Hainan and Hong Kong Forge New Pacts, Deepening Economic and Tourism Ties

HONG KONG – June 25, 2026 – A series of high-level promotional events held in Hong Kong have solidified the deepening economic and cultural partnership between the island province of Hainan and the global financial hub. Under the banner of "Sunny Hainan · Heart's Desire," leaders and industry titans from both regions gathered to map out a future of integrated growth, underscored by the signing of four major cooperation agreements and the immense opportunities presented by the Hainan Free Trade Port (FTP).

The events, attended by Hainan Governor Liu Xiaoming and Hong Kong Deputy Chief Secretary for Administration Cheuk Wing-hing, served as a powerful platform to showcase Hainan's transformation into one of the world's most open and dynamic investment destinations. The enthusiastic reception from Hong Kong's business and tourism sectors signals a new chapter in a collaboration that is rapidly evolving from a strategic vision into a tangible economic reality.

The Economic Engine: Hainan's Free Trade Port Policies

At the heart of the burgeoning partnership are the unprecedented policies governing the Hainan FTP. Since launching island-wide special customs operations on December 18, 2025, Hainan has operated as a distinct customs territory, a landmark move in China's high-level opening-up strategy. This framework is built on the principles of "zero tariffs, low tax rates, and a simplified tax system."

The zero-tariff policy is particularly transformative. With the new customs system, about 74% of all taxable items—over 6,600 product categories—are now exempt from import duties, VAT, and consumption tax when entering Hainan from abroad. This has had an immediate and dramatic effect, with zero-tariff imports soaring to nearly 2.65 billion yuan by the end of May 2026, a year-on-year increase of 120%.

Furthermore, a preferential 15% corporate income tax rate—compared to the standard 25% on the mainland—is attracting a wave of businesses in tourism, modern services, and high-tech industries. This is complemented by a crucial policy allowing tariff exemptions for goods that undergo substantial transformation within Hainan. If a product achieves 30% or more local added value, it can be shipped to mainland China duty-free. This rule is a game-changer for supply chain optimization, creating what one analyst called a "cost-buffer platform" for enterprises in the Greater Bay Area and beyond.

The tangible results are clear. At a related symposium, four new cooperation agreements were signed, covering high-end commerce, cultural-tourism integration, and regional industrial coordination. While specific parties were not disclosed, officials confirmed the deals reflect Hong Kong's strong interest in leveraging Hainan's unique advantages. This follows a trend where 793 new Hong Kong-funded enterprises were established in Hainan in 2025 alone, a 21.5% increase from the previous year.

Building a 'Living Circle' Through Culture and Connectivity

Beyond boardroom deals, the partnership aims to foster a vibrant "Hainan-Hong Kong Living Circle." This concept is built on seamless connectivity and rich cultural exchange, making travel and interaction between the two regions effortless. An average of four direct flights now operate daily, with carriers like Hainan Airlines and Cathay Pacific creating a sub-two-hour air corridor. Hong Kong Airlines is also slated to join the route, further enhancing mobility.

To capture the imagination of travelers, Chen Tiejun, Director of Hainan's tourism department, unveiled the "Top Ten Calling Cards of Hainan Tourism." These highlights go far beyond the island's famous beaches, promoting a diversified and modern tourism experience. The list includes:

• A global shopping paradise, fueled by offshore duty-free sales that reached 20.34 billion yuan in the first five months of 2026.
• Highly favorable visa-free policies for travelers from 86 countries, positioning Hainan as an accessible international hub.
• Unique marine, sports, and imaginative space tourism, tapping into new and emerging travel trends.
• World-renowned medical and wellness services, catering to the growing health tourism market.

These calling cards are being promoted through 46 tourism offices worldwide, part of a strategy to establish Hainan as a gateway for "one-journey, multiple-destination" tours across China. For residents of Hong Kong, this means a world-class vacation destination with a unique blend of natural beauty, cultural depth, and duty-free luxury is now just a short flight away.

A Strategic Blueprint for Regional Integration

The Hainan-Hong Kong collaboration is not happening in a vacuum. It is a core component of China's broader national strategy for regional integration and economic openness, designed to complement the powerhouse Greater Bay Area (GBA) that includes Hong Kong, Macao, and nine cities in Guangdong province.

Experts emphasize that Hainan's role is complementary, not competitive. While the GBA excels in high-end R&D and advanced manufacturing, Hainan offers an ideal location for intermediate production, logistics, and leveraging global supply chains under the FTP's favorable tax and tariff regime. This synergy allows companies to optimize their entire value chain across the region.

The Hainan FTP is also a pillar of China's "dual circulation" strategy, which balances domestic economic development with international trade. By benchmarking itself against global free trade ports like Singapore and Dubai, Hainan is being developed into a globally influential hub for trade, finance, and innovation by 2035. The steady issuance of offshore RMB bonds in Hong Kong, totaling RMB 18 billion over four years, further cements its role in international finance.

Real-World Impact and Future Outlook

The policies are already yielding dividends for international businesses. Italian-invested Hainan Zambon Pharmaceutical, for example, is using the zero-tariff policy on production equipment to cut costs and boost efficiency. Similarly, new market entrants like Singapore's Co+Nut+Ink dessert brand are using the FTP as their gateway into the vast Chinese market. This influx is reflected in the numbers: Hainan added 1,240 new foreign-funded enterprises through May 2026, a 37.6% year-on-year jump.

Residents are also beginning to see direct benefits. A policy introduced in February 2026 grants Hainan residents an annual duty-free shopping quota of 10,000 yuan for certain imported goods, improving quality of life and stimulating local consumption.

The economic intertwining is undeniable. Bilateral goods trade between Hainan and Hong Kong reached RMB 9.35 billion in 2025, more than doubling since 2020. As connectivity improves and the full scope of the Free Trade Port policies is realized, this partnership is set to become a defining model for regional economic synergy and high-level openness in the 21st century.