A high-end rubber roll leaves the Yangpu Economic Development Zone, a bag of roasted coffee carrying the Hainan brand is shipped out of Xinglong, and a Thai aircraft takes off from Haikou airport after a maintenance check that took half the usual time.

These snapshots from Hainan capture the island's transformation from a mere transit point to a burgeoning industrial hub, driven by the launch of island-wide special customs operations in the Hainan Free Trade Port.

The zero-tariff policy in Hainan is making a tangible difference in everyday life. Within the first month, duty-free sales in Haikou hit 2.24 billion yuan ($324.1 million), offering consumers more choices and lower prices. At Boao Super Hospital, imported medical equipment, facilitated by the zero-tariff policy, is cutting costs and easing patients' burden. Children with severe hearing loss can now receive cochlear implants promptly, and high-end cancer treatments are now within reach.

For businesses, zero tariffs mean lower costs and faster operations. Airlines from Thailand and Vietnam have flocked to Haikou's bonded zone, saving 10 to 15 percent in costs and reducing maintenance time by almost half. In the first month alone, Haikou registered 15,785 new businesses, accounting for nearly 60 percent of the province's total.

The value-added policies further ensure that more economic value remains on the island. In the first month, exports of domestically processed, tariff-exempt goods in Haikou reached 41 million yuan. While the scale is still modest, the strategic direction is clear.

For years, one question shadowed Hainan's free trade ambitions: would the island become only a pass-through zone, with no real industry of its own? The answer is being built into the system's design. Hainan's "30 percent domestic value-added exemption" allows imported raw materials to be processed locally and shipped to the mainland duty-free, provided they reach the required value-added threshold. This encourages firms to do more than unload and reload cargo. It incentivizes building, processing and hiring on the island.

The petrochemical industry in Yangpu shows what that looks like in practice. In the past, some companies processed crude oil in a limited way and sent it out, collecting only thin margins. Now, with zero-tariff imports and processing exemptions, they are extending the chain into higher-value products such as plastics and specialty rubbers. In just 100 days, Yangpu has begun to develop a comprehensive industrial ecosystem.

Xinglong's coffee industry tells a similar story, but in a lighter, more unexpected register. Hainan once imported coffee beans from South America, roasted them lightly and shipped them out. Now, lower equipment costs and better policy support are helping build a more complete production chain: roasting, grinding, blending, packaging and branding. Products sold under the "Xinglong Coffee" label are reaching Southeast Asia and the domestic market. The process is also attracting a new kind of workforce: roasters, quality controllers and brand managers. In that sense, a cup of coffee has become a small but vivid measure of industrial change.

But Hainan is not trying to become another Singapore or Dubai. Singapore's success rests on geography, efficiency and a rules-based market. Dubai has leveraged oil wealth to build itself into a logistics and financial hub.

Hainan's strength lies in China's vast domestic market. The point is to plug into global trade and anchor itself more deeply in the national economy.

Openness can drive development. In Yangpu, specialty petrochemicals feed both domestic industries and regional supply chains in Southeast Asia. In Xinglong, coffee moves outward while still finding a strong market at home. In Haikou, aircraft maintenance not only serves foreign carriers but also builds local industrial capacity.

However, Hainan's openness is measured, not extreme. Environmental red lines guide petrochemical expansion, balancing growth with ecological protection. Specialty agriculture, from coffee to other crops, emphasizes sustainable cultivation and processing, safeguarding the island's ecological edge. Policy incentives prioritize public welfare: zero tariffs benefit businesses while reducing medical and consumer costs, ensuring that the gains of openness are widely shared.

The first 100 days from Dec 18, 2025 to March 27 this year have shown that the policy framework is working. But a free trade port is not built in a season. Deep processing needs further development. Global brands need stronger recognition. Supply chains need better coordination. Talent must be attracted and retained. In short, Hainan has made a promising start, but more hard work lies ahead.

The focus now is on turning policy into industrial strength and lasting competitiveness. Hainan has begun to move beyond transit and toward transformation. A thriving petrochemical park signals industrial confidence. A cup of coffee can carry a new brand. Faster aircraft maintenance points to a more sophisticated service economy. Taken together, they suggest a free trade port that is starting to move, however gradually, from concept to reality.

Yan Hongping is a professor at the International Business School in Hainan University; and Chen Yue is a lecturer at the same institute.

The views don't necessarily reflect those of China Daily.

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