Business & Economics
Hainan FTP Activates Island-Wide Special Customs Regime, Raising Zero-Tariff Goods to 74%
On 18 Dec 2025, Beijing transitioned the entire 30,000-km² island of Hainan into a special customs supervision zone, slashing tariffs and streamlining controls to plug the Free Trade Port into both global supply chains and China’s domestic market.
Focusing Facts
- Zero-tariff coverage jumped from 1,900 to 6,600+ items, lifting the share of duty-free goods from 21 % to 74 %.
- Goods processed in Hainan with ≥30 % local value-add may now be sold into mainland China duty-free under the new “second-line” rule.
- The regime couples zero tariffs with a 15 % flat corporate tax and China’s lowest individual income tax to attract regional headquarters and foreign talent.
Context
China has tried to leverage coastal enclaves before—Shenzhen SEZ in 1980, Pudong in 1990, and the 2013 Shanghai FTZ—all promised liberalization within defined borders; some, like Shenzhen, blossomed, others, like Shanghai FTZ, under-delivered once capital-account realities set in. Hainan’s 2025 customs shift echoes those efforts but layers on a dual-circulation logic: it aims to be simultaneously “inside China, outside its customs wall,” a concept reminiscent of Hong Kong’s 1842–1997 entrepôt role and Dubai’s 1985 Jebel Ali model. Structurally, the move reflects two longer arcs—the region-wide tilt toward mega-free-trade blocs (RCEP, CPTPP) and Beijing’s push from incentive-based to rules-based openness to counter US-led decoupling. Over a 100-year horizon, if Hainan can truly balance freer flows of goods, capital and data with national security controls, it could reroute South China Sea logistics and offer ASEAN a non-dollar financial hub; if not, it risks becoming another property-driven zone of unrealized ambition. The historical record suggests that institutional depth, not headline tariff cuts, will decide which path prevails.
Perspectives
Chinese state owned media
China Daily, People’s Daily, China News, Xinhua — Hainan’s island-wide special customs operations are portrayed as a landmark in China’s high-level, rules-based opening-up that will seamlessly connect global and domestic markets and turbo-charge industries from coconut crafts to high-tech manufacturing. State outlets highlight success stories and strategic vision while glossing over implementation risks or competitive downsides, serving Beijing’s narrative of steady reform and global leadership.
Hong Kong public broadcaster and regional wire services
RTHK, Reuters quotes — Coverage stresses the immediate business perks—lower taxes, wider zero-tariff lists and easier mainland access—framing the customs change as a pragmatic boost for foreign companies and local tourism. Reporting leans on official statistics and on-scene remarks from Chinese leaders, offering little independent scrutiny and largely echoing Beijing’s upbeat messaging to maintain access and audience appeal.
Asia-Pacific business press and investor-focused outlets
The Manila Times forum write-up, China Watch pieces by foreign business figures — Commentators hail the FTP as a ‘game-changer’ that will reroute regional logistics, give exporters like Australia quicker market entry and shower listed companies with zero-tariff and tax-break dividends. Pro-business tone may over-sell opportunities to attract readership and advertisers, downplaying regulatory uncertainty or geopolitical tensions that could impede the rosy forecasts.