Key things to know about Hainan FTP island-wide special customs operations

The Hainan Free Trade Port (FTP) in southern China will officially launch island-wide special customs operations on December 18, a key move to boost trade and attract global business.

The island-wide special customs operations aim to eliminate barriers with a two-tiered customs system, described as "freer access at the first line, regulated access at the second line and free flow within the island."

The "first line" comprises eight ports of entry and refers to Hainan's connection with overseas markets. This will allow overseas goods to enter the island more conveniently, with most products benefiting from zero tariffs and expedited clearance processes.

The "second line," consisting of 10 ports, defines the customs boundary between Hainan and the mainland, where goods will undergo standard customs oversight to ensure fairness and prevent smuggling.

Chen Yajie, an economist at the Center for Public Diplomacy and Hainan Openness, National Institute for South China Sea Studies, said that "regulated access at the second line" targets three key categories: tariff-free imports, products with at least 30 percent added value after processing that qualify for import tariff exemption, and goods with eased trade restrictions.

"The special customs operations are not an end in themselves, but a strategic means to establish the entire island as a special customs zone aligned with international trade rules, thereby facilitating trade and investment, and creating a testing ground for China's ongoing reform and opening-up," Chen said.

Under the new policy, the proportion of tariff lines with zero-tariff products in the Hainan FTP will increase from 21 percent to 74 percent, while the number of tariff-free items in Hainan will rise from about 1,900 to around 6,600, covering nearly all production equipment and raw materials.

Combined with simplified customs clearance procedures, these changes are expected to enhance Hainan's competitiveness as a low-cost, high-efficiency trade hub and a key entry point for global goods.

Cui Fan, a professor at the University of International Business and Economics, called the island-wide special customs operations a "crucial leap" for the Hainan FTP in attaining the world's highest level of openness.

According to the Overall Plan for the Construction of the Hainan Free Trade Port, the island will see liberalization and facilitation "basically established" by 2025, become "more mature" by 2035, and develop into a globally influential duty-free trading center by 2050.

Cui emphasized that the launch of the special customs operations on December 18 is a critical step in the early stages of the FTP's policy and institutional development.