Hu Cheng measures signals at the Yangpu Power Plant (COURTESY) 

Siemens Energy, one of the world’s leading energy technology companies, became the first foreign-funded manufacturer to establish a branch in Hainan and began construction of a gas turbine assembly base and service centre on 18 December 2025. 

The historic event took place on the first day of the Hainan Free Trade Port (FTP)’s island-wide special customs operation at the Yangpu Economic Development Zone in Danzhou City, northwest Hainan. 

Approximately eight km away, two Siemens V94.2 gas turbines, which had supplied power to Hainan for 30 years, were decommissioned as planned a month earlier. 

Behind this tale of gas turbines lies a three-decade-long journey of industrial upgrading and opening up. German giant Siemens has evolved progressively from an operation and maintenance service provider to a local smart manufacturer. Meanwhile, Yangpu has transitioned from being a testing ground that relied on large-scale development to a platform for high-standard opening up in the Hainan FTP. The two have witnessed each other’s transformation hand in hand. 

Power plant transition 

In 1992, the Yangpu Economic Development Zone was officially established, becoming China’s first national-level economic and technological development zone developed by foreign investors in a contiguous area and enjoying the benefits of bonded zone policies. 

The following year, the Yangpu Power Plant was registered as a Hong Kong-funded company. Facing Hainan’s weak power infrastructure and urgent energy needs at the time, the plant decided to import two Siemens V94.2 gas turbine combined cycle units to alleviate the electricity shortage constraining local development. 

“These were the most advanced gas turbines introduced into China at the time, and also the gas turbine units with the largest installed capacity,” said Hu Cheng, the power plant’s chief engineer. 

Over three decades, these two units, with a total installed capacity of 440 mw, cumulatively generated over 28.4 billion kwh of electricity. They underwent seven major overhauls and two significant upgrades, yet maintained stable operation throughout. At their peak, they bore approximately 40 percent of Hainan grid’s peak-shaving load, becoming central to the safe and stable operation of Hainan’s power grid. 

With the establishment of more power enterprises in the Yangpu area and the vigorous development of clean energy sources like wind and solar power, the role of these two turbines, once hailed as the “energy heart” of Yangpu, gradually diminished. In October 2025, after reaching their designed service life limit, the two units were shut down as planned. 

“It’s like seeing off an old friend who has completed his mission. There’s reluctance, but more than that, pride - in 30 years, these two turbines never once failed us or caused any trouble for the Hainan power grid,” Hu recalled. The years he spent with the units witnessed not only his personal experience of Yangpu’s transition from struggling with power shortage to establishing an optimised energy structure, but also the transformation of the land itself from a barren stretch to a modern industrial zone. 

From supplier to co-builder 

In 2020, the Master Plan for the Construction of the Hainan Free Trade Port was released, designating Yangpu as a pilot and demonstration zone for the port’s development. Yangpu took the lead in implementing a “free access at the first line, regulated access at the second line” system. Under this framework, the first line refers to the border between the Hainan FTP and all countries and regions outside China’s customs territory, for which a range of free and convenient entry-exit measures have been put in place. The second line refers to the border between the FTP and the mainland, where precision management is applied to items enjoying free access at the first line. This approach has created new opportunities for the area to experiment with institutional opening up. 

Siemens Energy was aligning its global strategy with comprehensive localisation under the principle of “in China, for China, and for the world.” This direction happened to align with Hainan’s goal of building a “clean energy island” and China’s “dual carbon” commitments. Yangpu’s planning in the field of intelligent equipment manufacturing caught the attention of Siemens Energy’s executives, leading to renewed discussions. However, initially, cooperation was confined to a “wait and see” approach. 

“A heavy-duty gas turbine involves tens of thousands of components, and at that time, not a single component could be locally produced in Hainan. The first questions that popped up were: how to guarantee the supply chain? Could the overall cost go up?” said Li Rui, deputy general manager of the Energy Development Department at Yangpu International. 

Hainan’s weak industrial foundation in high-end manufacturing at the time was the biggest obstacle to project implementation. What ultimately dispelled the company’s concerns were Hainan’s continuously improving business environment and the tangible policy dividends brought by the island-wide special customs operation. 

This included the shortest negative list for foreign investment access in China, China’s first negative list for cross-border trade in services, significantly relaxed market access restrictions, zero tariffs, preferential enterprise income tax, and establishment of the Yangpu China ship registry port. With the implementation of policies facilitating customs clearance, trade, and investment liberalisation and facilitation, Hainan is creating an efficient, stable and transparent development environment for global high-end manufacturing. 

On the first day of the special island-wide customs operation on 18 December 2025, Lars Voelker, general manager of Siemens Energy (Hainan), personally experienced how quick the process actually is. He successfully obtained the business licence for the company at the Yangpu government service hall - the process from application submission to licence printing took just one working day. 

The Siemens Energy gas turbine assembly base and service centre is the first foreign-funded manufacturing project in the Hainan FTP following commencement of the island-wide special customs operation. The base covers nearly 2.7 hectares of land, with a total built area of over 13,000 square metres. It is scheduled to be completed and operational by 2027, by which time it aims to achieve localised production of gas turbines in Hainan. 

This is not merely a production base but a comprehensive platform integrating high-end manufacturing, technological research, development and innovation, and offshore services. The base will primarily serve markets in Hainan and Southeast Asia, engaging in gas-fired power generation, offshore wind power and green hydrogen energy. “This marks a brand-new chapter in our cooperation,” said Joern Schmuecker, senior vice president of Siemens Energy. He said that this project aligns with the Hainan FTP’s goal of building a new hub for a high-level open economy. The company will contribute to building a high-end industrial ecosystem and promote energy transition in China and globally. 

“From the operation of the first Siemens Energy unit, to deepening service cooperation, and now to the landing of the gas turbine assembly base and service centre, I have witnessed Siemens Energy’s transition from a ‘maintenance provider’ to a ‘co-builder,’ and I’ve personally experienced Yangpu’s leap into an industrial cluster,” said Hu. 

He noted that this project will not only help to foster an advanced industrial ecosystem in Yangpu but also accelerate technological exchange and industrial upgrading in Hainan’s energy sector. 

Workers install a generator rotor at the Yangpu Power Plant (COURTESY) 

Demand for talent  

Launching a project is just the beginning; the long-term foundation for development lies in developing human resources and a complete, strong industrial chain. 

The arrival of Siemens Energy in Yangpu has attracted the attention of a number of upstream supporting enterprises - such as KOCEL, Anhui Yingliu Group, and Shenyang Instrument Transformer. A precision manufacturing ecosystem centred on high-end gas turbines is now taking shape. 

As the first overseas university officially approved to operate independently in China, the Bielefeld University of Applied Sciences has also made its home in Yangpu, and is set to welcome its first graduating cohort next year. Its practice-oriented education model is closely aligned with the industrial needs of the Hainan FTP, aiming to provide application-oriented expertise to enterprises. 

Amid this three-decade-long industrial transformation in Hainan, Hu has also undergone his own professional evolution. Starting as a front-line engineer, he grew into a technical expert and national model worker, and has now shifted his focus to talent development. 

At the training base established within the repurposed Yangpu Power Plant, Hu leads an innovation studio where he guides employees in overcoming technical bottlenecks, building capabilities in new energy and equipment adaptation, and preparing skilled individuals for the energy sector’s future. 

“We aim to make our technical backbone the core force supporting the development of clean energy,” said Hu. “Just like those two veteran power units: reliable, responsible and deeply rooted in this land.”