Editorial | Hong Kong can and must remain competitive with Hainan
The island’s customs reform may affect certain sectors in Hong Kong. The city should innovate, adapt and reinforce unique advantages
Under the new customs regime, about 75 per cent of taxable imports qualify for duty-free entry. Goods imported duty-free and later shipped to the mainland will face tariffs as if they originated abroad. But goods further processed on Hainan can enter the mainland tariff-free or be re-exported, subject to a value-added threshold of 30 per cent. This is bound to further enhance the island’s economic growth, including tourism.
President Xi Jinping first unveiled plans for a Hainan free-trade zone seven years ago, positioning the island as a key connector with the global market. Hainan is now cast as a showcase for the next phase of opening up. At a ceremony marking the launch last week, Vice-Premier He Lifeng urged the province to seize the opportunity to deepen structural reforms and strengthen risk prevention, saying it should become “a major gateway for China’s new era of opening up”.
Nevertheless, Hong Kong must monitor Hainan’s progress and consider how the two ports might complement each other. The island’s customs reform will inevitably affect certain sectors. Luxury goods, for instance, may lose their price advantage in Hong Kong once similar items enter the mainland duty-free via Hainan. Retailers catering to high-end consumers will need to rethink their strategies.
The broader implications extend beyond retail. Hainan’s opening up reflects Beijing’s willingness to test out bold reforms. By lowering barriers to trade and incentivising value-added processing, the government aims to attract investment, stimulate consumption and integrate the island more closely into global supply chains.