At a State Council Information Office press conference on July 23, Vice Chairman Wang Changlin of the National Development and Reform Commission stated that, with the approval of the CPC Central Committee, the customs closure of the Hainan Free Trade Port will officially commence on December 18, 2025.

 “Open at the first line, monitor at the second line, and ensure freedom within the island.” 

       The island-wide customs closure is the flagship project of the Hainan Free Trade Port (FTP) and a milestone move to further open up China. Under this regime, the Hainan FTP will operate on the principles of “open at the first line, control at the second line, and freedom within the island.”

Open at the first line: between the Hainan FTP and the rest of the world (outside China’s customs territory), goods, people, and transport will enjoy highly liberalized and convenient entry and exit measures.

       Control at the second line: between the Hainan FTP and the Chinese mainland, targeted oversight will be applied to the items liberalized at the first line.

Freedom within the island: factors of production—capital, goods, talent, and data—will circulate with relative freedom inside the FTP.

       For customs supervision, the overarching rules are:

       First-line imports: except for goods subject to statutory inspection/quarantine or license control, zero-tariff imports and bonded goods will be released immediately upon declaration.

       Second-line outflows: customs procedures are further streamlined—mandatory declaration items have been cut from 105 to 42.

“Closure” does not mean “closing the island.”

       Over the past five years, the Hainan Free Trade Port has become ever more open:

       Actually utilized foreign capital reached RMB 102.5 billion, an average annual increase of 14.6 %.

       Outbound direct investment totaled USD 9.78 billion, soaring 97 % per year on average.

       8,098 new foreign-invested enterprises were established, a yearly rise of 43.7 %.

       Merchandise trade and services trade grew 31.3 % and 32.3 % per year respectively.

       Investors from 176 countries and regions now operate in Hainan, pushing the province’s economic openness ratio to 35 %.

       Hainan offers the country’s most liberal visa-free policy—nationals of 85 countries may enter without a visa.

       After the closure, exchanges between Hainan and the rest of the world will become smoother and freer, while links with the mainland will remain convenient and efficient. Under the current closure design, only a small subset of goods moving from the Hainan FTP into the mainland will be subject to inspection; the vast majority of cargo and all people, personal items, and transport vehicles entering or leaving the island will continue to be handled under existing rules—nothing changes. Whether you are visiting Hainan on business or for a holiday, you will need no additional permits; everything works exactly as it does today.

  Sealing policy measures  

       Closure Policies in a Nutshell: “Four Greater Eases”

       Even more generous zero-tariff treatment
• The share of tariff lines enjoying 0 % duty on “first-line” imports will rise from 21 % to 74 %.
• Once on the island, zero-tariff goods can circulate duty-free among eligible users.
• If these goods are processed locally and achieve ≥30 % added value, they can enter the mainland tariff-free.

       Even more relaxed trade rules
• Certain goods that are banned or restricted nationwide will be granted open-market access when imported across the “first line.”

       Even smoother passage
• Eight existing open ports will serve as “first-line” entry points, allowing qualifying imports to sail through.
• Ten newly designated “second-line” ports (e.g., New Haikou Port, Haikou South Port) will offer multiple fast-track options for goods moving to the mainland.

       Even smarter, low-intervention oversight
• Zero-tariff and newly liberalized goods will be subject to precise, risk-based supervision, ensuring policies land smoothly.

       Compared with today’s regime, the zero-tariff net is dramatically wider. The current three positive lists cover roughly 1,900 tariff lines. After full closure, a short negative list will replace them, expanding duty-free coverage to about 6,600 lines—74 % of all tariff lines, an increase of nearly 53 percentage points.

       The pool of beneficiaries is also vastly enlarged: virtually every enterprise, public institution, or non-profit on the island with genuine import demand will qualify.

  Optimize the value-added tax exemption declaration policy for processing  

       Duty-free domestic sales of processed value-added goods constitute one of the cornerstone policies of the Hainan Free Trade Port. Compared with the current pilot scheme, the post-closure regime introduces four major optimizations:

       Lowering the eligibility threshold by removing the requirement that 60 % or more of a company’s revenue must come from encouraged industries.

       Broadening the scope of imported inputs eligible for the benefit.

       Refining the value-added formula so that the value of goods produced within the Hainan FTP itself is counted toward the added value.

       Extending the cumulative application of the value-added mechanism to more scenarios.

        Assistant Commerce Minister Yuan Xiaoming stated that, as planned, the Ministry of Commerce—together with other relevant departments—has formulated and released the “Negative List for Prohibited and Restricted Imports and Exports in the Hainan Free Trade Port.” For the first time, this list comprehensively and systematically spells out the scope of goods and items currently subject to nationwide prohibitions or restrictions, giving market players a clear and straightforward understanding of regulatory boundaries.

       The list eliminates import-licence requirements for 60 tariff lines covering used mechanical and electrical products—about 80 % of all such items under licence management—thereby satisfying most of Hainan’s in-house production needs. Building on existing policies for pilot free-trade zones and comprehensive bonded areas, the list also allows 38 tariff lines of products to undergo bonded repair in the Hainan FTP, achieving the highest level of openness nationwide in the bonded-repair sector.