The Hainan Free Trade Port began much-anticipated island-wide special customs operations on December 18, marking a landmark move by China in expanding high-standard opening-up and promoting the development of a more open global economy. The special customs operations, marked by significant tariff incentives and measures promoting free trade, will play a vital role in reinforcing economic globalization and strengthening China’s ties with the major markets of the Regional Comprehensive Economic Partnership (RCEP). Feng Fei, Party Secretary of Hainan, said the province is working to build the Hainan FTP into a key gateway driving China’s opening-up in the new era. “Choosing Hainan means choosing opportunities. Investing in Hainan means investing in the future,” Feng said. Mohammed Al Zarooni, Chairman of the World Free Zones Organization, said that “Hainan province’s remarkable journey as China’s flagship free trade port offers a real-time case study in innovation, institutional reform and global connectivity.” Hainan’s pioneering role as a high-level free trade port and a dynamic hub for trade, sustainability and innovation, highlights China’s growing leadership in global trade reform, sustainability and digital transformation, Zarooni added.
Starting on December 18, all of Hainan Island operates as a special customs supervision zone. Enterprises eligible for special preferential policies of the Hainan FTP will enjoy zero tariffs on certain goods imported from overseas into Hainan. The scope of zero-tariff goods expands to some 6,600 tariff lines, covering about 74% of all tariff lines – an increase of nearly 53 percentage points compared with the level before the policy’s implementation, according to the Ministry of Finance. These goods can circulate freely among eligible entities within Hainan. If a minimum of 30% value-added processing takes place in Hainan, they will be exempt from tariffs when entering China’s mainland. Li Daokui, Dean of the Institute for Chinese Economic Practice and Thinking at Tsinghua University, said, “The import tariff exemption policy for products processed in Hainan is crucial, as it significantly boosts Hainan’s appeal to companies as a key manufacturing or processing hub for foreign goods to enter China’s mainland.”
“Hainan can serve as a strategic conduit connecting China’s vast domestic market with the large markets of the RCEP, with a particular focus on ASEAN,” Chi Fulin, President of the China Institute for Reform and Development, said. Jochen Knecht, CEO of the International Free Zone Authority in Dubai said the Hainan FTP is a gateway to Southeast Asian markets in two aspects. “It is an opportunity for Chinese companies to find other places to extend their reach, to explore new markets, but also for companies from all over the world to come to Hainan, using Hainan as a gateway into China,” Knecht said.
Seeing the big opportunities ahead, foreign and Chinese companies are scrambling to invest in Hainan. DFS Group, a part of French multinational LVMH Group, and Shanghai-based Shenya Group, will jointly build a mega luxury retail complex in Sanya, Hainan. Nan Cunhui, Chairman of Chint Group, said: “Hainan is an ideal place for investment. We have established our overseas investment headquarters in the province and invested in clean energy projects, including photovoltaic and wind power stations in Haikou, Sanya and Danzhou. The exponential growth in clean power demand, driven by artificial intelligence and computing technologies, aligns with Hainan’s low-carbon development goals,” pledging further investments in green hydrogen storage, zero-carbon industrial parks and smart city initiatives.
The duty-free policy will help turn the island into a consumption hub that offers greater opportunities for both domestic and foreign players, experts said. Hainan’s offshore duty-free policy allows eligible travelers and residents to buy goods exempt from import duties, value-added tax (VAT) and consumption tax when leaving the island. Under the updated policy, effective from November 1, the range of duty-free goods available offshore has expanded to 47 categories. New additions include pet supplies, portable musical instruments, mini drones and small home appliances. Zhu Keli, Director of the China Institute of New Economy, said the updated policy integrates domestic brands into the duty-free system – a move that aligns with the rise of guochao, or China-chic, which has been gaining traction and influence among both Chinese and overseas consumers,” he added. Hainan has recorded nearly 2.55 million inbound and outbound trips last year through December 16, marking a 25.9% increase from the same period last year. Trips by foreign visitors surpassed 1.38 million, a jump of 44.1% year-on-year, showing the island’s rising appeal as an international destination.
For international brands, Hainan offers a high-traffic, tariff-advantaged gateway into one of the world’s most robust consumer markets, said Zhou Mi, Senior Researcher at the Chinese Academy of International Trade and Economic Cooperation. Meanwhile, for Chinese manufacturers, it provides an important platform to test, showcase and promote their products alongside global peers in front of a broader audience, the China Daily reports.
