Key gateway

The island-wide special customs operations of Hainan are a practical advancement in the country's opening-up

In alignment with China's strategic need for high-standard opening-up, building a major gateway for the country's new era of opening-up is of great significance. The launch of the island-wide special customs operations across the Hainan Free Trade Port on Dec 18 marks a landmark step in China's pursuit of high-level opening-up.

Advancing regional economic integration with free trade as the main driver is not only a strategic choice amid shifts in the global geopolitical landscape, but also a pragmatic response to changing geoeconomic dynamics.

In the face of mounting geopolitical tensions and fragmentation in global markets, leveraging the Hainan FTP's role as a hub for market connectivity, rules alignment and industrial coordination is a practical move to promote regional free trade and safeguard the stability and security of the country's industry and supply chains.

Against the backdrop of a rapidly changing global economic and trade order, the port's island-wide special customs operations will entail the introduction of more advanced policies for trade and investment liberalization and facilitation. Such steps aim to promote cooperation through openness and expand regional interest integration through collaboration. The goal is to establish the port as an intersection of the domestic and international markets, a focal point for regulatory alignment, and a hub for industry and supply chains.

Following more than 40 years of reform and opening-up, China has grown to be one of the most vibrant markets, with over 1.4 billion consumers and a middle-income population exceeding 400 million. China continues to deepen opening-up on its own initiative, sharing its vast domestic market with the world. As a major move in its continuing opening-up, the island-wide special customs operations of Hainan will provide global investors with more convenient access to China's market and its development opportunities.

President Xi Jinping has stressed that "the strategic goal of building the Hainan FTP is to develop it into a key gateway driving China's opening-up in the new era". Hainan lies along one of the most important maritime routes linking the Asia-Pacific region with other parts of the world. Within a four-hour flight radius from Hainan are 21 countries and regions in Asia, home to about 47 percent of the global population and nearly 30 percent of global GDP; within eight hours, that coverage rises to 59 countries and regions, 67 percent of the world's population, and 41 percent of global GDP.

Meanwhile, more than 94 percent of China's foreign trade and over 60 percent of the Association of Southeast Asian Nations' foreign trade are carried by maritime transport, and 65 percent of China-ASEAN trade is transported by sea. In view of the increasing need for maritime cooperation and governance, the Hainan FTP is well-positioned to become a strategic hub that pragmatically advances China-ASEAN cooperation in the blue economy. This not only serves the shared interests of countries in the region, but also contributes to secure and resilient regional industry and supply chains.

Following the launch of the island-wide special customs operations, the Hainan FTP will implement a special supervision model of "freer access at the first line, regulated access at the second line, and free flow within the island". It will take the lead in applying unilateral opening policies toward ASEAN economies and others, and strive to build a hub for China-ASEAN economic cooperation and people-to-people exchanges, further strengthening its role as a demonstration zone in expanding bilateral economic and trade collaboration.

In recent years, while the momentum of global free trade has weakened, regional economic integration has accelerated, with the Asia-Pacific region — anchored by the Regional Comprehensive Economic Partnership — emerging as a highlight of global regional economic cooperation. In the coming years, adapting to the growing trend of regional economic integration and actively making investment and trade arrangements within the Asia-Pacific region, with a focus on the RCEP, will be a crucial lever for China to gain the strategic initiative.

On the one hand, leveraging the combined effects of the Hainan FTP's zero-tariff policies and RCEP tariff reductions will expand the trade potential between Hainan and other RCEP members.

On the other hand, greater emphasis should be placed on the alignment and mutual recognition of market rules and service systems with other RCEP members via the Hainan FTP. This will support the freer and more convenient movement of goods and production factors, and promote deeper integration in sectors such as agriculture, tourism, healthcare, finance and insurance, cultural and entertainment services, shipping and logistics, duty-free retail and high-tech industries.

Looking toward the 15th Five-Year Plan (2026-30) period, the Hainan FTP should focus on high-level opening-up and build itself into a strategic intersection of domestic and international circulation.

First, it is important to accelerate the development of a modern industrial system. The Hainan FTP should take trade in services as a priority, emphasize building industry chains and highlight internationalization as a defining feature. It should aim to establish a modern industrial system with Hainan characteristics and strong international competitiveness by 2030 that is oriented toward ASEAN and serves the mainland. Meanwhile, efforts should be made to shape an international tourism and consumption center of global influence, enhancing service supply in areas including duty-free shopping, healthcare, culture and entertainment, and international education — making Hainan a major destination for Chinese residents seeking international consumption experiences.

Second, it is imperative to achieve substantive progress in integrated development between the Hainan FTP and the Guangdong-Hong Kong-Macao Greater Bay Area. Financial cooperation should be harnessed to enable breakthroughs in advancing industrial integration, forming synergies in building a major gateway for national opening-up. For example, leveraging early achievements in financial opening, collaboration can be expanded into key sectors including tropical agriculture, the marine economy, and high-tech industries.

Third, a market system should be developed centered on "two headquarters hubs" — regional headquarters in the Hainan FTP for Chinese enterprises expanding into ASEAN, and headquarters in the Hainan FTP for international companies, particularly those from ASEAN, entering the Chinese market. Experience from global free trade hubs such as Singapore shows that attracting global or regional headquarters is crucial for strengthening a region's role in economic cooperation. With its special customs operations, the Hainan FTP can accelerate the establishment of a highly open and convenient financial environment as well as a competitive taxation system, enabling the rapid formation of a strong cluster of headquarters enterprises.

The author is the president of the China Institute for Reform and Development and the president of Hainan Institute for Free Trade Port Studies. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.