The Chinese Communist Party's Central Committee and the State Council jointly released the Master Plan for the Construction of Hainan Free Trade Port on June 1. In his instructions on the Hainan Free Trade Port，CCP General Secretary Xi Jinping stated that building the free trade port is a major strategic decision made by the Central Committee to foster innovation and push ahead with socialism with Chinese characteristics. Focused on overall development at home and abroad，the Plan is of great importance in assuring progress in a new era of China's reform program and the opening up of the economy. Xi also stressed the importance of adhering to the leadership of the CCP and to socialism with Chinese characteristics，while maintaining the demanding requirements of international economic and trade rules，promoting the smooth flow of production factors and building Hainan into a high-quality free trade port.

The Smooth Flow of Capital

A free trade port is a special economic zone with the highest level of openness in the world today. Normally，it refers to a specific customs territory where most goods are exempt from tariffs and there is free movement of people，funds and products. This has been amply demonstrated in practice in China's Hong Kong，Singapore，and Dubai. Among all these factors，the flow of funds is the most critical. China's Hong Kong and Dubai have allowed the free flow of funds since the establishment of their free trade ports. In 1969，Singapore set up its first free trade zone and in 1978，the Financial Supervisory Authority of Singapore issued its Announcement No. 754，which completely eliminated foreign exchange controls and cancelled all foreign exchange management procedures and approval requirements on the flow of funds. Residents and non-residents were allowed to open accounts at home and abroad and transfer funds freely between those accounts. To accommodate the free flow of funds，free trade ports usually adopt stable exchange rate mechanisms. China's Hong Kong and the United Arab Emirates (Dubai) both peg their currency to the US dollar，while Singapore uses a link to a currency basket.

It is worth mentioning that，although funds are allowed to move freely，there are restrictions on trade and investment. (All of the listed restrictions in this section about China's Hong Kong，Singapore and Dubai draw on the information in the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions [2018].)