Hainan’s Free Trade Port: New Dynamics and Prospects of Key Industries

box-sizing: border-box; margin-top: 0px; margin-bottom: 1rem; font-family: Roboto, 微軟雅黑體, 'Microsoft JhengHei', 微軟正黑體, Arial, sans-serif; color: #1a1a1a; background-color: #ffffff;">As the Hainan Free Trade Port continues to develop1, the province is stepping up its efforts to open up its market and pursue more liberal trade policies. Industrial clusters are rapidly taking shape in industrial parks, the foundations of its real economy are being strengthened, and its industrial sector is continuously expanding. Currently, the island has 13 key industrial parks with diversified industrial development. In addition to the Yangpu Economic Development Zone2 cited in the previous article, the island has established industrial parks covering a wide range of industries, including high‑ and new‑tech sectors such as aerospace technology and software development. It has also set up industrial parks for various service categories, such as a medical tourism pioneering zone and an international education innovation pilot zone.

Indeed, the release of the catalogue has played a significant role in propelling the development of key industries and accelerating the construction of a modern industrial system. Since its implementation (once preferential treatment already granted to micro, small and medium‑sized enterprises and high‑ and new‑tech enterprises is excluded), more than 4,000 business entities have enjoyed a reduced enterprise income tax rate of 15%, bringing the proportion of all enterprises entitled to various preferential policies up to about 33%. More preferential policies are set to be rolled out.

The Catalogue of Encouraged Industries in the Hainan Free Trade Port (2024 Edition), which came into effect on 1 March 2024, specifies that in addition to those categories receiving encouragement under existing national industrial catalogues, Hainan will have 14 more industries receiving such treatment, creating a total of 176 types. These cover a wide range of manufacturing industries, wholesaling and retailing, transportation/warehousing, accommodation and catering, information transmission/software and information technology services, finance and other commercial services4. They are eligible for a reduced enterprise income tax rate of 15%.

Hainan is currently in great need of capital and talent to drive its industrial development. Hong Kong companies not only have a great deal of experience in international business and financial development (which can act as a reference for the Hainan Free Trade Port), they also possess global talent and financial resources in abundance. They should capitalise on resources available in the Hainan Free Trade Zone – such as land for all kinds of industries (key industrial parks) and R&D capability (in seed breeding and deep sea) – as well as its preferential policies to meet the needs of key industries for technologies and commercial services. They should also devise risk management plans to safeguard their business in Hainan, and could even consider seeking access to the wider mainland market via Hainan.