Hainan FTP's independent customs operation set to boost market vitality

The launch of an independent customs operation in the Hainan Free Trade Port by the end of this year will substantially reduce business costs, stimulate market vitality and boost free trade at the port, senior government officials said on Wednesday.

They also said the move will introduce comprehensive trade and tax liberalization measures aimed at attracting investment, expanding foreign trade and promoting service-oriented sectors and industrial development in the free trade port.

Speaking at a news conference in Beijing, Wang Changlin, deputy head of the National Development and Reform Commission, said the policy will be implemented at the free trade port on Dec 18, following approval from the Communist Party of China Central Committee.

The island-wide independent customs operation refers to the establishment of a designated area, under the special supervision of customs authorities, that covers the whole island of Hainan.

Wang said that aside from certain goods entering the hinterland from the Hainan FTP that require inspection, most goods, as well as all personnel, items and means of transportation, will remain under existing regulations.

"Chinese residents traveling to the Hainan FTP for business or tourism will not need to obtain any additional documents," he said, adding that citizens of a total of 85 countries are currently eligible for visa-free entry into Hainan province.

After independent customs operations begin, imported zero-tariff goods will be managed under a negative list system in the Hainan FTP, with the list of taxable imports replacing the previous list for zero-tariff items, said Liao Min, vice-minister of finance.

The scope of zero-tariff goods will expand from the current 1,900 tariff lines to about 6,600, covering about 74 percent of all tariff lines — an increase of nearly 53 percentage points compared with the level before the policy's implementation, he said.

Under the new policy, eight ports will operate as first-tier entry points, enabling expedited clearance for eligible imports, while 10 second-tier ports will handle the flow of goods entering the Chinese mainland.

Products from encouraged industries in the Hainan FTP that undergo at least 30 percent value-added processing will be exempt from tariffs when entering the mainland.

Wang Lingjun, vice-minister of the General Administration of Customs, said that later this year, the threshold for enjoying the value-added policy will be lowered and its coverage broadened, better meeting the production needs of local manufacturers and fostering the development of industrial chains and clusters.

Amid rising global protectionism and anti-globalization trends, Yuan Xiaoming, assistant minister of commerce, said the Chinese government will focus next on enhancing the Hainan FTP's role as a gateway for high-level opening-up and aligning it with international trade rules through institutional innovation and pilot reforms.

The Ministry of Commerce will support the Hainan FTP's development by establishing open platforms such as the island-wide pilot free trade zone and cross-border e-commerce zones, while introducing targeted policies to foster industrial clusters, enhance trade innovation and drive the growth of emerging industries and business models.

Foreign companies are already responding to the new policies. Among them, Club Med, a France-based global travel and lifestyle brand, plans to open new resorts in the Lingshui Li autonomous county of the Hainan FTP as part of its upcoming expansion.

"We are optimistic about China's growth potential, and the country has become our second-largest source market today," said Andrew Xu, Club Med's global deputy CEO and CEO for China.

With the government continuing to refine its offshore duty-free shopping policy in the Hainan FTP to better meet diverse consumer needs, Joanne Crevoiserat, CEO of Tapestry Inc, a United States-based luxury goods group, said the company established its China travel retail headquarters in Hainan in 2022 and sees strong potential for long-term growth, expecting increased sales in the international tourism and shopping hub.