Selling the Internationalisation of Hainan
Beijing (ANTARA) - Hainan, China’s youngest province with a tropical climate comprising Hainan Island and several small islands in the South China Sea, is pursuing ambitious steps in international trade since the end of 2025.
As of 18 December 2025, Hainan has implemented a special customs zone known as the “Hainan Free Trade Port (FTP)”, which differs from the customs system in mainland China, allowing it to compete with Hong Kong and Singapore as a global economic centre.
The Hainan FTP policy was proposed by President Xi Jinping in 2018 and approved by China’s State Council. In 2021, the government enacted the Hainan Free Trade Port Law. Since 2023, Hainan has begun piloting customs closure operations with a “supervision of goods, not people” model.
Under the FTP scheme, goods shipped from Hainan to mainland China are treated as imports. This system is designed to create a more open and flexible trade ecosystem for global investment.
Goods flow in Hainan is regulated through three principles: first line freer access, which facilitates the entry of foreign goods into Hainan; second line controlled access, which imposes stricter oversight on goods from Hainan to mainland China; and free circulation inside the island, which allows goods to move freely within the island.
Since this policy took effect, many imported goods have been exempted from import duties, import Value-Added Tax (VAT), and Luxury Goods Sales Tax (PPnBM).
The negative list for China’s Priority Free Trade Zone and the national negative list have also been relaxed in Hainan. Since 2021, the national negative list for cross-border services has been reduced to 11 sectors and 70 items.
Out of a total of 8,960 types of goods with tariff codes in China, 6,637 types or 74 percent now enjoy zero percent import tariffs. Meanwhile, some goods remain subject to tariffs to protect domestic industries.
Real-world example
Another policy under the FTP scheme is the exemption of import duties for goods produced in Hainan using imported raw materials, provided they have at least 30 percent local added value when shipped to mainland China. This rule is designed to encourage growth in Hainan’s manufacturing and processing industries.
One business benefiting from this policy is Hainan Ausca International Oils and Grains Co., Ltd, a grain and cooking oil processing company operating in the Yangpu Economic Development Zone, Hainan Province.
Deputy General Manager of Hainan Ausca, Cao Youha, said his company fully utilises the policy allowing products with over 30 percent processing added value to enter the domestic market without import duties.
“The main raw materials we use for this cooking oil are basically commodities like canola seeds and soybeans that we obtain from Canada, Brazil, Ukraine, or other countries. Then in Hainan, we process them into cooking oil products and sell them to other provinces in China, with some exported to various parts of the world,” said Cao at his factory site in Yangpu, Hainan.
Cao said his company was part of the first wave of projects entering the Hainan FTP blueprint pilot zone. By early 2026, he claimed to have enjoyed import duty reductions worth 300 million RMB (approximately Rp750 billion).
When production began in 2021, Ausca’s cooking oil production volume reached 190,000 tonnes with a value of 1 billion RMB (approximately Rp2.5 trillion). This figure has increased annually. By 2025, processing volume reached 1.58 million tonnes with a value of 6.8 billion RMB (approximately Rp17 trillion), an increase of about sixfold.