Hainan free trade port stands out as key gateway for China's opening-up in new era

China's island province of Hainan is set to launch its independent customs operations on Thursday, turning the once laid-back holiday paradise into a world-class free trade port which serves as a premier gateway for China's opening-up in the new era.

Reform and opening-up is a phrase synonymous with China's modern economic transformation. Throughout this process, President Xi Jinping has placed Hainan at the heart of China's national opening-up strategy. Since 2013, he has visited the island province five times, giving it a new mission for a new era.

On April 13, 2018, at a ceremony marking the 30th anniversary of Hainan's establishment as a province and special economic zone, President Xi made a major announcement to support building a pilot free trade zone across Hainan, and to back the province in gradually exploring and steadily advancing the development of a free trade port with Chinese characteristics, establishing its policies and institutions step by step and in phases.

Since then, Hainan has not only absorbed practices tested in other free trade zones, such as negative-list management and streamlined business registration, but has also been tasked with even more ambitious institutional innovation.

"[Hainan] will closely focus on the strategic positioning of building a pilot zone for comprehensively deepening reform and opening-up, a national ecological civilization pilot zone, an international tourism consumption center, and a major national strategic service and support zone," said Feng Fei, secretary of the Communist Party of China Hainan Provincial Committee.

Based on Hainan's strategic position, President Xi further identified four key industries for the Hainan Free Trade Port: tourism, modern services, high-tech industries, and tropical specialty high-efficiency agriculture.

Since 2012, China has established 22 pilot free trade zones and introduced more than 3,500 institutional innovations. The biggest difference between Hainan and other free trade zones is what is known as its "special customs operations," which means designating the entire island as a special customs supervision zone.

In other words, eligible goods imported from overseas are exempt from tariffs as well as value-added and consumption taxes. And zero-tariff goods can circulate freely within the island. On top of this, products in encouraged industries that achieve over 30-percent value-added processing can enter the domestic market tariff-free. In short, Hainan is becoming one of China's most dynamic and open testing grounds for institutional innovation.

"[Hainan] aims to become, by 2035, a new high ground for China's open economy and by the middle of this century, to fully build a high-level free trade port with strong international influence," said Feng.

This new chapter in China's reform and opening up comes at a time of rising global protectionism and complex international dynamics. It sends a clear message to the world: China's door will not close. It will only open wider.

For more than four decades, reform and opening-up has illuminated China's path forward. Today, standing at the forefront of a new era, Hainan is carrying a renewed national mission.