The move is widely seen as a landmark in China’s efforts to promote free trade and expand high-standard opening-up amid rising protectionism worldwide.
Under the new arrangements, the tropical island of more than 30,000 square km has been designated as a special customs supervision zone, marking a new stage in the development of the Hainan FTP.
There, foreign companies can benefit from a business environment more closely aligned with international standards, lower tax and production costs, broader access to service sectors like healthcare and education, and use Hainan as a platform to tap into the vast Chinese mainland market.
Officials describe the special customs system as “freer access at the first line,” referring to freer trade between Hainan and areas outside China’s customs borders, and “regulated access at the second line,” which involves applying standard customs controls for goods moving from Hainan to the mainland.
The share of zero-tariff products in the Hainan FTP has been raised from 21 to 74 percent, expanding the list of related items from 1,900 to over 6,600.
Zero-tariff goods processed in Hainan may be sold to the mainland duty-free if their local processing generated an added value of 30 percent or more.
Once an underdeveloped frontier outpost, Hainan became China’s largest special economic zone in 1988. A master plan released in 2020 set the goal of developing the island into a globally influential, high-level FTP by the middle of the century.
Official data shows that since 2020, more than 9,600 foreign-invested enterprises have been established in Hainan.
The launch date, Dec. 18, coincides with the anniversary of a landmark CPC meeting in 1978, widely considered the start of the country’s reform and opening-up era.
Over recent decades, China has established 22 pilot free trade zones, eliminated foreign investment restrictions in manufacturing, and expanded market access in sectors including telecommunication, healthcare and education.
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