China opened a new bonded harbor on Thursday in a major step toward a free trade zone operation with the Association of Southeast Asian Nations (ASEAN).

The Yangpu Bonded Harbor Area is China's fourth such facility to have preferential tax rates. The harbor, with a first phase of 2.3 sq km, will cover 9.21 sq km when its three stages are completed. It is located in the Yangpu Economic Development Zone (YEDZ), in south China's Hainan Province. It has passed an inspection by the General Administration of Customs.

The three other bonded harbor areas are in Yangshan of Shanghai, Dongjiang of Tianjin and Dayaowan of Dalian, Liaoning Province.

Speaking at a ceremony to launch the Yangpu port, Vice Governor Jiang Sixian promised to make good use of policies involving the port and help turn Hainan into a free trade zone.

Li Lanxue, chief of Haikou Customs, said the Yangpu port would offer tax breaks on imports and rebates on domestic commodities. Inter-company transactions will be exempt from value-added and consumption taxes, in addition to preferential policies in YEDZ.

"The bonded harbor zone will focus on transfer, storage, logistics, processing and trade in energy and raw materials, and will eventually become an ASEAN-oriented business center," said Li.

YEDZ is on the 150-sq-km Yangpu Peninsula in northwestern Hainan, 40 km north of the provincial capital, Haikou. It covers 30 sq km.

Established in 1992, the zone was meant to be an export-oriented industrial district focusing on advanced technology and the development of tertiary industry. The 1997 Asia financial crisis, however, had a negative impact on the zone, from which it never fully recovered.

To attract overseas investors, YEDZ has been allowed to offer incentives. The zone's statistics show that domestic and foreign companies have signed investment deals worth 40 billion yuan (about US$5.88 billion) since the Yangpu Bonded Harbor Area was approved for construction in October last year. The deals involve services such as shipping and logistics.

(Xinhua News Agency November 21, 2008)