Hainan Free Trade Port is expected to “close operations” across the entire island by the end of this year. However, in recent years, the actual use of foreign capital in Hainan has been bleak, and the industry is currently more affected by the escalation of the China-US trade war. A former high-ranking Chinese Communist Party official has said that Hainan Free Trade Port is “out of tune with the times.” Earlier analyses have indicated that this project, which was personally promoted by the Chinese Communist Party leader Xi Jinping, has a dim outlook.
From the beginning of its construction, Hainan Free Trade Port has been listed as a major strategic initiative for China, brewing and preparing for more than 6 years. However, the construction of Hainan Free Trade Port coincided with the global backlash against globalization and the escalation of trade tensions between China and the United States, leading to a decline in the actual use of foreign capital in recent years.
According to China’s foreign investment statistics bulletin, Hainan attracted actual foreign capital of $3.71 billion in 2022 and $3.26 billion in 2023, a 12% decrease. The bulletin for last year has not been released yet.
The Hainan Provincial Department of Commerce has pointed out that in the previous year, the province’s actual use of foreign capital ranked tenth nationwide, but did not disclose specific numbers.
Data analysis shows that from January to September 2024, foreign capital used in Hainan decreased by about 20% compared to the previous year.
According to statistics from Haikou Customs, the total amount of duty-free shopping supervised by Haikou Customs in Hainan’s outlying islands in 2024 was 30.94 billion yuan, a decrease of over 13 billion yuan compared to 2023.
Chen Bo, a specially appointed researcher at Hainan University and Liaoning University, told Ming Pao that the data from Hainan does not show a particularly evident attraction of foreign capital, and even a decline. This is due to the overall environment, which is currently the biggest challenge for Hainan Free Trade Port.
Chen Bo also pointed out that since the construction of the Free Trade Port in Hainan in 2020, after undergoing tests such as the COVID-19 pandemic, the actual construction time is less than two years, and it is still in the early stages, with many shortcomings, such as the weak economic foundation of Hainan, far inferior to the industrial chain and overall supporting capabilities of mainland China.
At this year’s Boao Forum for Asia, Long Yongtu, former Vice Minister of the Ministry of Foreign Economy and Trade of the Chinese Communist Party, pointed out that the current international trade environment is unfavorable, and in a sense, Hainan Free Trade Port is “out of tune with the times”.
In October last year, Zhi Fulin, Director of the China (Hainan) Reform and Development Research Institute, also stated at a forum that the challenges of the Free Trade Port are greater than the opportunities.
Zhi Fulin mentioned that the policy of Hainan Free Trade Port has limited attraction to European and American capital. In 2022, only the UK invested $350 million in Hainan, and the US invested only $53,000 in Hainan. From 2018 to 2022, the actual use of foreign capital in Hainan showed a growth trend, while in 2023, it decreased by 12.1% year-on-year.
Zhi Fulin also rarel…