{"id":2404,"date":"2025-10-17T10:00:51","date_gmt":"2025-10-17T10:00:51","guid":{"rendered":"https:\/\/msadvisory.com\/?p=2404"},"modified":"2026-04-20T11:28:36","modified_gmt":"2026-04-20T11:28:36","slug":"hainan-free-trade-port-china","status":"publish","type":"post","link":"https:\/\/msadvisory.com\/hainan-free-trade-port-china\/","title":{"rendered":"Hainan Free Trade Port"},"content":{"rendered":"\t\t
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The construction of China\u2019s Hainan Free Trade Port has officially gone underway. With high expectations, the government anticipates that it will be the center of commerce in China once the first phase has come to a conclusion, by 2025. In this article, we aim to provide insight on the Hainan Free Trade Port, the key policies in the region and how exactly it will work (see also the comprehensive master-plan document<\/a>).<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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\"Market<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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What is the Hainan Free Trade Port?<\/h2>

The Hainan Free Trade Port (FTP) is part of the government\u2019s effort to make Hainan an influential global trade port to support the expansion of the Chinese market. The Hainan FTP is run by the Chinese government under a socialist system. It will be established in 34,000 square kilometers of land, which will make it the largest of its kind in the world.<\/p>

In June 2021, the Hainan Free Trade Port Law of PRC took effect a year after China announced its major plans for Hainan (as established in the Hainan Free Trade Port Law<\/a>). The goal is to implement a series of policies that will transform Hainan into a world-class free-trade hub similar to that of Singapore and Hong Kong.<\/p>

The greatest advantage that the Hainan FTP will offer is the exemption of goods usually prohibited from being imported or exported. Other overseas merchandise will also be allowed free trade after 2025.<\/p>

Goods exported overseas from the Hainan FTP will still be subject to export and tax regulations. However, merchandise not on the import taxation list can be imported tariff-free. Goods entering the Hainan FTP from mainland China will also be handled according to domestic regulations.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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The Hainan Free Trade Zone<\/h2>

The Chinese government looks forward to making Hainan a key destination for commerce, diverting shoppers and business players away from other major ports like Hong Kong.<\/p>

Foreign investors can invest in Chinese private equity products, along with being able to transfer capital into and out of the country, as long as it is within the provided limits. Similarly, companies residing in the Hainan FTZ can raise or borrow capital with a higher cap from foreign banks.<\/p>

Previously, China had been preventing capital flight by imposing strict trade rules. Currently, the government has shifted its priorities to promote the yuan as an international currency by allowing domestic funds to be invested in foreign equities of up to USD 5 billion.<\/p>

Hainan FTZ will also be a testing ground for innovative real estate policies. The finance ministry has been considering enforcing property taxes to stabilize market prices, and Hainan will be a good candidate for an initial testing phase of the policy. If deemed successful, programs implemented in the Hainan FTZ will be brought to mainland China.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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The Difference Between an FTP and FTZ<\/h2>

A\u00a0free-trade port (FTP)<\/em>\u00a0refers to a port area outside the jurisdiction of customs checkpoints but still resides within a country\u2019s boundaries. This kind of setup enables the free entry and exit of merchandise. On the other hand, a\u00a0free-trade zone (FTZ)<\/em>\u00a0is situated within the mainland and is within the administration of customs checkpoints.<\/p>

China established the Shanghai FTZ (read more about the\u00a0Shanghai Free Trade Zone<\/a><\/em>) to test how market reforms will have an effect on certain industries. It aims to improve the overall business environment by providing a one-stop solution for all businesses in the zone. The setup is expected to support China\u2019s Belt and Road Initiative (BRI) and open the Chinese market to bilateral free trade agreements with other countries.<\/p>

FTPs are opened to strategically stimulate economic development. According to a study, there are more than 2,000 FTPs worldwide, with China as one of the major countries running them.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Key Elements of the FTP in Hainan<\/h2>

Liberalization and the Facilitation of Trade<\/h3>

A special customs supervision zone system will be established in the area. It will help Hainan FTP become the forerunner for overseas trade, while being the \u2018second line\u2019 to trade with the mainland.<\/p>

Hainan FTP will be opened to freely importing and exporting goods with other countries, so long as the merchandise is not on the prohibited or restricted list. Goods entering mainland China from Hainan FTP will be more tightly controlled.<\/p>

Liberalization and Facilitation of Investment<\/h3>

The negative list for foreign investments will be simplified to allow for a more accessible Chinese market (see the 2020 Negative List for Hainan FTP<\/a>). In December of 2021, the Hainan FTP authorities released a new negative list that permits expanded market access to foreign investment in sectors previously restricted like education, telecommunications, manufacturing, mining, and business services.<\/p>

Fiscal and Taxation Systems<\/h3>

The Hainan FTP will launch a simplified taxation system, including a zero-tariff advantage for certain goods by 2025.<\/p>

Policies for lower tax rates will also be enforced over corporate income tax (CIT) and individual income tax (IIT). Under this system, businesses in Hainan that have engaged in substantial activities in specific industry sectors will pay a lower CIT rate of 15% by 2025 (as confirmed by China-Briefing\u2019s analysis<\/a>). This deduction almost halves corporate taxes from the general 25% rate that\u2019s applied.<\/p>

High-end and in-demand talents working in the Hainan FTP may enjoy additional tax exemptions, so long as they satisfy certain criteria. A portion of their actual IIT that exceeds 15% will be exempted from tax collection by 2025.<\/p>

The reduced tax rates do not imply that Hainan FTP is a tax haven. For enterprises to obtain preferential tax treatments, substantial economic activity in the area should be established first.<\/p>

Environmental Protection Policies in Hainan<\/h3>

The Hainan FTP will be protected by laws for ensuring strict ecological and environmental protection.<\/p>

Industrial Development and Talent Support<\/h3>

Hainan FTP will be transformed into an international tourism center that will emphasize culture, sports, retirement, and medical care. Aside from attracting strong local talents, the region will also target expatriates and international students.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Incentive Category<\/th>Description<\/th>Implementation\/Effective Date<\/th><\/tr><\/thead>
Corporate Income Tax<\/a> (CIT)<\/td>Reduced rate of 15%<\/strong> for eligible enterprises in specified sectors<\/td>By 2025 (policy already in effect for some)<\/td><\/tr>
Zero-Tariff Entry for Goods<\/td>Goods imported into Hainan (and processed \u2265 30% value-added) can enter mainland tariff-free<\/td>Planned island-wide customs ops by Dec 18 2025<\/td><\/tr>
Foreign Investment Negative List<\/td>Only 27 restricted sectors<\/strong> for foreign investment<\/a> \u2014 fewer than national list<\/td>From Feb 1 2021 for Hainan FTP<\/td><\/tr>
Tag\/label \u201cHainan Origin Certificate\u201d<\/td>Goods processed in Hainan meeting > 30% value-added threshold may carry preferential label<\/td>Requirement for zero-tariff import-into-mainland<\/td><\/tr>
Expanded Duty-Free Goods & Quotas<\/td>Increase of duty-free import items from ~1,900 to ~6,600 + coverage from 21%\u219274% of tariff-lines<\/td>Announced July 2025<\/td><\/tr><\/tbody><\/table>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t
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\"Shanghai<\/a><\/figure>
Ready to take advantage of Hainan\u2019s 15% CIT and simplified investment access?<\/a><\/div>

Let MSA guide your company registration and set-up in the Hainan FTP \u2014 speak with our China-specialist team today.\n\nMessage  \u2192<\/span><\/p><\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t

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Advantages of the Hainan FTP<\/h2>