Gantry cranes at Yangpu Port, Hainan Province, swung into motion as a cargo ship carrying soybeans from Brazil docked at the terminal on January 6. About four kilometers away, at a modern processing plant operated by Ausca International Oils and Grains Ltd., production lines were ready to turn imported crops into finished products. 

Raw materials sourced from across the globe are processed here before being shipped to markets across China and exported to more than 10 countries, including Japan and the Republic of Korea.

Yangpu Port in Hainan Province on January 16 (Duan Wei) 

For Ausca and a growing number of companies, the Hainan Free Trade Port (FTP) has become a place where China’s vast domestic market intersects with global supply chains.

That positioning has taken on new significance since December 18, 2025, when Hainan officially launched island-wide special customs operations, signaling a new phase in China’s only province-wide free trade port. Backed by looser trade controls, lower taxes and streamlined investment rules, the tropical island—roughly 50 times the size of Singapore by land area—is seeking to attract capital inflows and develop a modern industrial base.

Where China meets the world 

Ausca’s story illustrates how the model works in practice.

In June 2020, Ausca CEO Zhang Hui visited Yangpu for the first time. At that point, the Master Plan for the Construction of Hainan Free Trade Port had just been released, and Zhang quickly recognized the port’s potential. “Hainan has the domestic market at its back and the world in front. The growth potential is huge,” she told Beijing Review. Following her visit, the company swiftly made its investment decision.

Registered in August 2020 and operational by April 2021, 18 months faster than similar projects in other provinces, Ausca benefited from government’s streamlined approval process.

As the Hainan FTP’s island-wide special customs operations advanced, the policy dividends became even clearer. The company imports roughly 3 million tons of soybeans, rapeseed and other raw materials annually from countries including Brazil and Canada, all of which enjoy the zero-tariff policy. Centrifuges used to remove impurities from primary pressed oils also benefit from the same zero-tariff policy.

Currently under the zero-tariff policy, for eligible entities in the Hainan FTP, over 6,600 categories of product are exempt from import tariffs, import value-added tax and consumption tax.

Meanwhile, the processing value-added duty exemption policy implemented in the Hainan FTP enhances the competitiveness of enterprises in the domestic market. This policy stipulates that goods produced by enterprises in encouraged industries in the Hainan FTP, if they contain imported materials and achieve at least 30 percent value-added through local processing, are exempt from import tariffs when entering the mainland, with only import value-added tax and consumption tax levied according to regulations.

Under the processing value-added duty exemption policy, Ausca has saved an estimated total of 300 million yuan ($43 million) in import duties, Zhang said.

And tax incentives extend further. Companies registered and substantively operating in Hainan’s encouraged industries are subject to a 15 percent corporate income tax rate—lower than Singapore’s statutory 17 percent rate and well below the 21-percent U.S. federal rate, offering firms greater flexibility in allocating capital and production globally.

The impact is reflected in Ausca’s growth. The company’s output value rose from 1 billion yuan ($155 million) in 2021 to 7 billion yuan ($980 million) in 2025, Zhang said.

Ausca is far from alone. From December 18, 2025 to January 17, 2026, the number of businesses eligible for the “zero tariff” benefit increased by over 10,000. Imports under the policy reached 750 million yuan ($108 million), up 38.9 percent year on year. Thirty companies sold 85.9 million yuan ($12 million) worth of value-added products into the mainland market tariff-free, covering chemicals, medical devices, pharmaceuticals, food products and jewelry.

Companies are using Hainan’s institutional openness to tap both domestic and international markets. “Hainan has allowed us to truly operate within a dual-circulation framework,” Zhang said. “It has opened up a much broader market space.” Dual circulations refer to economic flows in both domestic and international markets.

Building a modern industrial system 

Attracting investment, however, is only the starting point.

Hainan’s longer-term ambition is to convert openness into a modern, future-oriented industrial system—one built not on short-term capital inflows, but on sustainable industrial clustering.

Haikou City, Hainan Province, on January 12 (COURTESY PHOTO) 

In an interview with China International Communications Group, Feng Fei, Secretary of the Hainan Provincial Committee of the Communist Party of China, outlined the vision: “Drawing on Hainan’s opening-up policies, natural resources and trends in technological and industrial transformation, we are strengthening, extending and upgrading four leading industries: tourism, modern services, the high-tech sector and tropical high-efficiency agriculture. We are also developing strategic emerging industries such as seed industry, deep-sea exploration, commercial aerospace, green and low-carbon initiatives and the digital economy. At the same time, we are cultivating future industries including bio-manufacturing, hydrogen energy, brain-computer interfaces and embodied intelligence. The goal is to build a modern industrial system that is advanced, distinctive and well-structured.”

The strategy hinges on differentiation.

Rather than competing head-on with established free ports, Hainan is positioning itself as a complementary node within China’s broader economic architecture and the global trade network.

Cross-border e-commerce offers one example. Instead of replicating domestic platforms, Hainan has built infrastructure tailored to international operations, including dedicated Internet lines, intellectual property (lP) protection measures for cross-border e-commerce, and more flexible offshore accounts and foreign exchange settlement arrangements.

Visa-free entry for citizens of 86 countries has further eased talent mobility, helping firms recruit foreign hosts and operators and overcome bottlenecks for companies expanding overseas.

The Hainan FTP’s development does not aim to replace existing international FTPs, but to expand the global network of such ports. Commentator Gao Peining of news portal China.org.cn noted that Singapore’s strength lies in its governance efficiency, shipping hub status and role as a gateway to Southeast Asia. Hainan, by contrast, anchors itself in tourism, modern services, hi-tech industries and tropical agriculture—a structural difference that underpins cooperation rather than competition.

That complementarity is already taking shape. Singaporean firms including CapitaLand have launched logistics parks and smart city projects in Hainan, exporting management expertise and global networks, while leveraging Hainan’s policy experimentation space and access to China’s market.

Industrial clustering follows a market-driven logic of “attracting firms through firms.”

On December 18, 2025, German industrial giant Siemens Energy broke ground on a gas turbine assembly base and service center in Yangpu, establishing Siemens Energy (Hainan) Co. Ltd. It is the company’s fircst gas turbine assembly and service center in China.

Gas turbines play a pivotal role in stabilizing renewable energy grids, supporting wind and solar integration—aligning closely with Hainan’s ambition to build a “clean energy island.” The facility is expected to serve markets in Hainan and Southeast Asia, covering gas power, offshore wind and green hydrogen.

“This marks a new phase in our cooperation,” Joern Schmuecker, Senior Vice President, Gas Services Central of Siemens Energy told newspaper Hainan Daily, adding that the company aims to support both China’s and the world’s energy transition.

Local officials see the project as a catalyst. “Serving Siemens well means serving its entire supply chain,” said Chen Qi, Deputy Director of the Investment Promotion Bureau of Yangpu, “That’s how we attract more global players.”

Alongside this industrial drive is a focus on establishing legal certainty and meeting international standards, especially in the realm of intellectual property protection.

Hainan has moved to strengthen IP protection across different sectors, treating domestic and foreign entities equally and cracking down on infringements. In 2025, the island province recorded the highest growth nationwide in its IP development index.

“Hainan is proactively aligning with high-standard trade rules, introducing 20 action measures under the Regional Comprehensive Economic Partnership (RCEP) and 16 measures for deepening cooperation with RCEP member states. (The RCEP is a free trade agreement among 15 Asia-Pacific nations, creating the world's largest trading bloc by economic size—Ed.) We are also piloting alignment with rules under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, accelerating the development of internationally compatible frameworks in areas such as IP protection and fair competition. Protecting IP in accordance with the law is a key priority and firm commitment of the Hainan FTP,” Feng said.

The numbers suggest momentum is building. Twenty-two Fortune Global 500 companies have established a presence in Hainan. To date, 131 headquarters or regional headquarters of enterprise have been established in Hainan, and the province has received investment from 180 countries and regions. From December 18, 2025, to January 17, the province added 26,800 new business entities, while newly established foreign-invested firms rose 13 percent year on year.

Together, these trends point to a shift underway—Hainan seeks to move beyond being a magnet for capital and toward becoming a durable industrial hub at the crossroads of China and the global economy.