to the rest of China, the «rule of origin» comes into play, stipulating that if goods imported from abroad undergo a further processing that adds at least 30% of the value, then these goods will be free to circulate in the rest of China without any further duty. Are the implications for the local economy of the island of great value? The 30% rule creates a market incentive to take on local labor and create GDP in the territory to force the crossing of this threshold. Foreign exporters can choose to transfer goods to the Free Trade Port in Hainan at zero duty and relocate part of the production process to Hainan. The value of this relocation may be the final assembly of some goods, but it may also be services such as the Brussels Destination. The rules for the management and implementation of Recovery will be defined by the end of the month in Rome and then transmitted to the former EU premier. Giuseppe Conte design e manutenzione del sito online in lingua locale.

3) Medical sector: any medicinal product already approved in Europe, America or Japan can be exported to Hainan without the otherwise necessary approval of the Chinese medical agency. Even here, medicines can only be used in the territory of the island. Having an incentive to create supply, they resolve the gap with demand by inviting patients from the rest of China to treat themselves in Hainan, developing the «wellness tourism» that leads to more investment in R&D and infrastructure. It is difficult in a few lines to convey the planning and execution capacity they have in China. In the enthusiasm of the moment, I suggested to Vice Minister of Commerce Qian and the director of the Institute for Reform and Development the idea of a twinning between Sicily and Hainan, both islands in the middle of two seas with strong trade intensity. But not a twinning of paper, but the establishment of two committees of permanent experts to exchange ideas, learn each other and cooperate for the development of ports, infrastructure, research centers. You know, China is so far away, in these fields, they can be more partners than competitors. They are our neighbours, on the other hand, from whom we must be more wary. That they, the business with China, they do indeed. I talked about Hainan with the Councillors Turano and Armao, always kind and open to new ideas for the good of our Sicily and I hope that we can carry on such an initiative. The Chinese, however, expect an answer next week. What do I say?