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Examining the Construction of Hainan Free Trade Port Through a Duty-Free Receipt (New Economic Perspective)
Guangming Daily | Local Language | News | Dec. 5, 2025 | UndeterminedTrade Issues and Numbers
The Hainan Free Trade Port has implemented a duty-free receipt policy focused on processing value-added tax exemptions, which has been refined over more than four years since its introduction in July 2021. Initially applicable to sectors such as grains, oil, jade, and meats, the policy now extends to pharmaceuticals, jewelry, petrochemicals, and other industries across the entire island. By October 2025, 129 enterprises were approved as pilot participants, achieving approximately 11.096 billion yuan in processing value-added domestic sales and securing around 860 million yuan in customs duty exemptions.
The policy mandates that imported goods processed in the Free Trade Port must have a processing added-value rate of at least 30% to qualify for duty exemption, encouraging high value-added manufacturing rather than simple transshipment. The initial implementation was piloted by Hainan Aoscar International Grain & Oil Co., which, with support from local authorities and customs, developed operational guidelines clarifying cost calculation, distinguishing material and parts costs from labor and energy inputs to determine added value. This framework enabled enterprises to meet policy requirements and shaped a collaborative problem-solving model between government and businesses.
Challenges arose in industries with complex processing, such as beef jerky production, where auxiliary ingredients like scallions and garlic needed to be categorized appropriately in cost calculations. After negotiations, these ingredients were excluded from material costs as they do not add weight but contribute to flavor, thus enhancing added value. This case established a precedent for tailored, case-by-case resolution, moving away from one-size-fits-all approaches and fostering cooperation between customs and enterprises.
The policy’s benefits are extending along industrial chains, improving governance from regulatory control toward service provision aimed at industrial strengthening. In the pearl industry, for example, the duty exemption on imported seawater pearls has saved companies substantial costs, allowing reinvestment into research and development for new product lines. Further policy optimizations set for implementation on December 18, 2025, include combining processing value-added statistics of upstream and downstream enterprises and excluding the cost of Hainan-produced goods from material costs, facilitating easier compliance with the 30% threshold and encouraging deep processing and industrial integration within the Free Trade Port.
The evolution of the duty-free receipt policy from initial pilot trials to comprehensive industrial ecosystem support highlights its role as a foundational element in building a modern, advanced industrial system with Hainan characteristics. The process underscores a long-term commitment to creating a competitive business environment that promotes innovation, industrial upgrading, and integrated supply chains.