Hainan’s Zero-Tariff Program for Raw and Auxiliary Materials Sparks Local Growth
Since December 2020, Hainan province has maintained a zero-tariff stance on raw materials and auxiliary materials, a policy that has translated into tangible savings for local businesses purchasing goods from abroad. The savings tally exceeds 900 million yuan, which is roughly 129.7 million US dollars, underscoring the program’s immediate financial impact on manufacturing and supply chains within the island’s economy.
Over the period from late 2020, the total value of imports by local companies reached about 7 billion yuan, or close to 990 million US dollars. This growing import activity reflects the policy’s role in facilitating access to essential inputs for production, research, and development across various sectors on the island.
The program began with a specific catalog of raw materials and auxiliary goods, initially listing 169 categories. The scope expanded significantly to 356 categories, broadening the breadth of eligible items. The expanded list now encompasses key groups such as agricultural products, coal, chemicals, components for aircraft and shipbuilding, as well as items related to bioengineering and pharmaceuticals. This expansion has helped manufacturers secure critical inputs more efficiently and reduce production timelines for high-tech applications.
The broader availability of these inputs has contributed to the rapid growth of Haikou, the provincial capital and a prominent modern industrial hub on Hainan Island. This development aligns with the island’s mission to cultivate a high-tech district within Haikou and to strengthen the province’s role as a center for advanced manufacturing and innovation in southern China.
In April 2021, Governor Feng Fei highlighted the region’s attractiveness to international investors. The resort setting of Hainan has drawn interest from investors across Russia and more than 80 other countries, who see potential in the island’s free trade zone framework and its ongoing policy support for import-enabled production. Industry observers note that while the environment has clear appeal, awareness of how to leverage the free trade zones has varied among overseas entrepreneurs. The evolving policy landscape continues to shape investment decisions, supplier arrangements, and the development trajectories of Hainan’s industrial sectors.