Today’s Focus: Hainan Island closes on this day, releasing signals of continued reform and opening up? Why won’t Hainan become the next Hong Kong? Is it just a facade project or a major turning point in policy? Acting officials from the Eastern Theater Command appear, is the rectification still ongoing?
Guests on this episode: Host Henghe from “Henghe Review”; Dr. Shen Mingshi, Research Fellow at the Taiwan Institute for National Defense Security; Qin Peng, current affairs commentator and senior political and economic analyst. Host: Jinshi.
Last Friday (December 19), President Trump announced at an event in the White House’s Roosevelt Room that he reached agreements with nine of the world’s largest pharmaceutical companies to provide Americans with drugs at lower prices. Now we connect with White House reporter Zhang Liang, could you explain the significance of these agreements?
On Thursday, President Trump also signed the “2026 Fiscal Year National Defense Authorization Act,” authorizing military and national security projects. Zhang Liang, what impact does this act have on America’s national security and defense?
Now let’s focus on the topic of “Hainan Island closure.”
On December 18, Hainan Free Trade Port officially initiated the full-island closure, with extensive official promotion. What does the closure mean? Closure refers to transforming the entire Hainan Island into a customs-controlled special area implementing the policy of “open at the frontlines, control at the secondary lines, and free movement within the island.”
“Open at the frontlines” means that goods entering Hainan from abroad do not need to pay customs duties.
“Control at the secondary lines” means that goods moving from Hainan into the mainland need to be controlled and taxed accordingly.
And the free movement within the island means that various factors can circulate relatively freely within the Hainan Free Trade Port.
The closing date of Hainan was chosen on December 18. This date clearly carries symbolism. 47 years ago, on December 18, 1978, the Third Plenum of the Eleventh Central Committee of the CCP was held. This historic plenum established the path for the CCP’s reform and opening up.
In the process of reform and opening up, the CCP established five economic special zones and fourteen open coastal cities. Hainan itself was authorized as an economic special zone in 1988, and now it has officially become a free trade port. Is this a continuation of the CCP’s reform and opening up?
Mr. Qin Peng, for now let’s put aside the design of the Hainan Free Trade Port and talk about the signal, is the closure of Hainan a signal of the CCP continuing its so-called reform and opening up? This seems to be inconsistent with Xi Jinping’s governing philosophy and direction since taking office?
According to CCP official media, the Hainan Free Trade Port was “personally planned, deployed, and promoted” by CCP leader Xi Jinping. The CCP’s official newspaper People’s Daily wrote that the Hainan Free Trade Port should be developed as an important gateway for so-called opening up to the outside world.
Mr. Henghe, what do you think is the intention and purpose of the CCP in establishing the “Hainan Free Trade Port”? How do you view the prospects of the “Hainan Free Trade Port”?
The area of Hainan Island is actually similar to that of Taiwan, with an area of approximately 34,000 square kilometers, while Taiwan is nearly 36,000 square kilometers.
In terms of geographical environment, Hainan is even superior to Taiwan, as two-thirds of Taiwan’s territory is mountainous and rugged, while Hainan Island is higher in the middle and lower around the edges, with plains and plateaus accounting for more than half of Hainan’s area.
However, the economic development levels of Hainan and Taiwan are significantly different. Taiwan’s GDP in 2024 was around NT$25.5 trillion, equivalent to about RMB 6.2 trillion; whereas Hainan Province’s GDP in 2024 was only RMB 793.5 billion.
Professor Shen Mingshi, what is the main reason for the vast difference between Hainan and Taiwan? With Hainan becoming a free trade port now, is it possible for the gap with Taiwan to narrow in the future?
Regarding the prospects of the Hainan Free Trade Port, even some pro-Beijing voices are not optimistic.
For example, a Chinese “Free Trade Zone” expert, Professor Chen Bo, employed by Hainan University, once stated that Hainan has a weak economic foundation and its industrial chain and comprehensive supporting capabilities are much inferior to those in mainland China.
Some experts also point out that Hainan is somewhat like China’s border regions, lacking the most concentrated talents and the best industrial ecosystem. It also lacks attractiveness to young people.
At this year’s Boao Forum for Asia, Long Yongtu, former Deputy Minister of the Ministry of Foreign Trade and Economic Cooperation of the PRC, said that the current international trade environment is unfavorable, and in a sense, the Hainan Free Trade Port is “born in an inauspicious time.”
Mr. Qin Peng, many people believe that the CCP wants to turn the Hainan Free Trade Port into another “Hong Kong.” From the perspective of geographical location, industrial structure, and system, do you think Hainan could become a second Hong Kong?
Follow-up question: Of course, some mainland scholars say that the Hainan Free Trade Port is not intended to be a “Hong Kong on the South China Sea” or a substitute for Hong Kong; rather, it aims to form “complementary advantages and coordinated development” with Hong Kong. What is your opinion on this view?
Mr. Henghe, regarding the Hainan Free Trade Port, some consider it another “facade project” carried out by the General Secretary personally, indicating it as Xi Jinping’s “face project.” However, other opinions suggest that this may be a manifestation of the rise of the “reform faction” within the CCP system, marking a major adjustment in the CCP’s economic direction. Which of these two analyses do you think is more likely?
Now let’s focus on a personnel change in the CCP’s Eastern Theater Command.
General Lin Xiangyang, the Commander of the Eastern Theater Command, and General Liu Qingsong, the Political Commissar, were recently removed from their positions, and their acting replacements, Lieutenant General Yang Zhibin and Lieutenant General Zhang Jichun, appeared in official media coverage.
The CCP held the national memorial ceremony for the Nanjing Massacre victims in Nanjing on the morning of the 13th.
In the previous years at the memorial, the commanding officers of the Eastern Theater Command would attend. Last year, the then-Commander of the Eastern Theater Command, General Lin Xiangyang, and the Political Commissar, General Liu Qingsong, were present.
This year’s official media coverage revealed that standing next to Jiangsu’s Provincial Party Secretary was the current Deputy Commander of the Eastern Theater Command, Lieutenant General Yang Zhibin, and standing next to Jiangsu’s Governor was the Deputy Political Commissar of the Eastern Theater Command and Director of the Political Work Department, Lieutenant General Zhang Jichun. Both officers standing in the front row with Jiangsu’s leadership indicate that they are currently responsible for overseeing the daily work of the Eastern Theater Command.
Of the CCP’s five major theater commands, the Eastern Theater Command’s main strategic task is to deal with the Taiwan Strait situation and the East China Sea situation. However, amid recent military turmoil, the Eastern Theater Command has become a focal point for cleansing. Currently, it appears that the Commander has an official successor in Yang Zhibin, while the Political Commissar seems to be temporarily replaced by the corresponding deputy.
Professor Shen Mingshi, how do you perceive the current situation of the CCP’s Eastern Theater Command? Does the new commander not fully taking office yet indicate that the cleansing of this theater command has not ended?
The US government approved the largest-ever arms sale to Taiwan last week. We would like to hear your insights on this as well. This arms sale amounts to $11 billion and includes 82 sets of HIMARS long-range precision strike systems and 420 sets of M57 Army Tactical Missile Systems (ATACMS), which are seen as particularly targeting CCP’s amphibious operations.
Professor Shen Mingshi, in the recent national security strategy report released by the Trump administration, it clearly states that they will “establish a military capable of conducting operations to deter aggression in any area along the first island chain; however, the US military cannot and should not bear this task alone.” What is your view on this arms sale in relation to the latest US national security strategy?
On Saturday (December 20), Nikkei Asian Review reported that analysts pointed out that this arms sale signifies a shift in US arms sales to Taiwan, moving away from large equipment like F-16 fighter jets and warships over the past few years, towards weapon systems specifically aimed at deterring CCP’s landing operations in Taiwan.
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