Hainan's special customs operations: A new global corridor

Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion and not necessarily the views of CGTN.

With the official launch of island-wide special customs operations on December 18, the Hainan Free Trade Port has entered a new stage of development. This landmark move not only reflects China's firm commitment to high-level opening-up but also sends a positive signal of openness and cooperation to the world amid the headwinds of globalization.

The Essence of Special Customs Operations

The launch of special customs operations is not merely a physical separation but a profound reform of customs supervision. Its core lies in transforming the entire island of Hainan into a special economic zone "inside the country but outside customs," implementing a supervision model of "freer access at the first line, regulated access at the second line, free flow within the island." This institutional design ensures national economic security while creating unprecedented space for Hainan's openness.

Under special customs operations, Hainan will implement more liberal and convenient trade policies. Goods entering Hainan from abroad are exempt from tariffs, with tariffs levied only when goods move from Hainan to the mainland. This arrangement significantly reduces transaction costs between Hainan and the international market, enabling it to become a true hub connecting domestic and foreign markets. Simultaneously, opening-up policies in financial services, data flows, and personnel mobility will advance in tandem, forming a powerful synergy for institutional innovation.

Release of Policy Dividends

The most direct impact of the special customs operations is the systemic release of policy dividends. According to the Master Plan for the Construction of the Hainan Free Trade Port, Hainan will gradually implement special tax policies such as zero tariffs, low tax rates, and simplified tax systems. By 2025, a preliminary policy and institutional framework focused on trade and investment liberalization and facilitation will be established; in future, Hainan will become a new highland for China's open economy.

These policy advantages are accelerating the gathering of global resources in Hainan. Currently, Hainan has formed a "3+1" industrial system dominated by tourism, modern services, and high-tech industries. Post-customs closure, new trade formats such as offshore trade, entrepot trade, and cross-border e-commerce are expected to experience explosive growth. Financial opening policies will drive the rapid development of offshore finance and cross-border investment and financing. Facilitation policies for personnel mobility will attract high-end international talent, providing intellectual support for Hainan's innovative development.

Of particular note is Hainan's ongoing construction of an international shipping hub, which will become a key node in the regional logistics network. With the expansion and upgrading of ports like Yangpu and Haikou, coupled with deep integration with the global aviation network, Hainan is poised to become a major cargo distribution center and supply chain management base in the Asia-Pacific region within 5–10 years.

A New Platform for Regional Cooperation

The implementation of the Regional Comprehensive Economic Partnership (RCEP) and Hainan's special customs operation have created a rare policy synergy. As China's frontline facing ASEAN, Hainan possesses unique geographical and institutional advantages under the RCEP framework.

On one hand, Hainan can leverage the rules of origin accumulation to engage in deep industrial cooperation with RCEP member states, constructing a regional value chain division system. On the other hand, Hainan can serve as a pilot zone for stress-testing and institutional alignment with RCEP rules. In key areas such as trade in services, e-commerce, and intellectual property, Hainan can pioneer higher-level opening measures, accumulating experience for China's participation in higher-standard international economic and trade rule negotiations.

Breakthroughs in Institutional Innovation

The success of special customs operations hinges on whether institutional innovation can genuinely align with internationally accepted rules. Hainan has made significant progress in this regard but must continue to break new ground in multiple areas.

In trade facilitation, Hainan is developing smart ports to enhance clearance efficiency through digital means. In the future, Hainan is expected to achieve "second-level clearance" for most goods, significantly reducing time costs for businesses. In financial openness, Hainan is exploring specific pathways for the free and convenient cross-border flow of funds, including pilot programs for integrated domestic and foreign currency bank accounts and expanding the scope of cross-border asset transfers.

Notably, Hainan's exploration of cross-border data flows is forward-thinking. Under the premise of ensuring security and controllability, Hainan is researching a classified and tiered management system for cross-border data flows, which will have far-reaching implications for international economic and trade cooperation in the digital economy era.

Strategic Pivot Significance

From a broader perspective, Hainan's launch of special customs operations is a crucial move in China's opening-up strategic layout. Against the backdrop of China's accelerated construction of a "dual circulation" development paradigm, Hainan will become a key node connecting domestic and international markets and resources.

Hainan can act as a "super connector," effectively linking domestic market demand with the supply capabilities of Southeast Asia, South Asia, and even Indian Ocean coastal countries.

Hainan can also serve as an important showcase for Chinese ideas and solutions to the world. By building an ecological civilization pilot zone and advancing carbon neutrality demonstrations, Hainan can demonstrate China's green development philosophy to the international community. By creating a legalized, internationalized, and convenient business environment, it can showcase the latest achievements of China's reform and opening-up.

The launch of Hainan's island-wide special customs operations marks China's entry into a new stage of institutional opening-up. This is not only a historic opportunity for Hainan's development but also a critical step for China's deeper integration into the global economic system. Through institutional innovation, policy breakthroughs, and regional cooperation, Hainan is poised to create a new economic growth pole along the "Maritime Silk Road," becoming a strategic pivot for China's opening to the south.