The Hainan Free Trade Port (FTP) in south China is set to significantly expand its list of zero-tariff goods as part of the island-wide special customs operations, which is about to start on Dec 18.

Under the new taxation policy, Hainan FTP will expand its list of zero-tariff goods imports from 1,900 items, to over 6,600 items. With the launch of the special customs operation, products entering Hainan under zero-tariff policy will account for 74 percent of all taxable items, up from the current 21 percent.

Authorities will also extend the preferential 15-percent income tax rate for talents in high demand, as well as eligible companies investing and operating in Hainan, especially those in green energy, cutting-edge technology and modern services.

This new taxation system in the southern Chinese island province is built on the principle of "freer access at the first-line, regulated access at the second line, and free flow within the island."

It is seen as a major step to enhance Hainan's connectivity with the global economy. Freer access at the first-line allows Hainan to open up to international markets, enabling the flow of goods between the island and foreign countries.

Regulated access at the second line ensures that goods entering the Chinese mainland from Hainan are subject to domestic regulations, with additional duties applied as necessary.

Free flow within the island introduces more liberal trade and investment policies within Hainan, creating a highly favorable business environment.

Over the past five years, Hainan has utilized actual foreign investment of 102.5 billion yuan (14.47 billion U.S. dollars), with an average annual growth rate of 14.6 percent, attracting investment from 176 countries and regions. This positive trend is expected to gain more steam after Hainan begins special customs operations.

In recent years, Hainan's foreign trade has demonstrated strong growth momentum. In 2024, the total volume of Hainan's goods imports and exports reached 277.65 billion yuan -- up 20 percent year on year and nearly 200 percent from 2020.