#China #Hainan #China Trade #Hainan FTP #Economic Opening

The Hainan Free Trade Port: A Gateway to China’s Economic Expansion

In just a month, on December 18, 2025, Hainan will officially launch its eagerly anticipated special customs procedures across the island, marking a pivotal moment in China's efforts to strengthen its economic framework. This initiative is expected to facilitate smoother and more transparent cross-border trade, capital movement, and service exchanges.

In a recent CGTN article that explores the implications of this development, the implementation of special customs procedures is highlighted as a testament to China's commitment to enhancing institutional transparency and promoting a high level of openness.

What Does the Special Customs Procedure Entail?

The Hainan International Ship Registration Administration has completed the 'bareboat charter' registration for the vessel Xiang Tai Kou, which will become China's first duty-free bareboat charter ship operating from Yangpu Port. This is a significant step forward as the vessel, chartered from Liberia, takes advantage of Hainan’s zero-tariff policy, saving more than 10 million Yuan (approximately $1.4 million) in import tariffs and VAT on the charter fees.

This case exemplifies how the forthcoming customs procedures will expedite the opening of Hainan's economy and provide tangible benefits to enterprises operating within the Free Trade Port (FTP). Earlier this month, President Xi Jinping commended these measures during a work report on the FTP, describing them as a groundbreaking move to expand economic openness and encouraging the facilitation of cross-border flow of production factors, while promoting a market-driven, legally grounded, and internationalized business environment.

Enhanced Trade Flow and Business Environment

Post-launch, Hainan is slated to introduce a novel supervision model characterized by free access on the first line, regulated access on the second line, and unhindered mobility across the island. This dual-level customs system aims to enable freer trade between Hainan and regions outside the mainland, while maintaining standard customs checks for the mainland.

Wang Changlin, Deputy Head of the National Development and Reform Commission, shared insights on this arrangement, noting that the boundary between Hainan FTP and overseas regions will serve as the 'first line,' allowing for freer and more convenient flow of goods. He further projected that the proportion of customs lines with duty-free products in the Hainan FTP will surge from 21% to 74%.

Importantly, products imported into Hainan that are processed to add at least 30% value can be imported duty-free into mainland China. Additionally, certain goods that are currently banned or restricted nationwide will come under an open policy in Hainan.

Growth Potential and Future Prospects

Hainan's readiness to seize this opportunity is underscored by its remarkable foreign investments over the past five years, which amounted to 102.5 billion Yuan, with an average annual growth rate of 14.6%. This influx of capital has been drawn from 176 different countries and regions. Analysts anticipate that once Hainan fully implements its special customs procedures, this positive trend will amplify.

Eight ports are designated as first-level entry points, enhancing the expedited processing of qualified imports. Moreover, there are ten second-level ports dedicated to managing the flow of goods into the mainland.

Policy and Visas: A Flexible Approach

Building on its current visa-free entry policy for travelers from 85 countries, local authorities intend to expand the list of eligible countries and introduce more flexible and attractive residency conditions to enhance tourism and commerce as the new customs procedures take effect.

Additionally, Hainan will implement a negative list for cross-border service transactions, granting foreign investors the same treatment as local entities in key sectors such as finance, healthcare, and education.

Conclusion: A Bright Future Ahead

Aligned with the new policy, modernization efforts at Yangpu Port, the central logistics hub for the FTP, will accelerate. Du Chengcai, Deputy General Director of the Production Operations Center at Hainan Port and Shipping International Port Group, indicated plans to add new berths capable of accommodating vessels of up to 200,000 tons, and to expand the existing network of 58 shipping routes.

According to economist Li Daokui from Tsinghua University, China is on the cusp of one of its most significant market opening rounds. He emphasized that Hainan is pivotal not only for the FTP but also as a testbed for broader economic reforms, positioning it as central to China's forthcoming openness to foreign businesses and technologies.

Overall, the Hainan Free Trade Port has the potential to redefine local and global trade dynamics, paving the way for an era of unprecedented economic integration and cooperation.