Has Hainan’s free-trade zone lived up to expectations in its first 12 months?

When the island of Hainan was designated as China’s 12th free-trade zone by President Xi Jinping in April last year, it came with an ambition to make the area operational by 2020, and reach a “mature” development stage in 2035. But one year on, how far has China’s southernmost province lived up to expectations?

From November to March, the Hainan free-trade zone attracted 185.7 billion yuan (US$27.6 billion) of investment in three batches, allocated to 378 construction projects, including infrastructure, a tax-free town and sewage treatment works, according to calculations based on reports from state-owned news agency Xinhua.

Touted as China’s “key gateway to the Pacific and Indian Oceans” covering 18 counties and cities in the province, the zone has also signed 195 contracts with parties including international schools and theme parks, with a total investment of 285.9 billion yuan (US$42.4 billion).

“Hainan suffered a lot in the first 30 years as it was too eager for results, and as a result, it paid the price in the years to come. The State Council has urged Hainan to have a world-leading business environment in 2021, which will be a huge pressure for Hainan,” said Zhang Yansheng, senior researcher fellow at the Academic Committee of the National Development and Reform Commission (NDRC).

“Winning preferential policies are not the essential issue for Hainan, but Hainan needs to improve its openness and legal environment.”