A new chapter in global trade and economic connectivity

On December 18, 2025, Hainan Province entered a new phase of international economic engagement with the official launch of the island-wide special customs operations . The term can sound technical, but the concept is straightforward.

This is not a closing of doors but an opening: a transformation into a free port comparable to Dubai or Singapore, with freer access to the outside world, regulated access to the Chinese mainland and free flow within the island. Hainan has become a special economic zone within China, offering zero tariffs, low tax rates and greater economic freedom, all while providing access to a consumer market of 1.4 billion people.

 The investment opportunities are substantial.

Corporate tax rates are significantly lower. Encouraged industries that are registered and substantially operating in Hainan pay corporate income tax at 15 per cent, compared with the national standard of 25 per cent. High-end and urgently needed talents are exempt from individual income tax on the portion exceeding 15 per cent of their actual tax liability. Under the new framework, eligible individuals are subject to a progressive tax rate of 3, 10 or 15 per cent on comprehensive income and business income. Production equipment, operational vehicles and raw materials for business use are essentially tariff-free under a negative-list management system. For oil and gas equipment, chemical plants and aviation components entering Hainan, this translates into significantly lower costs.

A particularly attractive provision applies to manufacturers. Industrial products processed in Hainan using imported materials, with a local value-added portion reaching or exceeding 30 per cent, enter the Chinese mainland tariff-free.

This policy holds special appeal for energy and chemical companies, agricultural processors and jewellery and food manufacturers. The Middle East is already a global centre for oil and gas. Hainan can serve as a trade, warehousing, processing and distribution hub for Middle Eastern oil, gas and chemical products entering China and the wider Asia-Pacific region. Imports to Hainan are tariff-free, and after processing with the required value addition, products enter the Chinese mainland tariff-free. The island offers itself as a value-added processing base for access to one of the world's largest consumer markets.

 Capital flows have become smoother than ever. Hainan's Electronic Fence(EF) accounts facilitate cross-border settlement, investment and fund transfers. The province also operates QFLP and QDLP programmes, enabling two-way investment. For Middle Eastern sovereign wealth funds, family offices and corporate groups, establishing investment entities in Hainan means enjoying the 15 per cent corporate tax rate and benefiting from tax exemptions on qualifying overseas direct investment income.

Whether the objective is investing in the Chinese mainland or making global asset allocations, the island offers exceptional convenience. Hainan is positioning itself as a bridgehead for Middle Eastern capital entering China and the broader RCEP markets.

 Aviation policy adds another dimension. Hainan has opened its seventh freedom traffic rights, allowing foreign airlines to operate routes from Hainan to third countries outside China. This presents a strategic opportunity for Middle Eastern carriers such as Emirates and Qatar Airways. Supporting policies include bonded aviation fuel, aircraft maintenance and bonded aviation materials, making Hainan well-suited for air cargo transshipment, aircraft repair and logistics distribution along the Middle East-Hainan-Southeast Asia-East Asia corridor.

For Gulf businesses, Hainan's Special Customs Operations are still in their early stages. The policy window is opening. The invitation is straightforward: come and see for yourselves, consider how your resources might combine with Hainan's policies, and assess the potential of a partnership that could prove exceptionally rewarding.

This episode is part of "Caravans, Dhows and Coconuts: The Silk Roads across Land and Sea," a series exploring the evolving ties between Hainan province and the UAE through culture, education, agriculture, technology and trade.