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Development Magnet
Hainan Province thrives as China's largest testing ground for reform and opening up
By Li Nan | NO. 15 APRIL 12, 2018
A ceremony is held in Haikou in celebration of the establishment of Hainan Province on April 26, 1988 (XINHUA)

Wang Fangquan, a retiree living in Haikou, capital of China's southernmost Hainan Province, rushed to see the newly renovated Sanjiaochi Plaza on March 25, days before it was formally inaugurated. The plaza, a triangular open field in the city center, is a landmark of Hainan's establishment as China's largest special economic zone (SEZ) and youngest province 30 years ago.

Once a sleepy island prefecture of Guangdong Province, Hainan was upgraded to a national SEZ on April 13, 1988. News of the move at the time spread like wildfire across China. A total of 100,000 ambitious entrepreneurs flooded across the Qiongzhou Strait between the mainland and the island pursuing their "Hainan dream." Sanjiaochi, then the biggest open job fair in Hainan, was the first stop for most newcomers to seek employment and business opportunities. Wang was one of them.

"Many newcomers spent their first night here in the open air 30 years ago," Wang recalled. Later, the marketplace became a dilapidated and disorderly public space, inundated with unlicensed stalls. What's worse, the lake nearby was polluted due to lack of protection, making it a place to be shunned by most locals.

But things have changed in the last four months. The once shabby open market has been transformed into a picturesque park. This is one of the local government's latest moves to celebrate the 30th anniversary of Hainan's becoming a province and an SEZ.

"It's awesome," said Wang, who was astonished by the dramatic facelift of Sanjiaochi.

Sanjiaochi is a microcosm of Hainan. In the 1980s, Hainan was an impoverished and backward island without a traffic light. According to a report by Xinhua News Agency on April 1, 17 percent of its population didn't have their basic needs met and 85 percent of consumer commodities were shipped in from the other side of the strait at that time.

The turning point came in 1988. Many revolutionary policies, including the shareholding reform of state-owned companies and duty-free shops, have been tested first on the island.

Hainan has since grown by leaps and bounds. According to official statistics, Hainan's GDP totaled 446.25 billion yuan ($72.02 billion) in 2017, 78 times that of 1988. Its per-capita GDP amounted to $7,179 last year, 37 times that of 1988. The average annual growth rate of its per-capita GDP in the past five years was 7.2 percent, higher than the national level. The poverty rate was slashed to 1.5 percent, 1.6 percentage points lower than the national average.

Hainan, powered by 12 pillar industries including tourism, modern agriculture and high-end healthcare, is now firmly on the path toward prosperity.

Tourist select commodities in the a duty-free shopping mall in Sanya, Hainan Province, on February 8 (XINHUA)

Tourism 3.0

Tourism has long been Hainan's most important pillar industry thanks to its fine coastline and clean environment. Featuring an ocean-related entertainment tourism model represented by coastal sightseeing, the years between 1988 and 2000 are known as the island's Era of Blue Tourism, or Hainan Tourism 1.0.

In this phase, Hainan's biggest attraction was its blue ocean and white beaches. "Visiting the beach in the daytime and sleeping early in the evening was the typical tourism schedule in Hainan," Dai Guofu, General Manager of the Sanya Rice Park, told Beijing Review.

In 1996 more visitors made their way to the tropical island and in January of that year the First China Leisure Tourism Year was launched at Yalong Bay in Sanya, Hainan's southernmost coastal city. Later, China's first five-star hotel opened at the location. By the end of 2000, a total of 10 million tourists had visited Hainan, generating a total income of 7.9 billion yuan ($1.26 billion).

However, lack of diversified products impeded Hainan's tourism industry and resulted in imbalanced development between coastal and inland cities. In an effort to provide a wider range of attractions, the virgin rainforests, rice fields and traditional villages were put onto the tourist map at the end of the 1990s.

Hainan, as of 2000, was the first province in China to develop agro-tourism. The following decade is regarded as the Era of Blue Plus Green Tourism, or Hainan Tourism 2.0.

According to the local government's eco-friendly urbanization policy, no trees were cut, no farmland requisitioned and no cottages demolished in the urbanization process.

Wentoupo Village in east Hainan's Qionghai City is a prime example. The once out-of-the-way village became a destination for experiencing rural life thanks to the opening of a farm stay resort in 2014. The resort has created over two dozen jobs in the small village, helping residents double their income in three years.

The Sanya Rice Park in Hainan Province attracts dinosaur enthusiasts on March 4 (QIN BIN)

Rainforests, wetlands and rice fields have all been upgraded into resorts. The Sanya Rice Park, which opened in February 2018, is the latest example. The park was the test site for Yuan Longping, a renowned Chinese rice scientist, to cultivate new strains of high-yield hybrid rice. It has been transformed into the world's biggest dinosaur exhibition park with 323 models of various species of the animal scattered across the area. "We aim to provide a science education base for youngsters," said Dai, adding that tourists can experience rice planting and learn about dinosaurs in the park.

Eco-friendly tourism has made Hainan greener and put money in local wallets. By the end of 2017, 85.1 percent of Hainan's villages had been refurbished into resorts, receiving 9.51 million tourists and generating 2.86 billion yuan ($455.2 million) in tourism revenue. The per-capita disposable income of rural residents in Hainan rose to 12,902 yuan ($2,053) last year.

On December 31, 2009, the Chinese Government rolled out a program aiming to turn Hainan into an international tourism island. A series of preferential policies were released to open up the island further.

The year 2010 is therefore regarded as the beginning of the era of Hainan Tourism 3.0, represented by tourism plus high-end consumption and healthcare.

A duty free policy, which was introduced in April 2011, and an increasing number of duty-free shopping malls have generated accumulative sales of 31.5 billion yuan ($5.01 billion) by January 2018, becoming a major driver of Hainan's economic growth. The province also offers a visa-free service to foreign tourists from 59 countries, making it more easily accessible.

In 2017, China's first international medical tourism hub—Hainan Boao Lecheng International Medical Tourism Pilot Zone—was launched. The hub, 9 km west of the permanent venue of the Boao Forum for Asia, aims to offer tourists healthcare services including physical examination, rehabilitation and cosmetic surgery among others. Nine preferential policies have been introduced, including lower import tariffs on medical equipment and drugs as well as longer employment contracts for foreign doctors. Also, foreign investors are allowed to open hospitals there.

To help pull in more high-end healthcare institutions into the pilot zone, the Hainan Provincial Government has abolished 32 administrative approval procedures. From 2015 to June 2017, the zone has attracted 99 projects, with a total investment of 21 billion yuan ($3.34 billion).

To date, four medical service centers in the zone have been on trial operation and the number of such enterprises is expected to rise to 90 in the next decade, according to the local government.

"Many foreign tourists are fascinated with Chinese culture and traditional Chinese medicine services here," Liu Yueyong, Director of the Administration Department of Yiling Life Care Center, an early investor in the pilot zone, told Beijing Review.

With its diversified tourist products, Hainan had attracted 67.45 million tourists by the end of 2017, generating an income of 81.2 billion yuan ($12.92 billion). In 2017, up to 55.7 percent of Hainan's GDP and 79.5 percent of its economic growth came from the service sector. Hainan is now firmly on the map as a popular destination for tourists from around the world.

A seaside section of the Hainan High-Speed Railway in Lingshui County (XINHUA)

Infrastructure improved

Wu Yangkai, a 9-year-old living in Haikou, often tells his friends that he owns a "magic private bullet train" to bring his father back home.

His father, Wu Jing, who works in Sanya, 300 km away, comes back home on weekends. Before 2010, it took Wu Jing four hours by bus to return home every Friday after work. By the time he arrived his son was asleep. On Sunday, Wu Jing had to hurry back to Sanya after lunch. The father and son had only one and a half days together, something they both wished could be longer.

Their wish was granted at the end of 2010 after the Hainan High-Speed Railway East Line was put into operation on December 30. It cut the journey time between Sanya and Haikou to one hour and 22 minutes. Now Wu Jing can enjoy Friday dinners with his family and leave for the office early Monday morning. In the little boy's eyes, since both the terminal stations are near the door step of his home and his father's office, the train is like a "tailored private bullet train."

The Wu's are not the only beneficiaries. The line was further expanded into a 653-km loop railway along the coastline of Hainan at the end of 2015. It is the world's first high-speed railway on an island. Connecting almost all renowned scenic spots and 12 major cities in Hainan, the railway serves 87.3 percent of Hainan's population. By the end of 2017, passengers had made 250 million trips.

Besides railways, other transportation sectors have grown rapidly in Hainan in the past three decades. In 1988, there was only one airport with four routes linking Hainan and the Chinese mainland. Passenger throughput was 50,000 each year.

Now, there are three airports with 200 aviation routes and 351 sea lanes linking the island with the outside world. Passenger throughput surged to 39.38 million in 2017. Expressways and high-speed railways enable passengers to reach any place on the island in three hours.

A testing ground

Many attribute Hainan's dramatic change to reform and opening up. "For Hainan, as an island economy, opening up is the key to its survival and development," Chi Fulin, President of the China Institute of Reform and Development (CIRD), told Beijing Review.

According to Chi, Hainan is "the best testing ground" for China's reform and opening up. In the early years of its establishment as an SEZ and a province, Hainan enjoyed many preferential policies. "It has proved that the wider Hainan's door is opened, the faster it develops," said Chi.

He believes that as long as Hainan maintains its green development drive, it will become a symbol of China's efforts to achieve high-quality development.

Gan Lu, head of the Hainan Reform and Opening Up Research Department of the CIRD, echoes Chi's view. She calls for more eco-friendly policies to develop new industries in Hainan such as offering duty-free commodities to local residents, allowing only new-energy vehicles by 2020, prohibiting usage of pesticides and promoting green agriculture. (Reporting from Hainan)

Copyedited by Francisco Little

Comments to linan@bjreview.com

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