China’s tariff-free island nicknamed ‘new Hong Kong’
The island province of Hainan in the south of China has been designated as a free trade zone in a bid to boost economic growth.
China’s southern island province of Hainan has begun operating under a new customs system, separate from the rest of the mainland. The move is aimed at transforming the island into a major free trade zone amid growing global trade restrictions.
Located off China’s southern coast, Hainan is now operating under a framework inspired by the “one country, two systems” model already in place in Hong Kong and Macao. Under the new arrangement, foreign goods can enter the island tariff-free, marking a significant shift in China’s trade policy.
The system establishes two distinct customs borders: one between Hainan and the rest of the world and another between Hainan and mainland China. Most imported goods entering the island are exempt from tariffs, value-added tax and consumption taxes. However, if those goods are later transferred to the mainland, the applicable duties and taxes are applied as if the products had been imported directly from overseas.
Chinese authorities say the initiative is designed to enhance Hainan’s role as an international trade and investment hub while maintaining regulatory oversight. A more flexible supervision system will be implemented to ensure the secure and efficient movement of goods.
Wang Fengli, deputy director of the Hainan Free Trade Port working committee of the Communist Party of China, claimed the list of zero-tariff products will continue to expand. He also noted that key sectors including tourism, education and healthcare will be further opened to foreign participation.
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