The island province of Hainan, located in South China, is poised to bolster its status as a strategic trade hub while capitalizing on the opportunities presented by the Belt and Road Initiative, which is celebrating its 10th anniversary this year. Hainan’s transformation into a free trade port has played a pivotal role in its development, attracting foreign investment and fostering economic growth.
One noteworthy statistic reflecting the positive trend in Hainan’s development is the increase in the number of newly established BRI member foreign-invested enterprises during the first eight months of the year. This number experienced a notable 24.1 percent year-on-year surge, indicating a growing interest from foreign investors in Hainan.
Vice-Governor Bater of Hainan highlighted that foreign investment access and preferential tax policies are key factors that foreign investors consider when looking to invest. Hainan’s appeal in this regard is underscored by its remarkably low number of items on its foreign investment negative list, currently standing at just 27, the lowest in China. Furthermore, the province offers attractive tax incentives, particularly for businesses in industries encouraged by Hainan, such as tourism, modern services, and high-tech sectors. Companies in these sectors enjoy a preferential corporate income tax rate of 15 percent, and high-end talent is subject to income tax no higher than 15 percent of their gross income.
Hainan also extends support to enterprises through a preferential policy of exempting enterprise income tax on new overseas direct investment. This policy encourages businesses to increase overseas investment in Belt and Road partner countries, including Singapore, Indonesia, Malaysia, Vietnam, Cambodia, and others. This not only strengthens international market ties but also facilitates resource exchange between domestic and international markets.
Hainan’s investment in countries participating in the BRI continues to grow. In the first eight months of the year, Hainan added 49 overseas investment projects in these countries. The total foreign trade volume between Hainan and BRI countries reached 94.4 billion yuan ($12.9 billion), marking a substantial increase of 62.8 percent year-on-year. Such growth highlights the province’s commitment to fostering international trade relationships.
Bater further emphasized that Hainan has deepened bilateral exchanges and cooperation in various fields, with countries involved in the BRI accounting for about 80 percent of the total number of Hainan provincial leaders’ visits. The province has effectively leveraged international platforms for exchange, such as the Boao Forum for Asia, the China International Consumer Expo, and the Hainan Island International Film Festival. These platforms serve as opportunities for collaborative research, dialogue, exchange, and information sharing.
In addition to strengthening economic and trade ties, Hainan has also embarked on a range of people-to-people projects. Examples of such initiatives include the coconut planting demonstration park project signed between Hainan and the Federated States of Micronesia, which was included in the outcome list of the second Belt and Road Forum for International Cooperation in 2019. Additionally, the “China Hainan Cambodia Bright Operation” free ophthalmology clinic has provided eye screenings and surgeries for over 3,371 patients since its implementation in July 2016.
Looking ahead, Hainan is committed to expanding cooperation with Belt and Road partners, especially those in Southeast Asian countries. The province aims to establish itself as “two headquarters bases,” focusing on building a headquarters base for Chinese enterprises seeking international expansion and a headquarters base for foreign enterprises looking to enter the Chinese market. Hainan also aspires to become an international shipping hub for the New Western Land-Sea Corridor and a regional international aviation hub for the Pacific Ocean and the Indian Ocean.
Furthermore, Hainan is actively promoting the China-ASEAN (Hainan) cruise tourism connectivity demonstration project, with a goal of opening more tourism boutique routes connecting ASEAN countries and regions in the near future. These ambitious plans underscore Hainan’s commitment to becoming a key player in the Belt and Road Initiative, facilitating trade and cooperation between China and the rest of the world.
Explore more articles on Chinese economy or the Belt and Road Initiative.