China’s Hainan free-trade hub reinvents itself as Hong Kong’s rival – and partner

As Hainan pushes ahead with its free-trade port, the tropical island is emerging as a potential rival to Hong Kong’s long-standing role as a regional shopping and low-tax hub – even as both sides signal interest in closer cooperation.

Since launching a separate customs regime three months ago, Hainan – now a gateway to the Chinese market – has positioned itself as a “super partner” to Hong Kong across industry chains, finance, tourism and other sectors, according to officials.

“Hong Kong serves as the mainland’s ‘superconnector’, and the Hainan-Hong Kong partnership can be fully upgraded to that of ‘super partners’,” said Wang Bin, chief of the Hainan provincial government’s publicity department, citing their “highly complementary advantages”.

Both economies – located in the South China Sea and close to Southeast Asian markets – offer corporate tax rates of 15 per cent. Long compared by market observers, they have now entered a phase of cooperative competition.

Wang said Hainan aimed to tap Hong Kong’s strengths in talent, legal services and finance, noting that the city already accounts for more than 70 per cent of the island province’s foreign investment.

He proposed a cross-border model of “orders in Hong Kong, production in Hainan and sales worldwide”, calling the island province an ideal hub to industrialise the city’s research capabilities.

South China Morning Post