Chi Fulin: Hainan is becoming a "hotbed of openness" in the new era

On April 13, 2018, at the celebration of the 30th anniversary of the establishment of Hainan Province as a special economic zone, I listened to General Secretary Xi Jinping's important speech on site. General Secretary solemnly announced that the Party Central Committee has decided to support the construction of a free trade pilot zone throughout Hainan Island, and to support Hainan in gradually exploring and steadily promoting the construction of a free trade port with Chinese characteristics, and to establish a policy and institutional system for a free trade port in steps and stages. At that time, I was really excited. After the meeting, when I was interviewed by CCTV News, I didn't expect that I would choke for this, and it was hard to control my emotions for a while.

41 years ago, I started researching reforms at the Central Party School. 38 years ago, Xu Shijie, the then leader of the Hainan Provincial Preparatory Group, came to Beijing to find me and hoped that I would participate in the preparations for the establishment of the province in Hainan. 34 years ago, the China (Hainan) Reform and Development Research Institute was officially established. Along the way, I have witnessed Hainan, the "experimental field" of China's reform and opening up, increasingly painting the most beautiful picture and writing the best articles.

Today, I am also very excited. On December 18, 1978, the Third Plenum of the Eleventh Central Committee of the Communist Party of China launched the great journey of reform, opening up, and socialist modernization. On December 18, 2025, Hainan Free Trade Port officially launched the island wide closure operation, which has important symbolic significance in the overall reform and opening up of China and a milestone in the development history of Hainan.

Adapting to the strategic needs of China's high-level opening-up to the outside world

Adapting to the strategic needs of China's high-level opening up to the outside world, fully utilizing Hainan's geographical advantages as a transportation hub in the Pacific and Indian Oceans, and creating an important open gateway facing the Pacific and Indian Oceans, is the strategic goal of the central government in building the Hainan Free Trade Port, a major national strategy, and Hainan's historical responsibility. The closure and operation of Hainan Free Trade Port is a major measure to build an important open gateway for the country. This will enable Hainan to play an important and special role in serving China's promotion of regional economic integration and actively carrying out high-level regional cooperation and exchanges.

From 1988 to 1992, I served as the main person in charge of the Policy Research Office and Provincial System Reform Office of the Hainan Provincial Party Committee, and participated in several practices of reform and opening up in the early stage of the establishment of the Hainan Provincial Economic Zone. The establishment of Hainan Province as an economic special zone sends a signal that the country will create a special zone that is more "unique" than other special zones. In the initial difficult environment of establishing a provincial economic special zone, in accordance with the requirements of the State Council's Document No. 24 of 1988, which proposed that "Hainan's reform can have greater flexibility and establish a new system framework conducive to the development of the commodity economy, mainly through market regulation, under the guidance of the national macro plan," Hainan actively and boldly carried out several advanced reform experiments based on reality, accelerated the reform of the economic system, and basically formed the framework of the market economy system.

Against the backdrop of profound adjustments in the global economic, political, and security landscape, serious impacts on multilateralism and economic and trade order, and a significant increase in global economic uncertainty, the Hainan Free Trade Port has launched a full island closure operation on December 18th, sending another signal. This is not only a strategic deployment for the high-level opening up of Hainan Free Trade Port to the outside world, but also an important declaration to the international community that China will steadfastly promote high-level opening up, actively advance the process of free trade, and promote the construction of an open world economy.

Currently, whether viewed from the overall trend of regional cooperation or the demand for China's high-level opening-up strategy, supporting Hainan Free Trade Port to leverage its geographical advantages and accelerate the construction of an important open gateway to the Pacific and Indian Oceans is of great strategic significance. To serve the national strategic goal of building an important gateway for opening up to the outside world in the new era, the operation of the Hainan Free Trade Port's full island closure is aimed at accelerating the implementation of core policies and enhancing domestic and international confidence in China's firm promotion of high-level opening up and free trade; It is necessary to actively strengthen regional cooperation with the RCEP (Regional Comprehensive Economic Partnership) led by ASEAN, and create an important intersection point for domestic and international markets; It is necessary to actively connect with the world's highest level of openness and accelerate the creation of a new highland of institutional openness; It is to use institutional openness to drive institutional change, integrate and innovate institutions to create a globally leading business environment, and attract high-quality factors.

The closure is not the completion of the construction of Hainan Free Trade Port

Customs closure refers to the establishment of a special customs supervision area on the entire island of Hainan, and the implementation of a liberalization and facilitation policy system characterized by "opening up the 'first line', controlling the 'second line', and allowing freedom within the island". The closure is not the completion of the construction of Hainan Free Trade Port, but a new starting point for promoting a higher level of opening-up to the outside world. According to the Overall Plan for the Construction of Hainan Free Trade Port and the Hainan Free Trade Port Law of the People's Republic of China, it is necessary to gradually expand the coverage of "zero tariff" goods from 74% to over 99% on the basis of the existing "zero tariff" policy, and promote the formation of institutional arrangements for "low intervention, high efficiency, and free and convenient entry and exit of the vast majority of goods and commodities"; We should actively adapt to the new trend of restructuring international economic and trade rules, implement 10-20 negative lists for cross-border service trade, and promote the formation of a free and convenient system for service trade with the basic characteristics of "both access and operation"; On the premise of being able to control it, we should fully open up market access, accelerate the implementation of market access commitments, and promote the formation of institutional arrangements for investment freedom and convenience.

Freedom and convenience are the basic principles of closed door operations, and the important task is to make good use of the domestic market. This requires a bottom line of not reducing connectivity with the mainland, and further clarifying the relationship between "first line opening" and "second line management" in the specific practice of customs operation, forming a customs operation pattern where "second line management" better serves "first line opening". For example, after the island wide customs operation, goods from Hainan Free Trade Port entering the mainland through the "second line" will be considered as imports. This requires customs supervision in the "second line" field to attach great importance to preventing smuggling risks, implement precise classification supervision around "zero tariffs", and achieve effective connection with the "zero tariff" policy under regional free trade agreements such as RCEP; According to the requirements of the Hainan Free Trade Port Law of the People's Republic of China, "Goods with a certain proportion of processing value-added are exempt from tariffs", based on the existing policy upgrade, a differentiated processing value-added ratio of 10% to 30% will be formulated and implemented according to industry differences. Production service links such as research and development, design, transportation, and warehousing will be included in the scope of processing value-added, achieving overlap with RCEP rules of origin, and effectively implementing origin credit supervision for related goods.

Accelerate the implementation of core policies

Building Hainan Free Trade Port into an important gateway leading China's opening up to the outside world in the new era is the strategic goal of constructing Hainan Free Trade Port. We must firmly anchor this strategic goal, fully implement the overall plan for the construction of Hainan Free Trade Port, deeply implement the Hainan Free Trade Port Law, and establish a policy and institutional system that is compatible with high-level free trade ports.

To fully implement the overall plan for the construction of Hainan Free Trade Port, the top priority is to accelerate the implementation of core policies. This is an important measure to adapt to the trend and serve the overall situation, and it is a basic requirement for the substantive operation of Hainan Free Trade Port. Zero tariffs, low tax rates, and simplified tax systems are the core of the policy and institutional system of Hainan Free Trade Port, and are important conditions for achieving free and convenient trade, investment, cross-border capital flow, transportation, personnel exchanges, and secure and orderly data flow. Zero tariffs are not just a matter of tariff levels, but also a special institutional arrangement. Under this premise, other policies of Hainan Free Trade Port have important conditions for implementation. In terms of "low tax rate and simplified tax system", based on the previous exploration, we should follow the requirements of the overall plan for the construction of Hainan Free Trade Port and quickly expand the low tax rate policy to the Generalized System of Preferences. At the same time, create conditions to quickly promote the simplification of value-added tax, consumption tax, vehicle purchase tax, urban maintenance and construction tax, and education surcharge, and collect sales tax in the retail of goods and services.

From the practice in the past few years, the implementation of core policies directly relies on the special regional system arrangement of customs supervision for the operation of island wide customs closures. To establish the status of "customs supervision special area" through clear institutional boundaries and form a stable expectation of accelerating the implementation of core policies. At the critical juncture of customs operation, it is necessary to follow the requirements of "establishing and improving the Hainan Free Trade Port Customs Supervision Special Zone System for island wide customs operation" and achieve a smooth transition from a nationally unified customs supervision system to a customs supervision special zone system; In accordance with the requirement of the Hainan Free Trade Port Law to significantly reduce the tax burden level, individual income tax should be levied at three progressive tax rates of 3%, 10%, and 15%, with an innovative implementation of the "183 day" benefit requirement, and the transformation of corporate income tax from a special preferential policy to a universal institutional arrangement; In accordance with the requirements of the Hainan Free Trade Port Law, we must accelerate the reduction and reform of the tax system, and achieve a "simplified tax system". At the same time, it is necessary to implement positive list management for imported goods consumed by island residents as soon as possible, which will significantly enhance their sense of gain.

On December 24, 1987, on the eve of the establishment of the Hainan Provincial Economic Zone, I left the central government and set foot on Hainan Island. We had agreed to return to Beijing within two years, and in a blink of an eye, I had been in Hainan for nearly 38 years. From researching and discussing special tariff zones to proposing free trade ports and moving towards greater openness, this has been a main thread of my advice to Hainan for 38 years. The key to the development of an island lies in its openness; To play a strategic banner role in the overall reform and opening up of the country, it is more important to anchor the strategic goals of important open doors. Today, Hainan Free Trade Port finally landed. This is a once-in-a-lifetime historical opportunity for Hainan. At this significant historical opportunity, every person working and living in Hainan needs to make their own contribution to the better development of Hainan. It is believed that the closed Hainan Free Trade Port will become a hot spot for opening up, entrepreneurship and innovation in the new era of China. (The author is the President of China (Hainan) Reform and Development Research Institute and the President of Hainan Free Trade Port Research Institute)