The Hainan Free Trade Port

Earlier I wrote about China’s Libertarian City, Boao Hope City (officially the Boao Lecheng International Medical Tourism Pilot Zone), China’s first special economic zone for advanced healthcare. Boao Hope City is following the peer approval model I have long argued for:

Daxue: Medical institutions within the zone can import and use pharmaceuticals and medical devices already available in other countries as clinically urgent items before obtaining approval in China. This allows domestic patients to access innovative treatments without the need to travel abroad…. The medical products to be used in the pilot zone must possess a CE mark, an FDA license, or PMDA approval, which respectively indicate that they have been approved in the European Union, the US, and Japan for their safe and effective use.

Boao Hope City is part of the larger Hainan Free Trade Zone. Hainan is a large island off China’s Southern Coast, often called the Hawaii of China. The entire island is being turned into the world’s largest free trade zone. As of Dec. 18, 2025, Hainan now boasts:

• Expanded “Zero-Tariff” Coverage…“zero-tariff” eligible goods expand from about 1,900 to approximately 6,600 tariff lines, increasing coverage from 21% to 74% of total import/export items, encompassing most production equipment and raw materials. This exemption applies to import tariffs, import VAT, and consumption tax, potentially saving enterprises about 20% in tax costs on imported equipment.
• Optimized “Tariff Exemption for Value-added Processing” Policy: One of the most transformative measures, this policy sees significantly relaxed restrictions (e.g., on core business income ratios) and now allows cumulative value-added calculation across upstream and downstream enterprises. This makes it easier for businesses to meet the “over 30% value-added” threshold for tariff exemption when selling finished products into the mainland market. Companies can ship primary products or components to Hainan for substantial processing; if the value-added meets the standard, the final products can enter the mainland market tariff-free.
• “Dual 15%” Tax Incentives as a Long-term Advantage: Encouraged industries registered and substantively operating in the Hainan FTP enjoy a reduced 15% corporate income tax rate. Eligible high-end and in-demand talents benefit from an individual income tax exemption for the portion exceeding 15%, providing long-term, stable fiscal predictability.
• Enhanced Trade and Investment Liberalization/Facilitation: Measures include implementing a negative list for cross-border trade in services, relaxing foreign investment access, adopting a “commitment-based registration system” for business setup, and streamlining procedures. A visa-free policy for nationals of 59 countries is in effect, with further eased entry-exit restrictions for business personnel.