The $113 billion initiative–creating a customs regime distinct from mainland China–positions Hainan as a testing ground for deeper liberalization amid heightened U.S.-China tensions and slowing economic growth. The changes are seen as a litmus test for China’s ability to meet international trade standards, potentially affecting global supply chains and China’s bid for major free-trade agreements.
On December 18, China formally separated Hainan’s customs operations from those of the mainland, launching the Hainan Free Trade Port as its largest free-trade experiment to date, according to Reuters and others. The island, roughly the size of Maryland and home to nearly 10 million people, is now a distinct customs zone with tariff reductions, expanded duty-free categories, and business-friendly regulations.
