The Hainan special customs operation constitutes a new lever in the reconfiguration of the global supply chain.
Windows to Global Trade international business center in Haikou
Under the effect of the restructuring of globalization and the requirement for resilience, the Hainan Free Trade Port is asserting itself as a major opening-up strategy for China. Far from being a simple replication of existing models, it relies on profound institutional innovations to build a high-quality economic system. It aims to provide international trade with more reliable and seamless options, marking a pivotal stage in Chinese integration into the global economy.
Institutional openness
In a climate of geopolitical tensions, Hainan has a vital strategic significance. More than just a free zone, the island signals a change: China is abandoning its classic comparative advantages to build an “institutional platform” aligned with the most demanding international standards.
This transition from an “opening by factors” to an “institutional opening” logically accompanies the transition of the country, from a simple “factory of the world” to “market of the world”. The challenge is to guarantee total free trade and the movement of goods without customs duties throughout the island. This model is made possible by Hainan’s unique scale. With its 35,400 km2, Hainan offers an ideal testing ground for the free movement of goods, capital, people and data.
Hainan now aligns with the most demanding international economic and trade standards, such as those of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Which clearly demonstrates China’s capacity to reach the heights of global openness. Unlike China’s 22 other free trade zones, Hainan enjoys full tariff and regulatory autonomy, positioning itself as a versatile economic platform on a global scale.
These advantages are translated into concrete measures: the “zero customs duties” policy has reduced the costs of importing production equipment and raw materials for companies by around 20%. At the same time, the “value added by processing” rule – exempting from customs duties to the domestic market any product processed on the island at more than 30% – directly attracts global value chains and high-end manufacturing. Finally, the capping of corporate and income tax at 15% strengthens the attractiveness of the territory.
Tourists visit the pier of the Sanya International Yachting Center on November 15, 2025.
Upgrading intangible aspects
To be a world-class free trade port, it is not enough to have physical infrastructure; an intangible ecosystem aligned with international standards in terms of the rule of law, regulatory framework and efficiency of services is just as essential.
Hainan now has the shortest negative foreign investment access list in China. Thanks to digital technology, business management is more predictable and fluid. Its reforms aim for “competitive neutrality” in order to guarantee total fairness between market players and to avoid any regulatory arbitrariness.
The principle of “freer access on the first line and regulated access on the second line” enables bold advances in offshore finance, cross-border data flows and international medical services. In the financial sector, Hainan facilitates cross-border financing, including via blockchain for near-instant settlements, radically reducing risks and costs for businesses.
Although emerging, this ecosystem is progressing towards exemplary internationalization. To sustain global confidence, Hainan will need to maintain the stability of its policies in the face of external complexities, because it is this transparency that will allow it to have lasting influence on the global stage.
Trucks pass through an inspection site in Haikou before leaving Hainan Island. (ZHANG MAO)
A new opportunity
At a time when global supply chains are undergoing profound reconfiguration, the Hainan Free Trade Port is becoming a strategic lever in the Asia-Pacific. With its unique tariff regime and efficient logistics system, Hainan has the potential to become a new regional logistics hub and high-end manufacturing center.
Hainan is redrawing the geography of flows by establishing a constructive coopetition relationship with Singapore. Thanks to the widespread use of electronic declaration, customs formalities are completed in less than an hour, encouraging a growing volume of goods to abandon traditional hubs. This development is accentuated by the anticipated installation of giants of the sector such as PSA International, promoting the transformation of the Asia-Pacific maritime network; the historic “hub-and-spoke” model, centered on Singapore, is gradually giving way to a “multipolar network” fully integrating Hainan.
For China, Hainan represents much more than a maritime outlet serving the southwest and center-west of the country. By drastically reducing logistical times compared to the eastern coast, the island is establishing itself as an institutional pivot and a privileged gateway between China and ASEAN. It could serve as a preferred transit and processing base: raw materials from ASEAN would be valued there before accessing the Chinese market, while Chinese manufactured products would transit there towards ASEAN countries. This strategic role is all the more crucial as it is part of the normative alignment of the “Belt and Road” initiative, offering fluid access to the Chinese market for partner countries.
Hainan represents a global opportunity by providing transnational businesses with increased predictability and transparency. By focusing on tourism, modern services and cutting-edge industries such as biopharmaceuticals, deep-sea technologies and aerospace, the island is becoming a highly attractive “super-interface”. Hainan offers a strategic option to optimize the productive deployment of companies in Asia-Pacific while strengthening the resilience of their supply chains internationally.
*DARYL GUPPY is an expert in technical analysis of international finance and a former national board member of the ACBC (Australia China Business Council).
