50X bigger than Singapore: China bets on Hainan Island, plans for a free-trade gateway

Hainan, located in the South China Sea, is about 50 times larger than Singapore and nearly as big as Taiwan
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China has transformed Hainan into a vast free-trade zone, differentiating it from its existing 22 zones by treating the entire island as a single entity with unique customs and tax regulations.

At a time when major economies such as the US and parts of Europe are raising tariffs and tightening trade rules, China is moving in the opposite direction. Beijing has turned the entire island of Hainan into a free-trade zone, effectively making it a large, duty-free trading hub with its own customs and tax system, said a TOI report.

Hainan, located in the South China Sea, is about 50 times larger than Singapore and nearly as big as Taiwan. With this move, China has created what officials describe as the world’s largest free trade port by area.

What makes Hainan different

China already has 22 free-trade zones, but most of them are limited to specific cities or industrial clusters. Hainan stands apart because the entire island is being treated as a single free-trade port, with separate customs, tax and regulatory rules.

Under the new system, around 74% of imported goods are eligible for zero tariffs, up from about 21% earlier. This includes most industrial equipment and key raw materials, which could significantly lower costs for businesses operating on the island.

Chinese state media called the move a major step toward deeper economic opening, while China watchers have described it as one of Beijing’s most important trade decisions 2025.

For global companies, this creates a cost-saving route into the Chinese market. According to reports, products such as smartphones could become noticeably cheaper if routed through Hainan with some local processing.

In addition, authorities have promised faster customs clearance, fewer licensing requirements for industrial products, and simpler cross-border trade procedures.

Map: studycli.org/travel-china

Early signs of foreign interest

Foreign investment in Hainan has been picking up. Over the past five years, the island has attracted about $14.6 billion in overseas investment, with annual growth averaging nearly 15%. More than 8,000 foreign-funded companies from 176 countries and regions have set up operations there since 2020.

With global trade becoming more fragmented, Hainan represents China’s most ambitious attempt at liberalising trade in decades. Whether it succeeds will depend on how smoothly the rules are implemented and whether companies see long-term stability in the policy.

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