Business & Economics
China Activates Island-wide Special Customs Regime in Hainan Free Trade Port
On 18 Dec 2025 Beijing flipped the switch on Hainan’s full “first-line open, second-line controlled” customs system, instantly expanding zero-tariff coverage from 1,900 to 6,637 items across the island-wide free-trade port.
Focusing Facts
- The share of products eligible for zero tariffs jumped to 74 % from the previous 21 % once the new regime began.
- Siemens Energy became the first foreign-invested firm to register under the new rules and broke ground the same day on a gas-turbine assembly base in Yangpu.
- Earlier in the month, the 28th Hainan Winter Trade Fair inked 36 contracts worth 5.17 billion yuan, signaling demand ahead of the customs shift.
Context
Hainan’s customs hand-off echoes the 1980 designation of Shenzhen as a Special Economic Zone—small then, transformational now—and even the 1842 opening of Hong Kong as a free port, but with 21st-century digital surveillance and AI-driven logistics layered on top. It reflects Beijing’s long arc from the 1978 Third Plenum toward ever more calibrated, test-bed liberalization: use one island to fine-tune tariff, tax and data rules before scaling nationally, all while retaining a regulatory ‘second line’ safety valve. Strategically nestled between the 1.4 billion-person mainland and 700 million-strong ASEAN, Hainan is a physical node for the “dual circulation” model and a hedge against supply-chain decoupling pressures. Whether it becomes a true entrepôt or another heavily managed zone will shape China’s integration with global trade flows for decades; success would give Beijing a template it can iterate through 2035 and, on a 100-year horizon, could shift the locus of Asia-Pacific commerce the way Singapore’s 1969 free-port reforms did for the Straits of Malacca.
Perspectives
Chinese state-run media
e.g., CGTN pieces republished by Mirage News, Adnkronos — The island-wide customs regime in Hainan is portrayed as a landmark step that proves China is widening its doors to the world, accelerating global growth, and delivering win-win benefits for foreign firms. Coverage is agenda-setting propaganda that echoes Xi Jinping’s talking points, celebrating policy success while omitting risks such as tighter political oversight or uneven market access that outside analysts often flag.
Chinese business press & policy-oriented experts
e.g., 21st Century Business Herald, China Daily — Hainan’s FTP is framed as an unprecedented province-wide pilot zone that leverages digital customs, low taxes and institutional autonomy to lure high-tech, medical and GBA firms and to test reforms for future national rollout. While more analytical, the discussion largely assumes Beijing’s model will succeed, stressing efficiency and tax perks but skirting over sovereignty concerns and the fact that the scheme still tightens central control (‘opening the first line, managing the second’).
International trade-promotion newswire coverage
e.g., Media OutReach / PRNewswire items on trade fairs — Press-release style reports hail the customs launch and the Winter Trade Fair as a huge ‘buy global, sell global’ opportunity that will slash costs for importers and catapult Hainan’s tuna, coffee and tropical produce onto world shelves. These advertorial pieces aim to entice investors and buyers, so they accentuate headline sales figures and tariff savings while glossing over regulatory complexity, environmental impact or whether promised orders will materialise.