With the approval of the CPC Central Committee, the island-wide special customs operations of the Hainan Free Trade Port (FTP) will officially commence on December 18, 2025. In the 11th installment of Expert Talks on the Hainan FTP, reporter Wang Si sits down with Professor Cui Fan, Chief Expert at the China Society for World Trade Organization Studies and a professor at the University of International Business and Economics (UIBE), to get his insights.
Institutional opening up Brings stability and predictability Wang Si (W): On November 6, Chinese President Xi Jinping received a briefing on the progress of the Hainan Free Trade Port (FTP) in Sanya and delivered an important speech. He noted that the CPC Central Committee has decided that the Hainan FTP will officially launch island-wide special customs operations on December 18. Some have said that this initiative is the “crucial leap” for Hainan FTP in attaining the world's highest level of openness. What is your view on this? Cui Fan (C): I fully agree with that assessment; it truly is a “crucial leap.” In June 2020, the Overall Plan for the Construction of Hainan Free Trade Port was released, which clearly outlined a phased roadmap for building the Hainan FTP. In broad terms, there are three primary stages. The first stage will run until 2025, by which time the basic policy and institutional framework of the FTP, focusing on trade and investment liberalization and facilitation, will be established. Building on that, there are two further milestones: by 2035, the FTP's institutional framework and operating model should be more mature; and by the mid-century, a high-standard FTP with strong international influence should be fully established. Among these, a very critical step is the special customs operations starting December 18 this year, which is a key move in the initial establishment of the FTP's policy and institutional system. After the special customs operations begin, the share of goods categories subject to "zero tariffs" will jump from 21% to 74%. This is a substantive change and can be seen as an essential marker that the initial phase of the FTP's policy system has been established. In this sense, the change truly represents a “crucial leap.” W: In your view, how does Hainan's institutional opening-up differ from the previous “policy-driven” opening-up efforts? In advancing institutional opening-up, what unique historic mission has Hainan been entrusted with? C: The key to attracting foreign investment lies in stable institutions and a reliable business environment. As China's opening-up frameworks become more mature and our domestic market continues to expand, we need to transition from an opening focused on goods and factor flows to one that places greater emphasis on rules-based, institutional opening-up. For example, Hainan FTP's “dual 15%” rate cap on corporate and individual income tax is very different from the old “two-year exemption and three-year half-rate reduction” tax incentives for foreign enterprises. Hainan's new tax incentives are more institutionalized and long-term. A broad range of companies and individuals can all benefit from these incentives, making what was once a transitional policy a long-term, institutionalized one. This type of institutional opening-up makes the business environment more stable and predictable. C: The Hainan FTP shoulders a dual mission: to drive local development and to pilot new institutions for the country. Hainan is testing these high-level open policies, refining them over time. Eventually, it will also need to integrate with international rules, ensuring that our systems not only connect with global norms but are also compatible with them, maintaining mutual inclusivity. On the one hand, we must benchmark against the highest international standards. On the other hand, Hainan's experience will generate “Chinese solutions” that can contribute to international rule-making, help build an open world economy, and advance the liberalization and globalization of trade and investment under high-standard openness. Leveraging Hainan FTP's leading role to spur broader openness W: After island-wide special customs operations begin, in which fields do you think the Hainan FTP can take the lead in conducting “stress tests” and “pilot trials,” leaping from merely aligning with international rules to providing Chinese solutions for international rule-setting? C: In areas like government procurement, intellectual property, environmental standards and protection, and the digital economy, Hainan has plenty of room to further act as a pioneer, carrying out pilot reforms to advance high-standard opening-up. Especially in the digital economy, it is crucial to consider international rules, such as the Digital Economy Partnership Agreement (DEPA), which China is actively seeking to join. On the one hand, Hainan can leverage such international rules to boost the development of its own digital economy. On the other hand, the regulations that emerge from Hainan's practices can serve as a basis for China's participation in setting international rules and negotiating agreements. Hainan currently offers China's most open and preferential policy environment for the digital economy. In Hainan, companies and the government are continually exploring new digital-economy business models. These explorations are at the forefront nationally and have also laid a solid foundation for China to participate in formulating international rules related to the digital economy. W: The development of the Hainan FTP is a significant initiative in China's reform and opening-up. As its level of openness continues to grow, what important role will Hainan play in upholding the rules-based multilateral trading system and advancing economic globalization? C: The development of the Hainan FTP is not just about Hainan itself. More importantly, it has a demonstrative, leading effect that can drive higher-level open-up nationwide. The opening of the Hainan FTP is an initiative we have taken. Hainan's aim to establish a high-standard FTP with significant international influence will, in the process, further advance the liberalization of trade and investment nationally. In the long run, trade and investment liberalization and globalization align with the overarching trends of the global economy. By continuously raising its level of openness, Hainan not only leads the way for higher-level opening domestically, but also creates more opportunities for neighboring countries and regions, especially ASEAN nations. In this way, Hainan's leading and ripple effect works both at home and abroad. Integrating educational opening-up with Hainan's overall opening-up W: You once served on the Ministry of Education's drafting team for the Regulations on Chinese-Foreign Cooperation in Running Schools. The Hainan FTP permits high-caliber overseas universities and vocational colleges in the fields of science, engineering, agriculture, and medicine to establish independent campuses in Hainan. After island-wide special customs operations begin, how can the Hainan FTP better leverage its advantages to attract quality foreign educational resources to run joint programs in Hainan, and further polish its brand as an “International Education Innovation Island”? C: Hainan has made a significant breakthrough by allowing the establishment of independently run foreign educational institutions, which reflects the Hainan FTP's character of higher-level openness. In my view, the first step to building an International Education Innovation Island is to proactively bring in educational resources that align with Hainan's FTP development needs. Sectors such as healthcare and tourism are key components of the FTP's development. If the educational resources we introduce can be better aligned with these sectors, it will significantly benefit the FTP's development. It is crucial to attract various overseas educational resources. Meanwhile, we must remain committed to educating people with virtue and vigor. We ought to introduce China's realities to international students so that they can better understand our country and become important bridges for friendly cooperation between China and other nations. Indeed, some of those international students, after studying in Hainan, may even contribute to Hainan's development. Thus, opening up the education sector is a critical aspect of the Hainan FTP's high-level opening-up. In developing the Hainan FTP, we need to apply the new development philosophy, emphasizing innovation in educational models and technology (including the use of AI and other latest tools), and vigorously cultivating innovative talent to boost Hainan's scientific and technological innovation. In short, we must integrate the opening-up of education with Hainan's overall opening-up efforts.