The launch of island-wide special customs operations at South China's Hainan Free Trade Port represents a major strategic initiative by China to advance high-level opening-up in the new era. It carries profound historical significance and presents broad development opportunities. This strategy aims to build it into a prominent banner and a key gateway for China's opening-up in the new era. Its objectives extend beyond economic growth, encompassing the broader mission of comprehensively deepening reform and opening-up and building a new system for an open economy.

Historical significance

First, it establishes a new benchmark for China's high-level opening-up.

Hainan FTP is China's first free trade port aligned with the highest international standards of openness. It operates under a special regulatory framework featuring "liberalization at the first line, effective control at the second line and freedom within the island". The island-wide special customs operations mark a qualitative leap in China's openness across trade, investment, capital flows, personnel mobility, transportation and data flows. They serve as both a "testing ground" and a "stress test" for building a higher-standard open economic system.

Second, it functions as a stress test for China's move to deepen institutional opening-up. Institutional innovation lies at the core of Hainan FTP. Bold explorations are being conducted in areas such as cross-border data flows, cross-border finance, tax reforms (including low tax rates and a simplified tax regime), and the rule of law (such as the Hainan Free Trade Port Law). These efforts will generate experience for China to participate in and help shape international economic and trade rules, while providing replicable and scalable models for institutional opening-up nationwide.

Third, it serves as a strategic pivot for the new "dual circulation" development pattern, in which domestic and overseas markets reinforce each other, with the domestic market as the mainstay. Located at the intersection of China and Southeast Asia, Hainan FTP will — after the recent launch of island-wide special customs operations — become a key hub linking the domestic and international markets. It will be better positioned to attract high-quality global factors of production while promoting domestic consumption upgrading and industrial transformation, thereby playing a unique role in supporting the domestic circulation and connecting domestic and international circulations.

Finally, it contributes to exploring an FTP development path with Chinese characteristics. The development of the port is not a simple replication of foreign models. Instead, it integrates China's national conditions and development stage to explore a new pathway toward building the world's highest level of openness under a socialist system. While promoting economic growth, it also undertakes comprehensive missions including ecological civilization construction, rural revitalization and common prosperity.

Development opportunities

First, industrial opportunities in Hainan FTP are concentrated in three major areas. One is modern services, where sectors such as cross-border trade, international shipping, aviation hubs, modern finance, professional services (including legal, accounting and consulting), healthcare, education and culture are expected to experience rapid growth. The second is high-tech industries. Leveraging policies that enable secure and orderly data flows, it can develop frontier industries such as the digital economy, biomedicine, new energy and aerospace technology. The third is tourism and consumption. With the goal of becoming an international tourism and consumption center, sectors including duty-free shopping, medical tourism, exhibitions and sports events, cruise tourism and yachting services hold enormous potential.

Second, opportunities for enterprises and individuals in Hainan are expanding. Local enterprises can benefit from highly competitive tax policies (such as corporate and personal income tax incentives), freer cross-border capital flows, more convenient cross-border trade arrangements and broader market access.

Third, Hainan FTP creates new opportunities for regional and international cooperation. Hainan is set to become a key node linking China with members of the Regional Comprehensive Economic Partnership, particularly member states of the Association of Southeast Asian Nations. At the same time, it is expected to develop into an aviation and shipping hub facing both the Pacific and Indian Oceans, as well as a regional financial services center and an international trade center.

Singapore ties key

Comparisons between Hainan FTP and Singapore largely reflect expectations for Hainan FTP's development vision and objectives, rather than a simple competitive relationship. The two can achieve a "flying side by side" symbiotic relationship mainly in the following aspects.

First, it involves complementary positioning and differentiated development.

Singapore is already a mature global financial, shipping and trading center, as well as a hub for multinational headquarters. Its core competitiveness lies in its highly developed rule of law, financial system, professional services and efficient governance. Hainan, by contrast, is an "emerging growth pole" and "China's market gateway". Its key advantage lies in its proximity to China's vast domestic market, with enormous potential in consumption, domestic demand, application scenarios and institutional innovation experiments. Hainan places greater emphasis on becoming a new hub linking China with the world, particularly by exploring new rules in areas such as goods trade, data trade and the green economy.

Second, there remains broad potential for cooperation. With a focus on aligning rules and standards, Hainan FTP can learn from Singapore's advanced experience in financial opening-up, digital economy governance, intellectual property protection and dispute resolution mechanisms. In terms of industrial chain collaboration, Singapore's multinational headquarters, financial institutions and professional service providers can support enterprises investing and operating in Hainan. The two sides also have significant cooperation potential in green finance, cross-border data flows, maritime services, aircraft maintenance and healthcare. In addition, they can jointly explore third-party markets, collaborate under the Belt and Road Initiative, and develop Southeast Asian and broader regional markets together.

Third, this is not a "zero-sum contest". The Asia-Pacific region is large enough to accommodate multiple successful economic hubs. Singapore's success demonstrates the value of openness and the rule of law, while Hainan's success will demonstrate the opportunities of the Chinese market and the vitality of institutional innovation. The two can form a positive interaction characterized by "experience sharing, market complementarity, rule-based dialogue and coordinated development".

In conclusion, the island-wide special customs operations at Hainan FTP mark a milestone in China's reform and opening-up process. Its historical significance lies in "testing institutions for the nation and exploring new paths for opening-up". The development opportunities it brings are comprehensive and profound. Its relationship with Singapore should be one of benchmarking and learning, complementary cooperation and shared development. If it can successfully integrate its market scale and policy advantages with the rules, capital and professional services of advanced international economies such as Singapore, it is fully possible for Hainan FTP to rise as a distinctive and dynamic new growth pole in the Asia-Pacific and even the global economic landscape — shining alongside Singapore and other international hubs in a spirit of shared prosperity.

The writer is former director of the Market and Price Research Institute of the National Development and Reform Commission.

The views do not necessarily reflect those of China Daily.