China's Hainan given unprecedented special status

Hainan officially became the world's largest free trade port on December 18. With its superior institutions, this giant free trade port will become a symbol of China's reform and opening up in the new era.

At the opening ceremony of the “Walking China: Hainan Vitality” program and the “ASEAN Partnership” media conference (from August 18-24 organized by China Central Radio and Television - CMG), Mr. Wang Bin, Standing Committee Member of the Provincial Party Committee, Head of the Propaganda Department of the Hainan Provincial Party Committee (China) shared the latest information about the upcoming historical milestone of this island province.

Mr. Wang Bin - Standing Member of the Provincial Party Committee, Head of the Propaganda Department of Hainan Provincial Party Committee (middle), Ms. Zhang Hui, Deputy Director of the Center for Asian-African Language Programs of CGTN, China Central Television (CMG) (second from left) and VietNamNet reporters - representatives of press reporters from 9 ASEAN countries performed the launching ceremony of the media program "Strolling China - Hainan Vitality" on the morning of August 18. Photo: Bang Duong

Unprecedented special mechanism: Closed customs, 0% tax, multi-sector expansion

Speaking at the opening ceremony, Mr. Wang Bin said: “On December 18 this year, Hainan will officially operate a closed customs mechanism. This event is a milestone not only for the process of building the Hainan Free Trade Zone, but also an affirmation to the world of China's steadfast determination to expand integration at a high level, despite the counter-currents of protectionism.”

In 2018, Hainan was selected to become the largest free trade zone (FTZ) in China with an island area of ​​nearly 35,000 km², 35 times larger than Hong Kong and 17 times larger than Shenzhen. This is an important reform and opening-up strategy in China's new era, directly planned and promoted by General Secretary and President Xi Jinping.

With this scale, Hainan is also the largest free trade port in the world, 35 times larger than the Colón Free Trade Zone (Panama) - the largest free trade zone in Latin America and 620 times larger than Dubai - the largest free trade zone in the Middle East.

Mr. Wang Bin, Head of the Propaganda Department of Hainan Provincial Party Committee (China) spoke at the opening ceremony of the program "Walking China: Hainan Vitality" and the "ASEAN Partnership" media conference held on August 18, 2025 in Sanya City. Photo: According to CMG Radio

For the past 7 years, Hainan has been operating under the traditional customs regime, meaning it is still part of the national common tariff zone. Goods brought into Hainan from mainland China do not have to go through customs procedures, just like normal domestic transport. Goods brought into Hainan from abroad still have to declare and pay import tax and VAT (except for small, pilot duty-free zones on the island).

However, from December 18, 2025, with a closed customs mechanism across the island, all import and export activities, transportation of goods, services and cross-border capital flows will be managed within a separate framework, creating the highest level of freedom and convenience. Hainan operates an independent customs mechanism within the framework of Chinese law.

Goods from abroad entering Hainan are exempt from import tax, while goods from mainland China entering Hainan will be required to go through customs procedures and be considered as “exports”. Thus, Hainan is given a unique mechanism that is unprecedented and completely different from other free trade zones in the world.

Sanya City – Hainan's duty-free shopping center Photo: CMG Radio

"Currently, Hainan's own policies and institutions are basically complete," said Mr. Wang Bin.

Regarding incentives, the general principle is “0% tariff, low tax rate, simple tax regime”. It is expected that the scope of duty-free goods will be expanded to about 6,600 commodity codes, a sharp increase from 21% to 74% of the total commodity codes. Products processed on the island with an added value of 30% or more will also be exempted from duties when brought into mainland China.

Corporate and personal income tax is only 15%, much lower than the average in China (25%). In addition, Hainan also applies the least restricted list of foreign investment and the most encouraged list of industries in China's free trade zones. At the same time, Hainan also pioneered the first list of restricted cross-border trade services in China.

Regarding entry, the visa exemption policy applies to 59 countries and this list will be expanded in the future. Digital infrastructure is also focused on, with dedicated international Internet data lines covering key industrial zones, meeting the needs of most industries.

It can be said that this is China's way of turning Hainan into a "unique" international institutional testing ground, instead of just an island province dependent on the mainland, thereby sending a message about a reformed China, always ready to open up to the world.

The Business Card of New China

With a series of new points, Mr. Wang Bin introduced Hainan as “the business card of China’s reform and opening up in the new era”; as “the front line of institutional opening up, the new land of mutually beneficial cooperation in the region and the new driving force for economic globalization”.

Ms. Zhang Hui, Deputy Director of the Asia-Africa Language Program Center of CGTN, China Central Television (CMG) delivered a speech at the opening ceremony of the “Walking China: Hainan Vitality” program and the “ASEAN Partnership” media conference held on August 18, 2025 in Sanya City. Photo: According to CMG

From a media perspective, Ms. Truong Huy, Deputy Director of the Asia-Africa Language Program Center of CGTN, China Central Television (CMG) said that this place is also a "vibrant Hainan" in the eyes of international friends in all aspects from tourism, healthcare - recreation, education, science and technology...

According to her, the appearance of Hainan is discovered with the four words “openness, ecology, humanity and innovation”. In particular, the Central Business District of Sanya is currently the destination of 32 companies on the Fortune 500 list and has attracted 648 million USD in foreign investment in 2024. These figures show the transformation of Hainan from a remote island to an open gateway.

“Hainan will be the “observation point” for ASEAN and the world to understand a modern China, and at the same time a place to promote cooperative ideas, including new communications technology,” said Ms. Truong Huy.

For many years, ASEAN has been Hainan's largest trading partner. Bilateral trade volume increased from nearly 30 billion yuan in 2021 to 57.91 billion yuan in 2024. After the closed customs mechanism is put into operation, Hainan will continue to foster new momentum for cooperation with ASEAN, effectively utilize the incentives from RCEP, and together paint a bright picture of Hainan-ASEAN economic and trade relations.

For Vietnam, Hainan can be a new and most vivid practical lesson for designing a superior institutional framework for growth poles. This is even more valuable in the context of the Da Nang Free Trade Zone - the first free trade zone in the country, which was just established by the Prime Minister on June 13 and there may be other free trade zones in Hai Phong, Ho Chi Minh City, Dong Nai, etc. However, for a land to become a successful "special economic zone", the biggest lesson is not to copy incentives but to need a breakthrough mindset, a strategic vision and the highest political determination to turn creative ideas and policies on paper into reality.

Source: https://vietnamnet.vn/hai-nam-cua-trung-quoc-duoc-trao-co-che-dac-thu-chua-tung-co-2434086.html