Editor's note: Liu Chunsheng is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.

China has consistently been actively promoting its openness to the world and strengthening international cooperation. The establishment of the Hainan Free Trade Port (FTP) has become one of the benchmarks of China's high-quality opening-up. The development of the Hainan FTP is a vital component of China's new pattern of opening up and a crucial test field for economic reform.

Hainan, the largest island in China, has always been at the forefront of China's reform and opening-up. Since the implementation of the reform and opening-up policy in 1978, Hainan has been designated as a trial area for reform, attracting significant domestic and foreign investments.

However, its development has long been constrained by its geographical location, lack of resources, and limited market. To change this situation, the Chinese government announced the establishment of the Hainan FTP in 2018.

As a major strategic initiative for China's opening-up in the new era, the construction of the Hainan FTP has been underway for over five years. During this period, the Hainan FTP has seen remarkable growth, with early policy measures being gradually implemented, and the initial results of institutional innovation becoming evident. It has embarked on a path of high-quality economic development, and preparations for the comprehensive operation of the island-wide customs sealing are in full swing. Hainan has achieved historic breakthroughs in comprehensive deepening reform and opening up across various areas. 

The development of the Hainan FTP is characterized by several key features. The policies of the Hainan FTP cover various sectors, including goods trade, service trade, investment, and finance. The port implements more open policies, attracting domestic and foreign businesses for investment and cooperation.

Hainan implements an FTP system, eliminating import duties on most goods, reducing trade barriers, and turning Hainan into a bridge between Chinese mainland and international markets. To attract more foreign investment, Hainan FTP simplifies business registration procedures, shortening registration times, lowering capital requirements, and reducing the burden on enterprises.

The financial market of Hainan FTP is also highly open, allowing foreign banks, insurance companies, and other financial institutions to establish subsidiaries in Hainan, providing more financial services and fostering financial innovation. Hainan FTP also encourages the development of smart manufacturing and digital technologies, providing opportunities for tech companies to accelerate innovation and industry upgrading.

Since the implementation of the policies at the Hainan FTP, the economic development of Hainan island has achieved significant milestones.

The establishment of the Hainan FTP has led to a substantial increase in the total value of goods traded through Hainan. According to data from Chinese customs, over the past five years, Hainan's foreign trade has seen an average annual growth rate of 23.4 percent, with annual import and export values consistently exceeding the thresholds of 100 billion ($13.9 billion) and 200 billion yuan respectively.

Hainan FTP's institutional innovation three-year action plan has been fully completed, with a cumulative release of 134 system innovation cases, among which eight have been replicated and promoted nationwide by the State Council, and six have received commendation from the State Council inspection.

In 2023, Hainan is further deepening institutional innovation. Hainan is leading and testing international high-standard economic and trade rules, exploring reform and innovation in areas such as land, low-carbon, and service industry opening. Hainan is going to launch a new round of the three-year action plan for institutional innovation, focusing on key areas such as tax-free processing and offshore duty-free policy.

Hainan has promoted over 180 policy documents for the free trade port. A system of policies and institutions characterized by "zero tariffs, low tax rates, simplified taxation" and "five conveniences and one orderly movement" is gradually taking shape in the FTP.

For instance, in the field of trade and investment, Hainan has introduced the foreign investment negative list for the free trade port and negative list for cross-border service trade, as well as implementing three "zero tariff" lists. In terms of finance and taxation, policies such as a 15 percent corporate income tax rate for high-end and industries. In shipping policy, efforts to build the "China Yangpu Port" vessel registry have been accelerated, which has significantly propelled Hainan's total tonnage of international navigation vessels to rank second in China.

The establishment of the Hainan FTP holds profound significance for China's high-quality opening-up. Located at the southern gateway of China, Hainan FTP's construction has propelled economic cooperation between China and neighboring countries in Southeast Asia and beyond. This promotes regional economic integration and strengthens economic ties. 

The open policies of Hainan FTP have attracted a substantial amount of foreign investment and international companies, contributing to China's higher status in the global value chain. By attracting more high-tech manufacturers and service companies, China can elevate the level of its industries and increase its global competitiveness. Its financial openness measures are expected to speed up China's financial internationalization process.

In the future, Hainan FTP will continue to play a crucial role in strengthening China's connections with the international market, providing a model and leadership for China's high-quality opening-up.

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