China’s Hainan island takes steps towards goal of becoming a leading free trade port

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Chinas Hainan province completed a milestone by launching fully independent Customs operations islandwide on Dec 18.

ST PHOTO: AW CHENG WEI

Summary

• Hainan launched island-wide independent customs operations, allowing 74% of goods to enter tariff-free, aiming to become a globally influential free trade port by 2050.
• Hainan offers unique incentives like a 30 per cent value-added policy and capped income tax rates to attract foreign manufacturers and qualified talent.
• Analysts note Hainan faces challenges including US tariffs and a lack of skilled labour, making competing with Singapore or Hong Kong a long-term goal.

AI generated

BEIJING - China’s southern island of Hainan, better known for its sandy beaches and duty-free shopping, is making its first steps towards an ambitious goal of becoming a “globally influential” free trade port by 2050.

Hainan, a province, completed a milestone by launching fully independent Customs operations islandwide on Dec 18. This allows 74 per cent of goods going into Hainan to be tariff-free, up from 21 per cent previously, lowering costs for firms doing business there.

The idea is for Hainan to trade freely with the rest of the world, with tariff-free goods being circulated freely within the island, while imported goods going from the island to the rest of the country will be taxed as usual.

Hainan is already the world’s largest free trade port in terms of geographical area, at 35,400 sq km.

But it aims to eventually rival Hong Kong and Singapore as a globally influential free trade port, focusing on duty-free shopping, offshore finance, high-tech industries,