
As China’s zero-Covid policy takes an economic toll, Hainan free-trade port could provide a boost
- The Shanghai lockdown exposed China’s dependence on regional economic hubs. The creation of a new trade zone will help to more evenly distribute talent, capital and activity
- Hainan’s location, size and favourable policy environment make it an ideal platform for expanding China’s overseas political and economic engagement
Hainan’s transformation into a free-trade port is the latest step in China’s reform and opening up strategy. The plan to build Hainan into a free-trade zone was unveiled by President Xi Jinping in 2018.
Many Chinese citizens are now looking to emigrate to escape the restrictions on freedom of movement under the zero-Covid policy. Immigration consultants in China have seen a surge in enquiries.

The Shanghai and Beijing lockdowns exposed the extent of the country’s dependence on its regional economic hubs. When capital, talent and industry are all concentrated in first-tier cities and they are hit by a crisis, the domestic economy and global supply chains will be more severely affected.
Moreover, Hainan has the geographical advantage of being surrounded by the sea on all sides. In its 14th five-year plan, the central government stressed the importance of boosting inter-regional connectivity. The central government has noted that from Hainan, “21 countries and regions can be reached within four hours by air” and “59 countries and regions can be reached within eight hours”.
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The Haikou International Duty Free City project, with a planned construction area of more than 920,000 square metres, and the establishment of the Hainan Yangpu Offshore Wind Power Industrial Park, involving three central state-owned enterprises, is expected to create more than 3,000 jobs.
Hainan’s location, size and favourable policy environment make it an ideal platform for expanding China’s overseas political and economic engagement and improving diplomatic relations with its neighbours, especially with the Association of Southeast Asian Nations, China’s biggest trade partner. This will not only drive the development of the Greater Bay Area, but also of other regions in China.

In this sense, Hainan – like Hong Kong – can act as a gateway to China, gradually extending the country’s influence overseas.
With greater ease than inland areas in China, Hainan can further open the country’s economy to the world through trade and, simultaneously, relay information that can help shape China’s future development strategy to the central government. Overall, the development of Hainan as a free trade port aims to facilitate the flow of local and foreign talent, economic exchange and political cooperation.
Hainan’s favourable policies, geographical conditions and central government attention could transform the region and its role in the domestic and global economy. As President Xi seeks a third term, Hainan as a free-trade port will support his continuation in power and subsequent stability.
Jinyuan Li is a research candidate in global affairs at King’s College London
