China has taken a major step in its opening-up strategy by officially launching island-wide special customs supervision across the Hainan Free Trade Port (FTP). The move positions Hainan as one of the most open trade zones globally and sends a clear signal that China remains committed to free trade and economic integration, even as protectionism rises elsewhere.
Covering more than 30,000 square kilometers, Hainan is now designated as a special customs supervision zone, enabling significantly freer movement of goods, capital, people, and data. The policy shift marks a critical milestone in China’s plan to build Hainan into a high-standard free trade port with global influence.
What the New Customs Regime Means
Under the new framework, trade is governed by a dual-line system often described as “free access at the first line, regulated control at the second line.”
- The first line refers to trade between Hainan and overseas markets, where customs procedures have been greatly simplified.
- The second line applies standard customs controls to goods moving from Hainan into mainland China.
One of the most notable changes is the sharp expansion of zero-tariff coverage. The proportion of goods eligible for zero tariffs has increased from 21 percent to 74 percent, with the number of covered items rising from roughly 1,900 to more than 6,600.
In addition, goods processed in Hainan can enter the mainland duty-free if local value-added processing reaches 30 percent or more, encouraging manufacturing, processing, and supply-chain localization on the island.
A New Phase for the Hainan Free Trade Port
Speaking at the launch ceremony in Haikou, Vice Premier He Lifeng emphasized that the institutional and operational foundations for island-wide customs reform are now in place. He noted that the new system should accelerate reforms in key industries, strengthen risk-control mechanisms, and support high-quality economic development.
Policy experts view the move as a strong example of institutional opening-up, going beyond tariff reductions to reshape trade governance itself.
“This clearly shows that China’s doors are opening wider, not closing,” said Chi Fulin, president of the China Institute for Reform and Development, who described the Hainan FTP as operating at the highest level of openness currently seen in the global economy.
Immediate Impact on Trade and Business
The effects of the new policy were visible almost immediately. Major ports and airports across Hainan reported a surge in customs activity on the first day of implementation.
At Yangpu Port, one of Hainan’s key first-line gateways, a shipment of zero-tariff petrochemical imports totaling 179,000 tonnes cleared customs, delivering estimated cost savings of nearly 10 million yuan compared with the previous regime.
Airports such as Sanya Phoenix International Airport and Haikou Meilan International Airport also processed large volumes of zero-tariff imports, including crude oil, medical equipment, aviation materials, and food ingredients. The total value of same-day zero-tariff imports exceeded 500 million yuan.
For manufacturers already operating in Hainan, the benefits are tangible. Jia Green Chocolate Works (Hainan) Co., a joint-venture producer based in the FTP, began shipping products to mainland cities shortly after the policy took effect. According to company executives, production costs for the latest shipment were reduced by approximately 10 percent.
Why Hainan Matters for Foreign Companies
Hainan’s transformation is the result of long-term planning. Once considered a remote frontier, the island became China’s largest special economic zone in 1988. A national master plan released in 2020 set the goal of turning Hainan into a globally influential free trade port by mid-century, backed by the Hainan Free Trade Port Law.
For foreign investors, Hainan offers:
- A business environment aligned more closely with international standards
- Lower tax and operating costs
- Broader access to service sectors such as healthcare, education, and digital services
- A strategic base for serving the broader Chinese market
Since 2020, more than 9,600 foreign-invested enterprises have been established in Hainan, with investors coming from over 170 countries and regions.
Global firms are already using the FTP as a platform for future-oriented industries. Dun & Bradstreet, for example, registered its Hainan entity in 2022 and plans to build a global data hub supporting cross-border data aggregation and digital-economy development.
Looking Ahead: High-Standard Opening-Up
Chinese authorities have indicated that Hainan will continue to align its institutional framework with high-standard free trade rules, particularly in trade facilitation, investment access, and cross-border data flows. These reforms are closely linked to the policy direction outlined in China’s upcoming 15th Five-Year Plan (2026–2030).
Economists note that the timing of the launch—December 18—also carries symbolic weight, coinciding with the anniversary of China’s landmark 1978 reform and opening-up decision.
As China continues to expand pilot free trade zones, lift restrictions on foreign investment, and open sectors such as telecommunications, healthcare, and education, Hainan is increasingly positioned as a frontline testing ground for the country’s next phase of globalization.
Conclusion
The launch of island-wide special customs supervision in the Hainan Free Trade Port represents more than a technical policy change—it reflects China’s broader commitment to openness, reform, and integration with the global economy. For multinational companies, Hainan is emerging as a uniquely attractive gateway, combining policy innovation, cost efficiency, and direct access to one of the world’s largest markets.
