00:01Once known as a tropical paradise, Hainan is redefining its role in Asia's economic landscape.
00:09For decades, Hainan's economy was driven by tourism.
00:13Visitors flocked to the southernmost province of China for its beaches and resorts,
00:19making it a popular holiday destination.
00:22Today, Hainan is China's first free trade port,
00:26embracing reforms that open trade, attract investment and field innovation.
00:33With broader zero-tariff access, lower taxes and a business-friendly environment,
00:39Hainan is China's latest economic experiment.
00:50Firstly, I must clarify that the Hainan Free Trade Port
00:54is not a port project like PKSZ,
00:57and it's also not a special economic zone like the Johor Singapore SEZ.
01:03It is China's flagship initiative for deep institutional reform,
01:09aiming at a greater unilateral liberalisation,
01:13and a greater openness, a higher level of openness through trade and investment facilitation and liberalisation,
01:22a low-tech regime, efficient factor mobility, integrated institutional innovations,
01:29and a rules-based business environment anchored in the Hainan FTP law.
01:34This law gives them more autonomy to set investor-friendly policies.
01:41Since 18 December 2025, Hainan has operated under island-wide special customs operation,
01:47effectively functioning as a free trade port,
01:51enabling a high level of openness in goods and services trade, regardless of FTA status.
01:57And it's supported by zero-tariff on 74% customer's tariff line,
02:04a double 15% policy for selected sectors and scarce talent,
02:08and a streamlined tax system.
02:11The Hainan Free Trade Port comes with a set of liberal and open policies on tariffs,
02:17taxation, investment, capital flows, services, and visas.
02:21Under the rules, most foreign goods can be imported into Hainan with zero tariffs.
02:28But these goods will be subjected to China's normal tariff rates
02:32when they enter into the rest of the Chinese market,
02:35unless sufficient value-added processing is done.
02:38This encourages companies to import raw or semi-finished goods into Hainan
02:44and process them locally.
02:46In addition, foreign firms can also operate in service sectors
02:50that are normally restricted on the mainland, such as healthcare and education.
02:56I think China has 22 free spatial economic zones,
02:59and these are all the zones that try to see how China can integrate better into the world.
03:04For Hainan Free Trade Port, I think the difference, as I said, is more like the scale,
03:10because it's an island-wide special customs operation.
03:15It's the whole island involved.
03:15And then the tariff, the coverage is so big.
03:22And then it's not only opening up in the sense,
03:25but it's also a chance for China to test a new development model,
03:30how China can better integrate into the world economy.
03:33So from previously just based on maybe cost advantage, cost competitiveness,
03:38offering preferential incentive, etc.
03:42But now China wants to see how they can build and attract people to come
03:46because they are confident with their institutions,
03:48confidence with the business environment that they are creating,
03:52and also confidence with the connection with the local market, etc.
03:56Beyond trade, Hainan is also building an innovation-driven economy.
04:02Hainan's economy is mainly driven by four key economic pillars
04:08that together contributed nearly 75% of its GDP.
04:13Tourism remains the largest contributor,
04:16receiving about 100 million travelers in 2025,
04:21contributing to about 30% of its GDP.
04:25I believe it will be further boosted by the visa-free policy
04:29for travelers from 86 countries.
04:32And the next key pillar is high-efficiency tropical agriculture,
04:36where Hainan has been playing a national role in seed innovation
04:42through the project known as the Southern Breeding Nan Fund,
04:47where more than 70% of China's new crop varieties are developed in Hainan,
04:55in areas centered in Sanya, Ningsui, and Letong,
04:59which is often known as the Silicon Valley for seed technology.
05:03In Mandarin, we call it Nanfanguiku.
05:06So the remaining pillars include modern services,
05:09such as finance, exhibition, medical tourism, logistics, trade and cruise,
05:16and yacht industry, and also professional services,
05:20alongside the digital economy.
05:23And the fourth key pillar is high-tech industries,
05:27such as biopharmaceutical in Boao Lechen,
05:31and aerospace industry in Wenchang,
05:34and also the blue economy,
05:36where China's deep-sea resources are largely located in Hainan.
05:41Hainan is strategically located along major shipping routes,
05:45playing a role as a bridge between China and the world.
05:49There is growing potential for collaboration,
05:52especially those with strong manufacturing and logistics capabilities.
05:57To really excel or to develop Hainan Free Trade Port,
06:01I think besides government support, strong government support,
06:05they also need to have their policy, their ways to attract people.
06:08I think talent is the most important part of everything.
06:13How to attract people to go there,
06:15how to attract industry to go there.
06:17But I think China, this time, through the Hainan Free Trade Port,
06:20is not depending so much on the preferential policy.
06:23It's not really providing incentive,
06:25but rather than try to build the industry best.
06:29So technological-wise, I think Hainan may need to actually see
06:34how they can leverage the resources.
06:35So that's why partnerships with the neighboring countries in the region,
06:39I think it's very important for Hainan to really see the potentials.
06:43It has the potentials, but it also faces many current challenges.
06:47It needs to really think about how it can leverage with the partners,
06:51also how Malaysia, how ASEAN countries can play a role in the development.
06:57In the next episode, we will explore how the Hainan Free Trade Port
07:02shapes trade flow in Southeast Asia,
07:04and where does Malaysia fit in.
07:07The Hainan Free Trade Port
07:08I'm Dr. Goucault,
07:08I'm Dr. Goucault.
07:10I'm Dr. Goucault.
07:11I'm Dr. Goucault.
07:12I'm Dr. Goucault.
07:12I'm Dr. Goucault.
07:16I'm Dr. Goucault.
07:17You
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