An aerial drone photo taken on Nov 21, 2025 shows a view of the Yangpu International Container Port in Yangpu Economic Development Zone, South China's Hainan province. [Photo/Xinhua]
Passing through Haikou Meilan International Airport during my visit to Hainan before Thursday's start of the island-wide special customs operations of China's largest free trade port, I understood that Hainan is a space deliberately preparing for deep institutional transformation.
This impression did not arise from isolated details, but from the overall logic of how the environment was organized: attentiveness to processes, orientation toward digital solutions, and thoughtful infrastructure planning. What I witnessed was not the completion of a reform but a carefully constructed vision gradually taking shape — an insight into how strategic intent materializes outside of official statements.
Hainan's designation as a Special Economic Zone in 1988, and its subsequent evolution into the Hainan Free Trade Port, was not accidental. The island's geographic advantages — it is situated strategically in the South China Sea with access to Southeast Asian and global sea lanes — combined with its manageability as a relatively isolated place, have made it an ideal platform for piloting reforms.
Its logistical potential, environmental specificity and evolving business infrastructure enable Hainan to serve not merely as a development zone, but as an institutional bridge between China and international markets.
Today, Hainan is increasingly perceived as a space of balance — between nature and technology, experimentation and stability, domestic priorities and global integration. Through the reforms pursued there, China is demonstrating a softer, more thoughtful and cooperation-oriented approach to openness.
Customs and institutional reforms are often described in the language of laws, regulations and timelines.
However, being physically present on the island reveals a different dimension — the underlying philosophy that animates those policies. At its core is a pursuit of predictability and reduced institutional friction, fostering an environment where cross-border interaction becomes a stable norm rather than an exception. For businesses, scientific collaborations, cultural exchanges and educational programs alike, this sense of stability and clear rules is a crucial factor in making long-term decisions about cooperation and presence.
For example, the introduction of smart customs governance, underpinned by advanced data analytics and credit-based management, significantly speeds up clearance and reduces administrative burdens, benefiting domestic as well as international enterprises. More than 80,000 foreign trade entities in Hainan have already been categorized for optimized customs processing, improving efficiency and predictability for reputable global enterprises.
While early reforms emphasized the removal of trade and investment barriers, the current focus in Hainan is on enhancing the quality of institutions, digital transparency and effective governance. This shift reflects a broader strategic reorientation: China is not simply opening up but building the institutional architecture to ensure that openness is sustainable, rule-based and beneficial over the long term.
The future special customs model — characterized by a dual system of "first line" and "second line" supervision — is designed not to erode regulatory standards, but to balance deeper economic integration with domestic stability and social cohesion. This reflects a departure from traditional free trade approaches toward a more controlled yet flexible system tailored to China's development priorities.
Concrete socioeconomic trends attest to the seriousness of China's commitment to this model of openness. Over the past five years, Hainan has seen significant foreign capital inflows, with utilization of over 100 billion yuan ($14.2 billion) in foreign investment and the establishment of thousands of foreign-funded enterprises, involving investors from more than 170 countries and regions.
Underpinning these trends is the broad expansion of zero-tariff regimes. Under the new customs system, the number of tariff lines eligible for zero duties is expected to expand dramatically — from about 1,900 to roughly 6,600 tariff categories, representing approximately 74 percent of all tariff lines. These reforms will facilitate imports for processing and value-added activities, significantly lowering costs for enterprises and promoting trade liberalization across sectors.
In addition to tariff reforms, Hainan is introducing a negative list for cross-border trade in services, a simplified tax regime with flat corporate and personal income tax rates, and incentives that promote industrial upgrading and expanded service sectors, including tourism, retail and technology, according to media reports. These policies are intended not only to support trade, but also to deepen the island's role as a global investment, trade and logistics hub.
It is increasingly clear that Beijing views Hainan as a testing ground for institutional models that could later be scaled nationally or even offered as templates for international cooperation frameworks. The period of China's 15th Five-Year Plan (2026-30) will be crucial in marking the transition from preparation and experimentation to the role of a mature "gateway" — an active node in global production, logistics and service networks.
In this context, Haikou Meilan International Airport epitomizes not just a physical gateway but also a symbolic one that signals methodical preparation for a new era of openness and connectivity.
Hainan's reforms reflect a consistent pattern in China's development strategy: Domestic innovations in areas such as digitalization, standardization and governance are first trialed internally, and successful frameworks are then leveraged to shape China's international interactions. The island's meticulous preparation for its special customs regime illustrates this principle: first, institutional clarity and reliability; then, expansion of partnerships and deeper integration into global value chains.
This approach aligns with broader national priorities, including China's engagement with global trade agreements and international governance systems, and reinforces its commitment to contributing to and shaping global economic standards.
Ultimately, even being in a place where transformation is still unfolding can reveal much about a country's strategic direction. Sometimes national intentions are best understood not through slogans or grand proclamations, but through the sequence of actions, the architecture of emerging systems, and the careful layering of institutional design. Hainan today exemplifies this dynamic: It is a territory of anticipation, thoughtful planning and confident progression toward a new model of China's engagement with the world.
Through Hainan, China demonstrates that high-standard openness is not merely an economic strategy, but a practical and institutional commitment to shaping a more integrated, predictable and mutually beneficial global economic order.
The author is former director of the International Institute of Central Asia, former secretary-general of the Shanghai Cooperation Organization and former foreign minister of Uzbekistan.
The views do not necessarily reflect those of China Daily.
