Hainan's 80-day closure, people and money are flowing, a new life is surging forward

Spring 2026, for Hainan, not only signifies the revival of all things but also marks the full opening of a new era.

Since Hainan officially launched its island-wide customs closure on December 18, 2025, it has been 80 days. As a major measure of China’s comprehensive deepening of reform and opening-up in the new era, the effectiveness of the free trade port’s closure has attracted much attention.

On March 7, during the fourth session of the 14th National People’s Congress, at the open group activities of the Hainan delegation, Hainan Party Secretary Feng Fei summarized the overall operation of the closure over the past two months with eight words: “Stable and orderly, initial results evident.” He revealed that the island-wide closure is currently proceeding smoothly and steadily, with policy effects such as “free flow of goods, smooth travel for people, and concentrated traffic” gradually emerging.

From substantial breakthroughs in expanding the “zero tariff” policy, to improvements in residents’ sense of gain, and to the accelerated construction of the “45432” modern industrial system, Hainan Party Secretary Feng Fei, Governor Liu Xiaoming, and relevant department heads outlined a vibrant closure report to 63 domestic and foreign media outlets and 144 journalists.

Closure Effectiveness: “Expansion” and “Empowerment”

Regarding the initial results of the closure operation, Feng Fei summarized with two keywords: expansion and empowerment.

“Previously, everyone cared about whether it existed; now, more focus is on whether it’s good, wide, and effective.” Feng Fei said that the most direct change after the closure is the substantial expansion of the “zero tariff” policy. He explained that over 11,000 new entities have registered benefiting from the policy, the proportion of “zero tariff” goods in customs duty codes has jumped from 21% before closure to 74%, and the variety of goods has increased from over 1,900 to 6,600. This is not just a numerical increase but a profound mechanism reform—shifting from “positive list” management to a more open “negative list” management, injecting vast imagination into the market.

“Empowerment” is reflected in the cumulative effects of policy dividends. Feng Fei took the booming aircraft maintenance industry in Hainan as an example: “Repairing aircraft in Hainan is becoming a new choice for global airlines.” In the past, complex approval and deposit systems increased operational costs for airlines; now, a series of tailored policies such as duty-free inbound maintenance, bonded spare parts storage, and zero tariff on production equipment directly save foreign airlines 10% to 15% in overall costs.

“From the first Vietnamese aircraft maintenance order, to the completion of the Boeing 787 ‘heart surgery,’ and breakthroughs in ‘passenger-to-freight’ conversions,” Feng Fei told reporters that in 2025, over 2,400 flights were maintained in Hainan, with import and export values exceeding 100 billion yuan. “Hainan is building a global aviation maintenance hub with an efficiency of ‘halving maintenance cycles.’”

The warmth of policies is most felt by enterprises. At the tea break area of the Hainan delegation’s open group event, fragrant coffee was provided by Zhengda (Hainan) Xinglong Coffee. Huang Haiwen, the company’s administrative logistics manager, told reporters that this coffee is carefully crafted using imported coffee beans under the free trade port’s processing and value-added duty-free policies, and it won the 2025 International Gold Award.

“This policy upgrade can be summarized in one sentence: lower thresholds, broader scope, better algorithms, and greater dividends.” As a representative of a Sino-foreign joint venture, Huang detailed four highlights brought by the policy upgrade: removing restrictions on main business income proportion, lowering entry barriers; expanding imported raw materials from bonded goods to zero tariff goods, achieving dual benefits; including locally produced goods’ value in the value-added calculation to encourage “Hainan creation”; allowing upstream and downstream enterprises in the industry chain to “group together” for cumulative value-added.

“Imported raw materials and equipment enjoy zero tariffs, and processing value-added over 30% can still be duty-free for domestic sales.” Huang said this not only reduces corporate tax burdens but also, thanks to the system design of “opening at the front line, managing at the second line,” allows bringing high-quality global agricultural products to Hainan, processing them, and entering the mainland market duty-free, as well as connecting to global markets. Zhengda Xinglong Coffee is transforming from primary processing to deep processing and brand building, and the company is optimistic about Hainan’s post-closure development prospects.

How Can Fiscal and Tax Policies Unlock a Trillion-Yuan Market?

As the most closely watched component of the free trade port’s core policies, how will fiscal and tax policies evolve after the closure? Cai Qiang, member of the Hainan Provincial Government Party Leadership Group and Secretary-General, said that Hainan will continue to reduce the list of taxed goods, striving to increase the duty-free goods in customs duty codes from 74% to 90%, and ultimately move toward a simplified tax item list.

Cai Qiang explained that currently, there are 6,637 duty-free items in Hainan, with over 2,300 not yet included in the duty-free list. He said that most of these are consumer goods, widely distributed and affecting thousands of households, which raises higher requirements for anti-smuggling efforts. He revealed that in February, the first duty-free stores for daily consumer goods for local residents opened in Hainan, serving as a “pressure test” to see if they can be effectively managed and how much residents benefit. Cai Qiang indicated that the list of taxed goods will continue to shrink, with specific timelines still under discussion with the central government.

He also pointed out that current fiscal and tax policies have effectively stimulated market vitality. For example, a materials company imported 200 million yuan worth of lithium spodumene, saving over 30 million yuan in taxes, supporting raw material supply for lithium battery production; a tourism company introduced equipment worth over 38 million yuan for artificial wave creation, saving more than 8.6 million yuan in taxes, directly enhancing tourism experience; another collagen production enterprise benefited from the “15% corporate income tax” policy, reducing over 4 million yuan in corporate income tax annually, with the saved funds fully invested in R&D, leading to multiple technological breakthroughs and becoming a leader in the active peptide industry.

“Cai Qiang revealed that 2026 is the first full year after the ‘Fifteen Five-Year Plan’ and the first year of full operation after the closure.” He said that future fiscal and tax reforms will deepen, focusing on expanding the scope of “zero tariff” goods based on industrial development needs, and steadily advancing reforms such as sales tax reform to build a fiscal and tax system compatible with a high-level free trade port.

Island Resident Mr. Zhang’s “Shopping Cart” and the Government’s “Livelihood Ledger”

The changes brought by the closure are not only reflected in macro data but also in the tangible sense of gain for ordinary people. During the Spring Festival of 2026, the 21st Century Business Herald randomly interviewed several residents on the island, many expressed recognition of the benefits of the free trade port closure and held optimistic expectations for the future.

“Ultimately, building a free trade port is to let ordinary people live better lives.” Liu Xiaoming, Deputy Secretary of the Hainan Provincial Party Committee and Governor, used a hypothetical “Island Resident Zhang” to illustrate how policy dividends benefit people’s livelihoods.

“Mr. Zhang can buy milk powder and diapers for his children at duty-free stores; he can buy cosmetics and bags for his wife at offshore duty-free shops; he might find his favorite camera at the Consumer Expo; if family members need it, they can also use duty-free imported medicines at Boao Lecheng.”

Liu Xiaoming said this is just the “tip of the iceberg” of the benefits of the free trade port. He further explained how the government is transforming the “policy gold content” into the people’s “sense of happiness” across four dimensions: employment, education, healthcare, and housing. He noted that after the closure, the number of new enterprises increased by 43.6% year-on-year, effectively promoting high-quality employment; the “Study in Hainan = Overseas Study” brand effect continues to expand, with 26 domestic and foreign universities settling in the Lingshui Lian International Education Innovation Pilot Zone; with four national regional medical centers accelerating construction, the vision of “minor illnesses not entering the city, major illnesses not leaving the island” is gradually becoming a reality; and the unique housing security system in Hainan is helping residents shift from “housing to live” to “living comfortably.” “We will write the answers of the free trade port in the smiles of the people and in their sense of gain,” Liu said.

At the end of the Q&A session, Feng Fei once again extended an invitation to the world: “Choosing Hainan is choosing opportunity; investing in Hainan is investing in the future.” Data shows that over two months of closure operation, the number of inbound and outbound travelers at open ports increased by 35.1% year-on-year, and 51,000 new business entities were established.

Closure is not the end but the beginning of a new journey. On the road to building a Chinese-style free trade port, Hainan is surging forward with vibrant momentum toward a “new” strength.