Hainan is where China tests its next opening model

Hainan Free Trade Port officially entered “sealed-operation” status in December 2025. For China, this is not simply the launch of another free trade zone, nor a return to tax incentives. Rather, it represents a forward-looking institutional experiment taking place at a time when China’s domestic transformation and global economic shifts are happening simultaneously.

For the past four decades, China’s development relied heavily on attracting investment, expanding exports and integrating into global value chains. That phase enabled rapid industrialisation and large-scale urban growth. But as China enters a stage of high-quality development, its main challenges are no longer labour shortages or capital gaps, but issues related to institutional design, technological innovation and restructuring global economic relations.

It is against this background that Hainan has been repositioned. It is intended to become a testing ground for “institutional opening” — a space that can handle high-level stress tests in areas such as data governance, intellectual property, digital economy, finance, talent movement and alignment with high-standard international trade rules. These are reforms that most Chinese regions cannot implement independently, but Hainan’s whole-island free trade port model makes such experimentation possible.

Seen from the outside, it is easy to compare Hainan with Hong Kong, Singapore or Dubai. But these comparisons often underestimate the complexity of China’s current development environment. Today’s global trade patterns are changing; supply chains are becoming more regionalised; geopolitics is affecting technology, finance and energy; and Global South economies are emerging as new growth sources. Under such conditions, China cannot simply repeat past opening strategies. It needs new forms of global connections that combine institutional compatibility, technological collaboration, green development and South-South cooperation. Hainan provides a platform to explore exactly these possibilities.

At its core, Hainan Free Trade Port is not about offering favourable tax terms or relaxing regulations. It is about constructing a future-oriented ecosystem of openness — from data flow rules and intellectual property (IP) protection to research collaboration, financial connectivity, and cross-border talent mobility. If successful, Hainan could shape how China engages with the world in the next few decades.

This brings us to a part of the story that is often overlooked: the relationship between Hainan and Singapore. Far from being substitutes or competitors, the two actually possess complementary strengths that fit the regional landscape shaped by the Regional Comprehensive Economic Partnership (RCEP), the rise of ASEAN economies and ongoing supply chain restructuring.

Singapore has long served as a global resource allocation hub, supported by strong rule of law, financial services and international governance capabilities. Hainan, in turn, sits behind the world’s second-largest economy, with a complete industrial system, growing innovation capacity and a large domestic market.

This complementarity opens up practical opportunities for cooperation. In third-party markets in Southeast and South Asia, Chinese firms bring industrial and infrastructure capacity, while Singapore offers financial structuring, legal frameworks, and project governance — a combination that can make regional cooperation more commercially viable. In digital trade and data governance, both sides are exploring new rules, suggesting room for institutional linkage in the future. In education and research, Singapore’s mature internationalisation model aligns with Hainan’s ambition to bring in global innovation resources. From this angle, Hainan’s rise does not marginalise Singapore; instead, both can benefit by enlarging the regional economic pie.

Seen through a broader global lens, Hainan is not a local policy experiment but an institutional response to what many call the “post-WTO” phase of globalisation. Future globalisation will not only be about goods trade; it will be shaped by technology, supply chains, green transition, finance and talent flows. Hainan is trying to explore what an upgraded model of openness might look like — one that maintains compatibility with international norms while serving domestic innovation and industrial upgrading.

Of course, challenges remain. Institutional innovation requires legal stability, competent governance, talent ecosystems, cultural openness and professional services that facilitate internationalisation. Research and innovation need time, capital and stable expectations. None of this will happen overnight. But China’s reform history shows that many important institutional breakthroughs start small and slow, before becoming structural. Shenzhen in the early 1980s was seen as a risky experiment rather than a guaranteed success — yet it became a major node in China’s industrial and tech ecosystem. Hainan should also not be judged solely by short-term GDP numbers.

For regional observers and media, the key question about Hainan is not whether it can “catch up with” or “replace” anyone, but how it signals a shift in China’s opening logic — from element-based opening to institutional opening, from investment competition to ecosystem building, from one-way capital inflow to two-way cooperation and from old globalisation to new globalisation. The outcomes will influence both China’s next phase of opening and the depth of Asian economic collaboration.

In this sense, Hainan Free Trade Port has already become a valuable window for understanding China’s institutional evolution and Asia’s emerging economic landscape. Its full meaning may not be visible immediately — but the next decade will reveal much more.

Related: Hainan Free Trade Port: A game changer? | Hainan Free Trade Port: Replacing Hong Kong?