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Hainan Free Trade Port island-wide special customs operations are set to officially commence on December 18, 2025. In the second episode of Expert Talks on Hainan FTP, an in-depth interview program featuring face-to-face dialogues with leading experts on special customs operations, we talk with Zhang Jianping, Deputy Director of the Academic Committee of the Academy of International Trade and Economic Cooperation, a research institute under China's Ministry of Commerce.
Profile
Zhang Jianping
Deputy Director of the Academic Committee of the Chinese Academy of International Trade and Economic Cooperation.
Hainan to See Wealth of New High-quality
Employment Opportunities
Reporter: Hainan Free Trade Port island-wide special customs operations will officially launch on December 18 this year, stoking expectations across all sectors. What changes do you think that island-wide special customs operations will bring to businesses and residents on the island?
Zhang Jianping (Zhang): Island-wide special customs operations are a landmark project in the construction of the Hainan Free Trade Port. It is also a significant measure in China's implementation of institutional opening-up and promoting reform and development through opening-up. Currently, Hainan is studying and formulating policies that would allow the province's residents duty-free access to imported goods. Once such policies are implemented, residents will enjoy tangible economic benefits and advantages in this regard. An even greater benefit lies in the fact that the influx of foreign investment and professionals from various countries, including top-tier human resources and talents, will undoubtedly create more employment opportunities. This will present Hainan with more new opportunities in terms of high-quality employment.
Reporter: Attracting foreign investment is an important part of China's high-level opening-up. What major role do you think Hainan will play in attracting foreign investment after special customs operations are launched?
Zhang: Over the past five years, paid-up foreign capital in the Hainan Free Trade Port has reached CNY 102.5 billion, representing an average annual growth of 14.6%, ranking among the top in the country. Direct foreign investment has shot up to USD 9.78 billion, growing by a yearly average of 97%. 8098 foreign-invested enterprises have been established, growing at an average rate of 43.7%, with 176 countries now represented. Hainan's economic openness has also increased to 35%.
Looking ahead, I believe Hainan will definitely become a new hotspot in China for foreign capital absorption and utilization for the following reasons.
Firstly, we see that Hainan is accelerating the establishment of a trade management system that ensures the free, secure, and convenient movement of goods and further expanding the range of "zero-tariff" goods, which will significantly boost the confidence and determination of foreign enterprises to invest in China.
Secondly, Hainan is currently focusing on creating an open, transparent, and predictable investment and business environment. Currently, thanks to national policies, Hainan is also further leading the country in relaxing market access for foreign investment and introducing a large number of new special measures to ease market access. Additionally, efforts are being accelerated to establish an investment facilitation system focused on process supervision.
The third reason is that Hainan is gradually establishing a financial management system and policy framework geared toward open development. Typically, after foreign direct investment enters China, a series of processes needs to be carried out. However, Hainan is currently accelerating the upgrading of its multi-functional free trade account system, with the range of applications being further expanded. Hainan is opening its financial sector, actively attracting foreign financial firms, and piloting new approaches in cross-border asset management and other areas.
The fourth reason is that Hainan is currently implementing more convenient immigration policies and further relaxing restrictions on the free movement of people, making it easier for businesspeople to visit Hainan, further facilitating work visas, and improving its residence system for foreign nationals. These measures will enable businesspeople to move more efficiently in Hainan.
The fifth reason is that Hainan is set to establish a more liberal and open shipping and aviation system. For example, we are accelerating the construction of the "Port of Yangpu" port of registry, continuously optimizing ship inspection management policies, and enhancing shipping service capabilities. A large number of international ships are now registered at Yangpu. Additionally, Hainan has is relaxing airspace control and air traffic rights and actively promoting the expansion of the Seventh Freedom of the Air.
And finally, Hainan is working to establish an efficient, convenient, and secure mechanism for cross-border data flow. With special customs operations, there will be significant market demand from enterprises in the digital trade and economy sectors. So, new requirements for management and the opening up of information communication channels are bound to come up. Efforts have already been made to orderly expand the opening of Hainan's communication resources and services, adjust and improve the negative list for data export management, accelerate the construction of international communications gateway exchanges and cross-border submarine optical cables, and actively foster the development of the digital economy.
Easier Access to Duty Exemption Policy for Value-added Processing Following Special Customs Operations
Reporter: After island-wide special customs operations launch, how will the duty exemption policy for value-added goods processed in Hainan and sold in the Chinese mainland be optimized and adjusted?
Zhang: The biggest optimization of the duty exemption policy for value-added goods processed in Hainan and sold in the Chinese mainland will be its broader implementation. Specifically, it will be adjusted in the following ways once special customs operations launch.
First, the requirement that at least 60% of the income for enterprises in encouraged industries be derived from their core business operations has been removed.
Second, the scope of imported materials covered will be expanded, building on the previous pilot that only allowed bonded materials to be used.
Third, self-produced goods made in Hainan will be included in the scope of value-added calculations, enabling enterprises to more easily hit the 30% added value threshold.
Fourth, the value added through the processing of bonded materials by various upstream and downstream enterprises will count cumulatively toward the total added value, encouraging enterprises to expand their industrial chains and form industrial clusters.
So, in my personal view, the current post-special customs operations duty exemption policy for valued-added processed goods has significantly lowered the threshold, which will rapidly expand the scope of beneficiaries in the going forward. It will be better suited to production enterprises on Hainan Island and be conducive to the formation of industrial chains and clusters.
Reporter: Recently, the Ministry of Commerce announced the List of Goods and Articles Restricted or Prohibited from Import and Export in the Hainan Free Trade Port. What considerations were behind implementing this list? In terms of relaxing trade management, what new approaches will be explored?
Zhang: In terms of substance, I think this list can be likened to a negative list for trade in goods. It represents a new approach based on China's current goods trade management model.
On the one hand, it has significantly improved the transparency of goods trade management. For the first time, it comprehensively and systematically lists the scope of imports and exports currently subject to national prohibitions and restrictions, clarifying the regulatory boundaries for enterprises.
On the other hand, it has dramatically boosted the openness of the goods trade. While respecting China’s requirements to fulfill obligations under international conventions, safeguard national security, and adhere to ecological and environmental protection standards, the List relaxes management measures for certain imports in line with the Hainan Free Trade Port’s developmental goals. Basically, it’s a relaxation of restrictions and an expansion of pilot opening up initiatives. Sixty kinds of HS-coded used electronic goods are no longer subject to import license management, encompassing around 80% of goods in this category. This more or less meets the possible use cases in production for Hainan-based enterprises.
Policies Benefiting Companies and Residents Will Be Fully Implemented
Reporter: There are less than five months left before special customs operations are initiated. What aspects should China and Hainan specifically focus on?
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