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NovIn the backdrop of an international effort to restructure the global economic governance system, China's Hainan Free Trade Port serves as an illustration of what "high-level opening up" and deep institutional innovation looks like. As the only free trade port with Chinese characteristics, Hainan is not only a tropical island in the geographical sense, but also a "proving ground" where China's integration into the global economic and trade system and participation in rule-making is taking shape. The establishment of the free trade port brings together institutional openness and exploration in trade, finance, investment, data governance and other fields, which not only serves as the key for China to cope with the challenge of deglobalization, but also provides a vivid practical pattern for countries in the Global South to participate in governance in the digital age.
All-round 'proving ground': China's participation in the global rule-making
At a time when the global economic and trade rules are being restructured rapidly, conventional tariff reductions are not adequate to meet the governance needs of the emerging digital and green economies. What sets the Hainan Free Trade Port apart is its distinct customs model of "free flow at the first line and efficient control at the second line" – which translates as free flow of global goods, capital, talent, data and other elements, while maintaining national economic security via precise and effective supervision. This pattern of "paying equal attention to openness and security" is essentially China's active response to the global economic and trade rule-making game.
When it comes to trade, the Hainan Free Trade Port implements a policy of "zero tariff, low tax rate and simplified tax system" which means zero tariffs on production equipment imported for own use and transportation for the operation of an enterprise, and a maximum individual and corporate income tax rate of only 15 percent (lower than that of international free trade ports such as Singapore and Hong Kong). The Free Trade Ports will take the lead in implementing the "zero tariff" list covering three major fields: transportation and yachts, raw materials and accessories, and self-use production equipment. These policies are set to reduce operating costs for global enterprises, and promote the extension of trade in goods by implementing a management model of "negative list + pre-access national treatment."
In the financial sector, Hainan allows qualified foreign financial institutions to conduct securities, futures, funds and other businesses, and supports multinational companies in setting up global or regional fund management centers. Furthermore, the province is exploring an"electronic fence" supervision model for free and convenient cross-border capital flows. These explorations point directly to the balance between "capital account opening" and "risk prevention and control" in international financial rules, and have accumulated practical experience for China's participation in international financial governance.
Connecting with international high standards: digital and green trade with Chinese Characteristics
In terms of digital trade, Hainan relies on the institutional advantages of "safe and orderly flow of data" to build a dedicated channel for international Internet data and support the development of new formats such as cross-border e-commerce, digital content and offshore data centers. In fact, the Hainan Ecological Software Park is attracting global digital companies, allowing them to explore the "digital bonded" model for overseas data to be stored in specific regions, processed and exported in compliance with the country's regulations. It not only meets the needs of multinational enterprises, but also maintains the bottom line of security through "data classification and grading." So, this practice of "open innovation + precise supervision" is highly consistent with the rules on digital identity and non-discriminatory treatment of digital products under the framework of DEPA (Digital Economy Partnership Agreement), and provides empirical support for China to have a greater voice in future negotiations.
As to green trade, the design of the Hainan Free Trade Port integrates "dual carbon" principles. The Free Trade Port will take the lead in lifting restrictions on foreign equity in new energy vehicle manufacturing that would benefit carmakers like Tesla, building an international carbon emission trading center to explore the blue carbon (marine carbon sink) trading mechanism, and implementing "zero tariff" imports of green buildings and renewable energy equipment. These measures are expected to promote Hainan's own transformation into a "clean energy island," and embed the concept of green development into the global value chain.
The 'initiative move' against deglobalization: the strategic significance of independent customs operations
The context of deglobalization, which has been marked by the rise of unilateralism and protectionism, lends special weight to Hainan Free Trade Port's aims of "being well prepared for independent customs operation by the end of 2025." The phrase "special customs operations" means "free flow at the first-line" (namely independent customs clearance of global goods, funds and other elements) and "efficient control at second-line control" (routine supervision of goods between the Chinese mainland and the island). The essence of this institutional arrangement is to build an "open laboratory with manageable risks" for China during this turbulent period of global industrial and supply chain restructuring.
For the world, the Hainan independent customs operation will significantly streamline global resource allocation. It is expected to lower costs for enterprises entering the Chinese market, and make it easier to bring in high-end equipment, agricultural products, and energy resources for distribution throughout the Asia-Pacific region. Hainan will promote a "big rules" with "small incisions" strategy for global governance, which involves using the dynamic adjustment mechanism of its Free Trade Port's "zero tariff" list as a practical reference for the World Trade Organization's (WTO) "special and differential treatment in developing countries" reform.
More importantly, the institutional opening up of the Hainan Free Trade Port counters the traditional perception that "opening up is destined to be accompanied by loss of control." Through digital tools such as "smart supervision," "credit supervision," and "risk warning system," Hainan will achieve precise control of the whole chain of people, logistics and capital flow, and controlled risks to the minimum range while expanding opening up. This "balancing art of openness and security" provides an operational pattern for countries in the Global South to participate in international rule-making.
Therefore, the Hainan Free Trade Port is sending a clear signal to the world by putting institutional opening up to practice: China is not passively adapting to existing rules, but actively shaping new rules that redefine the international terms of engagement as a win-win development outcome rather than a zero-sum game. When the global governance system is facing a "trust deficit" and a "development gap," the Hainan Free Trade Port proves that through a higher level of institutional opening up, a more inclusive and more sustainable new international economic order could be built. This may be Hainan's most significant contribution to global governance – it is not only China's free trade port, but also a window for the world to observe China and understand governance in China.
（Gao Lei is an associate professor and research fellow at the Collaboration Centre for Theories and Practice of Open Economy, Center for Xi Jinping Thought on Opening-up, Research Institute of Globalization and China's Modernization, University of International Business & Economics. Xia Lu is a research fellow at the National Academy for Development and Strategy of Renmin University of China and deputy dean of the School of Marxism Studies at Xinjiang University. ）
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