Haikou City, Hainan Province, on January 12

Gantry cranes at Yangpu Port, Hainan Province, swung into motion as a cargo ship carrying soybeans from Brazil docked at the terminal on January 6. About 4 km away, at a modern processing plant operated by Ausca International Oils and Grains Ltd., production lines were ready to turn imported beans into finished products.

Raw materials sourced from across the globe are processed here before being shipped to markets across China and exported to more than 10 countries, including Japan and the Republic of Korea.

For Ausca and a growing number of companies, the Hainan Free Trade Port (FTP) has become a place where China’s vast domestic market meets global supply chains.

That positioning has taken on new importance since December 18, 2025, when Hainan officially launched island-wide special customs operations, signaling a new phase in China’s only provincewide free trade port. Backed by looser trade controls, lower taxes and streamlined investment rules, the tropical island— roughly 50 times the size of Singapore by land area—is seeking to leverage capital inflows to transform itself into a modern industrial base.

When investment becomes industry

Ausca’s story illustrates how the model works in practice.

In June 2020, Ausca’s CEO Zhang Hui visited Yangpu for the first time. At that point, the Master Plan for the Construction of Hainan Free Trade Port had just been released, and Zhang quickly recognized the port’s institutional potential. “Hainan has the domestic market at its back and the world in front. The growth potential is huge,” she told Beijing Review. Following her visit, the company swiftly made its investment decision.

Registered in August 2020 and operational by April 2021—18 months faster than similar projects in other provinces, Ausca benefited from the streamlined government approval process.

As the Hainan FTP’s island-wide special customs operations advanced, the policy dividends became even clearer. The company imports roughly 3 million tons of soybeans, rapeseed and other raw materials annually from countries including Brazil and Canada, all of which enjoy the province’s zero-tariff policy. Centrifuges used to remove impurities from primary pressed oils also benefit from the same zero-tariff policy.

Currently, eligible entities in the Hainan FTP can import over 6,600 tariff lines of goods exempt from import tariffs, import value-added tax and consumption tax.

Meanwhile, the processing value-added duty exemption policy implemented in the Hainan FTP enhances the competitiveness of enterprises in the domestic market. This policy stipulates that goods produced by enterprises in encouraged industries in the Hainan FTP are exempt from import tariffs when entering the mainland, if they contain imported materials and achieve at least 30 percent value-added through local processing, with only import value-added tax and consumption tax levied according to regulations.

If the finished products produced with imported materials are exported directly, that is when companies effectively operate under a “two-ends-out” trade model, they can avoid import tariffs altogether during production and circulation—a structure that lowers operating costs and boosts global competitiveness.

Under the processing value-added duty exemption policy, Ausca has saved an estimated total of 300 million yuan ($43 million) in import duties, Zhang said.

And tax incentives extend further. Companies registered and substantively operating in Hainan’s encouraged industries are subject to a 15-percent corporate income tax rate—lower than Singapore’s statutory 17-percent rate and well below the 21-percent U.S. federal rate, offering firms greater flexibility in allocating capital and production globally.

The impact is reflected in Ausca’s growth. The company’s output value rose from 1 billion yuan ($155 million) in 2021 to 7 billion yuan ($980 million) in 2025, Zhang said.

Ausca is far from alone. From December 18, 2025, to this January 17, the number of businesses eligible for the “zero tariff” benefit increased by over 10,000. Imports under the policy reached 750 million yuan ($108 million), up 38.9 percent year on year. Thirty companies sold 85.9 million yuan ($12 million) worth of value-added products into the mainland market tariff-free, covering chemicals, medical devices, pharmaceuticals, food products and jewelry.

Companies are using Hainan’s institutional openness to tap both domestic and international markets. “Hainan has allowed us to truly operate within a dual-circulation framework,” Zhang said. “It has opened up a much broader market space.” The double development dynamic, also known as dual-circulation, reorients China’s economy by prioritizing the role of the domestic market (“domestic circulation”) in driving growth, while remaining open to international trade and investment (“international circulation”).

A complementary role

Rather than competing head-on with established free ports, Hainan is positioning itself as a complementary node within China’s broader economic architecture and the global trade network.

Cross-border e-commerce offers one example. Instead of replicating domestic platforms, Hainan has built infrastructure tailored to international operations, including dedicated Internet lines, intellectual property (IP) protection measures for cross-border e-commerce, and more flexible offshore accounts and foreign exchange settlement arrangements.

Visa-free entry for citizens of 86 countries has further eased talent mobility, helping firms recruit foreign livestream hosts and operators—removing a persistent bottleneck for companies expanding overseas.

The Hainan FTP’s development does not aim to replace existing international FTPs, but to expand the global network of such ports. Commentator Gao Peining of news portal China. org.cn noted that Singapore’s strength lies in its governance efficiency, shipping hub status and role as a gateway to Southeast Asia. Hainan, by contrast, anchors itself in tourism, modern services, hi-tech industries and tropical agriculture—a structural difference that underpins cooperation rather than competition.

That complementarity is already taking shape. Singaporean firms including CapitaLand have launched logistics parks and smart city projects in Hainan, exporting management expertise and global networks while leveraging Hainan’s policy experimentation space and access to China’s market.