Vice Director Wang Changlin of the National Development and Reform Commission stated at a State Council Information Office press conference that Hainan Province will officially open its borders on December 28, 2025. At that time, Hainan will implement a policy of “opening one line, controlling the second line, and allowing free movement within the island.” Essentially, Hainan will become a huge customs zone, but with relatively free trade within the island. The officials explained that the chosen date is because December 28, 1978, marked the start of the “Reform and Opening-up” policy (which was actually about accelerating the dismantling of the socialist economy through foreign investment).
I checked myself, and the so-called “opening one line” refers to more free trade between Hainan and outside China. The zero-tariff product list ratio on this “first line” increased from 21% to 74%, involving 6,600 tariff items. There will also be open arrangements for some goods that are nationally prohibited or restricted from import. Personnel from 85 countries can enter Hainan visa-free.
“Controlling the second line” mainly means that after the disappearance of Hainan’s tariff barriers, imported goods will have price differences compared to mainland products. To prevent speculation based on these price differences, tariffs are set from Hainan to the mainland.
However, to stimulate personal consumption in Hainan, the central government has provided an annual duty-free allowance of 100,000 yuan for ordinary consumers. For enterprises registered in the Hainan Trade Port, a 15% trade income tax will be levied. This tax rate is lower than Hong Kong’s rate (Hong Kong’s profits tax is 16.5% for limited companies and 15% for non-limited companies).
“Free movement within the island” mainly refers to reducing government intervention in economic activities within Hainan Free Trade Port, allowing various factors to flow relatively freely.
I don’t have much understanding of this aspect myself, and I’m not quite sure what the purpose of treating Hainan as a giant customs zone by the central government is.
I think it is very likely because the goods are seriously unsalable, and the depression is very severe. Implementing zero tariffs is actually not bad for Zhongxiu itself, because Zhongxiu’s industrial output value is first, and it has long become one of the top countries for goods export. In addition, the internal freedom and increased investment seem more like trying to attract investment through this means, attempting to solve the depression problem in this way. Because according to Keynesianism, investing one yuan will infinitely promote social and economic development (although in reality, investment leads to excess goods, and the people still cannot consume all these things).
However, it should also be related to the class struggle within Hainan. Why choose Hainan as the place to close the borders? This question still needs further research.
Hainan is a province designated as a special economic zone, and combined with the special date of the Reform and Opening-up Memorial Day, I think it has something to do with this.
It seems that this approach is intended to attract capitalists to invest in Hainan. Because after opening up Hainan’s tariffs, capitalists can easily import cheap foreign raw materials in Hainan, reducing production costs. Although other foreign goods can also be more easily imported into Hainan, with Zhongxiu’s current production capacity, there is no need to worry about domestic products being squeezed out. However, it seems that Zhongxiu’s approach is actually useless; currently, Zhongxiu has a large surplus of goods, and the Keynesian policy of promoting capitalists to invest and expand production to consume the surplus goods will only lead to even more excess goods and a more severe economic crisis.
The first result of this policy has already appeared, which is that housing prices in Haikou seem to have increased.
Then I checked the housing prices in Haikou, and the prices of new houses are rising, curbing the downward trend since the beginning of this year, but the downward trend of second-hand houses has not changed.
