The Hainan Free Trade Port is accelerating its transformation into a global trade and services hub, with preferential tax and zero-tariff policies fueling double-digit growth in industries ranging from aircraft maintenance and engine repair to agro-processing, duty-free retail and healthcare. As Hainan province prepares to launch island-wide special Customs operations in December, officials report surging international business and expanding industrial eco-systems that are drawing in companies.
Since its launch in 2022, the one-stop aircraft maintenance base in the FTP has serviced more than 2,300 aircraft. The facility has performed full-body painting for over 270 planes and repaired 58,000 aviation components, making it a cornerstone of the local aviation industry. Policy support has been instrumental. Haikou Customs said it has backed the sector through temporary import and export repair policies. Under these measures, 100 aircraft have been repaired, generating benefits worth CNY2.6 billion and tariff exemptions of CNY38 million. The aircraft repair base provides exemptions from import duties for inbound aircraft repairs, flexible Customs rules and tax breaks on key parts to lower costs and turnaround times for foreign clients. These advantages have attracted more than 100 aircraft from over 20 overseas carriers, including Qatar Airways and Iberia Airlines. “We’re seeing a lot of loyal customers return, and many new clients are coming in as well,” said Yuan Yong, Party Secretary of Grand China Aviation Maintenance Co, a unit of Hainan Airlines Aviation Technic Co.
Hainan’s aviation maintenance hub has also worked to streamline its supply chain. It now stocks over 2,200 types of parts – nearly 18,000 items in total – dramatically shortening supply times, said Liu Jia, General Manager of the base’s Procurement Management Department. The system allows overseas suppliers to store parts in a bonded “aviation materials supermarket”. Airlines only pay once parts are used, turning the traditional “search for parts” model into one where “parts wait for people”. As a result, wait times for components have been cut by two to three months. Preferential FTP policies – such as waiving deposit requirements for inbound aircraft and allowing bonded materials – have significantly lowered expenses. “These comprehensive policies can save customers 10% to 15% on maintenance costs. The number of overseas aircraft we serviced in the first half of this year already nearly reached the total for all of last year,” Yang said. Wang Haiye, Chairman and General Manager of Haikou Airport Aircraft Engineering Co, said: “By building a complete maintenance ecosystem, we attract more planes to Hainan for service, which in turn encourages airlines to open new routes here.”
Beyond aviation, Hainan’s “value-added tariff exemption policy” is fueling manufacturing expansion. Under the scheme, imported goods are exempt from tariffs if at least 30% of their value is added through local processing. AUSCA International Oils and Grains, based in the Yangpu Economic Development Zone, has been a key beneficiary. Since production began in 2021, the company has saved about CNY300 million in tariffs, according to Chairman Zhang Hui. AUSCA imports soybeans and other raw materials from Brazil and Canada for processing and domestic sales.
Tariff reductions have expanded to other sectors. “It now extends to the health food industry, and in seafood, processing has shifted from primary to deep processing with higher added value,” said Feng Nan, Deputy Director of the Yangpu Economic Development Zone’s Administrative Committee. As of August, the policy generated CNY9.52 billion in domestic sales in Yangpu, with tariff exemptions of CNY737 million, representing over 80% of the provincial total. According to Haikou Customs, since 2020, the three “zero-tariff” schemes – covering raw materials, self-use production equipment, and operational transport vehicles and yachts – have been gradually expanded, now spanning “sea, land and air”, the China Daily reports.
The South China Morning Post reports that, also in Hainan, the world’s first commercial underwater data center is now operational. Servers are installed in a 1,300-ton underwater data cabin, equivalent to the weight of 1,000 passenger cars, in Lingshui county. “We put the entire data cabin in the deep sea because seawater can help cool down the temperature,” Pu Ding, Project Manager at Shenzhen HiCloud Data Center Technology, said. “Compared to land-based data centers, installations under the sea can reduce energy consumption needed for cooling, helping to lower operational costs.” Each cabin, located 35 meters underwater, contains 24 server racks capable of hosting 400 to 500 servers. Under Hainan’s 14th Five Year Plan, the province proposed building a subsea data center featuring 100 data cabins. The project is central to an integrated industrial estate focused on developing new technologies for the blue economy.
