Analysis of Medium-Long Term Economic Impact of Hainan Free Trade Port Large-Scale Investment

Based on my research, I will analyze the medium- to long-term impact of large-scale investment in the Hainan Free Trade Port on the regional economy from multiple dimensions.

Although the specific investment scale of 113 billion USD was not explicitly mentioned in the search results, data shows that Hainan has actually utilized foreign investment of 1025 billion RMB (approximately 144.7 billion USD) over the past five years, with an average annual growth rate of 14.6%[1]. Currently, Hainan has attracted investment from 176 countries and regions, and growth is expected to accelerate after full customs closure and operation.

• Significant Expansion of Zero-Tariff Coverage
  : Increased from 21% to 74%, covering approximately 6,600 product categories, a notable rise from the original ~1,900 categories[1]
• Special Customs Supervision Model
  : The management model of “first line open, second line controlled, free inside the island” will bring institutional dividends[2]

The Hainan Free Trade Port focuses on developing four core industries[1]:

• Tourism
  : As a traditional advantageous industry, combined with duty-free shopping and the construction of an international tourism consumption center
• Modern Service Industry
  : Including high-end services such as international medical care and education
• High-Tech Industry
  : Focusing on emerging fields like seed science, deep-sea technology, and aerospace
• Tropical Characteristic High-Efficiency Agriculture
  : Leveraging Hainan’s unique geographical and climatic advantages

In 2024, Hainan’s duty-free shopping volume reached 309.4 billion RMB (42.4 billion USD), a year-on-year decrease of 29.3%, and the number of shoppers dropped to 5.68 million[4]. This reflects:

• Decline in consumer willingness under global economic pressure
• Shift from post-pandemic “revenge spending” to normalized consumption
• However, fully duty-free Hainan is expected to attract Chinese consumers back from competitors like Jeju Island in South Korea

China’s overall retail sales grew by 3.0% year-on-year in November 2024, lower than analysts’ expectations of 4.6%[4], indicating that consumption recovery still has a long way to go.

The Hainan Free Trade Port Law provides a stable and transparent legal foundation for investment, and enhances investor confidence by improving the international commercial arbitration mechanism[1].

Passport holders from 86 countries can enter Hainan visa-free, facilitating the flow of talents and tourists[1], which will promote the establishment of a knowledge innovation exchange center.

Against the backdrop of rising global protectionism and supply chain restructuring, Hainan, as an active testbed for deeper integration, demonstrates China’s commitment to promoting economic globalization and upholding multilateralism[1].

1. Economic Structure Optimization
   : Shift from reliance on real estate and tourism to a diversified modern industrial system
2. Enhanced International Competitiveness
   : Improve position in the global value chain through institutional innovation and opening-up policies
3. Regional Driving Effect
   : Serve as an important pivot of the Guangdong-Hong Kong-Macao Greater Bay Area and play the role of an engine for regional coordinated development
4. Leadership in Consumption Upgrade
   : Build an international tourism consumption center and promote the upgrade of China’s consumer market

Although large-scale investment in the Hainan Free Trade Port faces short-term market adjustment pressures, in the medium to long term, it is expected to achieve a fundamental transformation of the economic structure through institutional innovation, industrial upgrading, and opening-up policies. Measures such as the expansion of zero-tariff policies, special customs supervision models, and legal protection systems will bring sustained competitive advantages and investment attractiveness to Hainan, ultimately building it into a world-influential free trade port with Chinese characteristics.

[1] Eurasia Review - “Hainan Opens A New Frontier For Global Business – OpEd” (https://www.eurasiareview.com/16122025-hainan-opens-a-new-frontier-for-global-business-oped/)

[2] Markets Financial Content - “From Passersby to Visitors: Meilan Airport’s New Growth Path” (https://markets.financialcontent.com/wral/article/binary-2025-12-4-from-passersby-to-visitors-meilan-airports-new-growth-path)

[3] fDi Intelligence - “The top investors in global free zones” (https://www.fdiintelligence.com/content/60b5a4c1-eccb-469a-9bc8-c8851e28ef59)

[4] Business of Fashion - “Trouble in China’s Shopping Paradise as Hainan Duty-Free Spending Falls 29%” (https://www.businessoffashion.com/news/china/trouble-in-chinas-shopping-paradise-as-hainan-duty-free-spending-falls-29/)

[0] Jinling API Data