China’s Hawaii Becomes the New Free-Trade Zone? A Personal Perspective / By Carina Peng

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When one talks about China’s international trade scene, very few people think of free trade. Why? For decades China was perceived by western nations as disregarding the Intellectual Property (IP) rights, the ownership to an idea or model, of companies of other countries. The topic on international trade is overlooked among adolescents. “By staying on top of international trade news we can get a glimpse into which companies would be ideal to invest in on the international and national stock markets,” David Mabry, a youth advocate at Economic Awareness Council, said. Even to adults, IP theft might seem tedious and irrelevant, but these intangible assets make up 80% of the value of top large-cap companies from the American stock market (Sheman, Fortune). Therefore, when I heard that Chinese President Xi Jinping designated Hainan Island of China to be a free-trade zone, I was shocked. I’ve been to Hainan Island several times when I visited my grandparents. The island is known to be China’s Hawaii, where the warm weather and clean air make the island a sanctuary for the retired from Mainland China—a tourist rather than a commercial state. I was ecstatic learning about this, since the 2012 Shanghai Free Trade zone created great economic opportunities. It generated 42.9 percent of the total import and export of the municipality in the first 10 months (IFCBA). While researching this further, I found that China now promises tech startups free rent, reduced tax rates, easier visa policies, access to governmental funding, and more (Yang, South China Morning Post). Furthermore, China is currently in a phase of experimenting with new policies that acknowledge the importance of IP rights. “The Chinese government is aware that access to the Chinese market is a hugely desirable asset for firms outside of China and it is leveraging this asset in its tech transfer policies, requiring firms to establish Joint Ventures with tech transfer provisions in order to do business in China,” said Chelsea N, an IP professional. In fact, Tesla is currently finding suitable arrangements under this new structure. While we wait to hear more about how this new trade landscape will operate, other less bold enterprises are proceeding very cautiously.