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China’s Hainan Free Trade Port: a dynamic hub for growth, not a tax haven

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By Wang Donghui, People’s Daily

The implementation of independent customs operations across Hainan Island has significantly accelerated the development of China’s Hainan Free Trade Port (FTP). A suite of preferential tax policies supports this momentum, designed to foster investment and industrial growth. However, these incentives raise a pertinent question: could the Hainan FTP become a tax haven?

While the zero-tariff policy offers substantial benefits and appeal, all preferential measures come with clear eligibility criteria. These advantages are not universally accessible; specific conditions must be met.

Take zero-tariff imported vehicles as an example. Rumors previously circulated online suggesting cars could be bought at half price in Hainan, prompting jokes about booking flights to buy cars. In reality, this duty-free policy applies only to transportation and tourism enterprises operating within the FTP. 

Qualifying companies must meet compliance requirements. Furthermore, these vehicles must be used for operational purposes: each journey must start or end within the FTP, and their cumulative time on the Chinese mainland cannot exceed 120 days annually.

Hainan residents enjoy access to a wide range of duty-free goods, but policies enforce an annual individual quota of 100,000 yuan ($14,583). Any purchase exceeding this annual quota or quantity limits is subject to import duties as required. Customs authorities have also emphasized that “quota sharing” and “proxy purchasing for profit” are illegal and will result in legal liability.

These eligibility thresholds prevent policy abuse and provide a clear answer to concerns: the Hainan FTP is neither designed to be nor will it become a tax haven.

What exactly is a tax haven? It generally refers to jurisdictions with extremely low or zero tax rates, lax regulation, and limited transparency, which primarily attract external capital seeking to shift profits and evade taxes. Hainan FTP, in terms of its development positioning, institutional design, and regulatory framework, does not fit this definition.

The core purpose of Hainan’s preferential tax policies is to serve the development of the real economy, attract high-end domestic and international production factors, and build a high-level platform for institutional opening up.

Widely noted policies, such as a reduced corporate income tax rate of 15 percent and a capped individual income tax rate of 15 percent, also come with well-defined conditions.

The 15 percent corporate income tax rate applies only to encouraged industries and requires that the enterprise’s actual management body be located within Hainan FTP, so it effectively prevents “shell companies” from exploiting policy loopholes. If a company is merely registered in the FTP but any of its production, operations, personnel, accounting, or assets are not based there, it will not be eligible for the preferential treatment.

Similarly, individual income tax incentives are targeted only at high-end and urgently needed talent genuinely required by the FTP. Eligible individuals must fall within specified talent categories, meet recognized standards, and be jointly certified by relevant authorities. In general, taxpayers must reside in the FTP for at least 183 days within a tax year, and their taxable income must be sourced from within the FTP.

In essence, both enterprises and individuals must demonstrate substantive operations and genuine qualifications to benefit. Such precisely targeted incentives unlock policy dividends while  safeguarding the fundamental principle of tax fairness.

Sound institutional design must be paired with rigorous enforcement. Hainan FTP has also established a “smart” regulatory system: leveraging big data and artificial intelligence, it can automatically flag abnormal cross-border capital flows and transactions involving high-risk regions; with blockchain technology, key transactions are fully traceable; and financial account information is exchanged with over 100 countries and regions.

The FTP has built a robust anti-money laundering system integrating institutional oversight, technology, and international cooperation, leaving minimal room for illegal activities. It also continuously strengthens international collaboration to enhance tax transparency and combat regulatory arbitrage.

Since its establishment, Hainan FTP has focused on four pillar industries, namely tourism, modern services, high-tech industries, and tropical high-efficiency agriculture, attracting enterprises and talent dedicated to rooting in the FTP and developing the real economy. The effectiveness of its policies is steadily translating into momentum for high-quality development.

On the 100th day since the launch of island-wide independent customs operations, a series of figures were released, highlighting the FTP’s strong performance. Offshore duty-free sales reached 15.62 billion yuan, up 27.64 percent year on year; 85,000 new market entities were registered, up 39.87 percent; total imports and exports exceeded 80 billion yuan, up 32.9 percent; and 223,000 visa-free inbound foreign visitors were recorded, an increase of 54 percent year-on-year.

An open and well-regulated Hainan FTP is not a place for opportunistic arbitrage, but a dynamic land where those committed to hard work can pursue their aspirations.

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Hermann Simon: China fuels global growth for “hidden champions” 

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By Liu Zhonghua, People’s Daily

German management scholar Hermann Simon coined the term “hidden champions” to describe small and medium-sized enterprises (SMEs) that operate below the public radar yet dominate their niche markets — typically ranking among the top three globally in their sector. These firms are distinguished by deep specialization, relentless innovation, and a fundamentally global mindset.

Having visited China over 70 times and closely tracked its industrial evolution, Simon remains deeply optimistic about the vitality of its SME sector. In an exclusive interview with People’s Daily in Hasborn, Germany, he noted that China has systematically cultivated a new generation of “hidden champions” through a phased support framework tailored to different stages of enterprise development.

He spoke highly of China’s achievements in technological innovation, industrial upgrading, and through a phased support framework tailored to different stages of enterprise development. He emphasized that Chinese companies have already emerged as global innovators across several cutting-edge industries.

“The outdated notion that China merely replicates foreign technology no longer holds,” he said. “Chinese enterprises are now leading the way in innovation within multiple advanced fields.”

According to Simon, China’s approach centers on long-term strategic commitment. “The country guides its specialized firms to focus on foundational technologies and pursue continuous, incremental innovation. This disciplined approach is essential for overcoming core technological bottlenecks and securing dominant positions in global niche markets.”

He highlighted China’s five-year plans as a key driver of industrial clarity and strategic foresight. “Well-calibrated assessments of emerging sectors provide businesses with clear developmental pathways, showcasing strong institutional coordination,” Simon explained. 

Strategic top-down planning, he added, helps consolidate resources, foster fair competition, and nurture globally competitive leaders. Strategic top-down planning, he added, helps consolidate resources, foster fair competition, and nurture globally competitive leaders. For other developing nations seeking to industrialize, he suggested studying China’s long-term strategy: leveraging domestic strengths to target distinctive niche industries and cultivate high-value-added champion enterprises offers a practical, scalable model.

Beyond macroeconomic growth, Simon underscored the role of these specialized firms in advancing balanced regional development and shared prosperity. 

While large corporations typically concentrate in megacities, many “hidden champions” are rooted in counties, smaller cities, and townships.

He pointed to Shandong Moris Tech, based in Shouguang, east China’s Shandong province, which expanded its specialty chemical operations across regions while remaining rooted locally. “Nurturing these highly specialized enterprises distributes high-skilled jobs and value creation across broader urban and rural areas,” Simon observed. 

“This provides a viable pathway toward more equitable regional development and inclusive prosperity.” Simon also pointed to China’s unparalleled industrial ecosystem as a major competitive advantage. With over 2,000 German firms operating manufacturing facilities in the country, he noted that dense supply chains and clustered industrial parks remain powerful draws. 

“Comprehensive infrastructure, a vast talent pool of engineers, and a massive domestic market make China an ideal testing ground for advanced manufacturing technologies and their large-scale deployment,” he said. “Ignoring the Chinese market would mean forfeiting access to one of the world’s largest industrial hubs, which accounts for nearly one-fifth of global industrial output.”

He added that China’s resilient domestic demand offers multinational companies valuable medium- to long-term certainty.

Consequently, many German “hidden champions” have established R&D centers and integrated value chains in China, leveraging the country’s open, dynamic ecosystem to extend their corporate lifecycles.

China’s well-developed and open market is not only a growth engine for “hidden champions” worldwide, but also an important source of their core competitiveness, Simon said.

As competition intensifies across niche industries worldwide, greater coordination and collaboration among specialized companies in Europe and China could become an important force in reshaping the global industrial landscape, Simon said.

Two-way investment between Europe and China can help improve structural imbalances in trade and economic ties. As Chinese companies accelerate their localization efforts in Europe by establishing R&D and production bases and creating local tax revenue and jobs, economic and trade cooperation between China and Europe can evolve from one-way trade in goods toward joint industrial development, helping mitigate the risks posed by trade barriers.

Regular in-person exchanges can also strengthen business trust, stabilize expectations for industrial investment and help reduce misperceptions arising from geopolitical competition, Simon said.

Reflecting on the past two decades, Simon acknowledged that China’s manufacturing sector has undergone profound transformation. Many specialized enterprises have significantly upgraded their technological capabilities and product quality, successfully surmounting key innovation challenges.

Looking forward, he cautioned that Chinese companies still face hurdles in three areas: deepening their international footprint, building globally recognized brands, and executing localized overseas investments.

“I hope more Chinese manufacturers will expand into European and U.S. markets, achieving tangible progress in brand globalization; promote balanced and mutually beneficial industrial investment between China and Europe; and help preserve a stable, predictable global trade environment while safeguarding supply chain continuity,” Simon said.

“By deepening cooperation between Chinese and foreign real-economy sectors on the basis of openness, connectivity, mutual benefit and win-win outcomes, we can help safeguard the long-term stability and development of global industrial and supply chains,” he concluded.

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A Decade of Growth: China-Europe Freight Rail Trips Surge 10.8-Fold

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By Li Xinping, People’s Daily 

This year marks the 10th anniversary of the China-Europe Railway Express operating under a unified brand. Over the past decade, the service has completed more than 130,000 journeys, transporting cargo valued at over $520 billion. What began as a regional freight initiative has evolved into a globally recognized logistics network.

Why has the China-Europe Railway Express developed so rapidly? Its unified brand has been crucial.

When the inaugural China-Europe freight train departed Chongqing in 2011, followed by subsequent services from Wuhan, Hunan, and Zhengzhou, growth was steady but fragmented. Annual departures rose from 80 in 2013 to 815 in 2015. 

However, independently operated local services led to duplicated efforts, elevated costs, inconsistent standards, and weak market recognition — bottlenecks that threatened further scaling.

On June 8, 2016, the China-Europe Railway Express officially launched its unified brand. Featuring a streamlined emblem that combines railway and silk motifs in red and black, the new identity standardized train naming, visual design, and marketing across all participating regions.

By consolidating resources and aligning operational protocols, the network significantly strengthened its overall competitiveness. Annual train journeys jumped from 1,702 in 2016 to 20,022 in 2025 — a 10.8-fold increase, reflecting an average annual growth rate of 31.5 percent. 

Today, the China-Europe Railway Express is increasingly recognized by countries along its routes for its advantages of speed, punctuality, safety, reliability, and environmental sustainability.

Connectivity remains the foundation of modern logistics. With unified branding and planning, service now operates three primary corridors — western, central, and eastern — spanning        96 scheduled routes at an average speed of 120 km/h.

At present, 129 Chinese cities connect to 236 cities in 26 European countries. Compared to 2016, the network has expanded by 113 cities domestically and 216 internationally, effectively covering much of the Eurasian landmass and providing a reliable backbone for cross-border trade.

Efficiency drives competitiveness. Transit speeds have been consistently optimized: trains cover approximately 1,600 km daily on Chinese territory and 1,000-1,300 km overseas, making them roughly one-third faster than conventional rail-sea intermodal alternatives. 

Capacity has also scaled up; upgraded rolling stock now supports trains of up to 55 cars and a maximum trailing weight of 3,000 tons, enabling heavier loads without compromising speed. 

Customs clearance has also become more efficient. In recent years, with the adoption of a “railway express” customs clearance model and the development of digital ports, customs clearance at China-Europe freight train ports has been reduced to as little as 30 minutes.

To simplify the supply chains, the service offers a centralized digital portal for end-to-end logistics management. For example, a Hangzhou-based equipment manufacturer executive recently used the platform to coordinate door-to-door transport, customs declaration, and integrated logistics. His shipment, dispatched from Zhengzhou, reached central Europe in just 17 days. Upon arrival, customer service teams remotely guided overseas partners through unloading to ensure a secure and efficient handover.

The model’s flexibility proved critical during a recent urgent shipment handled by a Xi’an-based logistics operator. A European chemical manufacturer needed 310 containers (18,600 tons) of raw materials delivered within 35 days. Ocean freight would take 45 to 60 days, while trucking would require over 600 vehicles and expose costs to volatile fuel prices.

“The China-Europe Railway Express took just 10 to 20 days for the full journey and had a large carrying capacity. It reduced total logistics costs by 29 percent, ensuring that the overseas chemical enterprise could start production on schedule,” said Su Lu, general manager of the Xi’an company.

As operations matured, transportation costs along both domestic and international segments have dropped by more than 40 percent since launch. Cargo diversity has expanded dramatically:  trains now carry goods across 53 categories, covering more than 50,000 types of products. High-value-added goods, including automobiles and auto parts, machinery equipment, and  electronics dominate outbound shipments, while inbound cargo includes timber, pulp, specialty agricultural products, and consumer goods.

Today, the China-Europe Railway Express continues to evolve.

On June 24, the first “zero-carbon” China-Europe freight train from the Yangtze River Delta successfully arrived at Yiwu West Railway Station in Zhejiang province. Operating under the Duisburg-Yiwu full-route timetable, the train used 100 percent green electricity on electrified sections. On non-electrified sections, it offset its remaining emissions through Gold Standard certified carbon offset projects, achieving net-zero carbon dioxide emissions during train operations.

As electrification upgrades continue along railway routes and clean transport vehicles, including new-energy heavy trucks, are increasingly deployed for cargo collection and distribution, the “steel camel caravan” spanning Eurasia is taking on an increasingly distinct green character.

After a decade of development, the “steel camel caravan” has grown far beyond a single transport route. With reliable capacity, efficient coordination and a commitment to green development, it has become a widely welcomed international public good.

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Baton of China-U.S. friendship passed down from one generation to the next

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By He Yin, People’s Daily

Veteran participants of China-U.S. “ping-pong diplomacy,” now well over seventy years of age, have returned to China, passing on to a younger generation the torch of friendship lit by the “little ball” that helped set the “big ball” of China-U.S. relations in motion.

Today, that tradition continues on the pickleball courts, where young Chinese and American players are forging new bonds. Embodying the ethos of “sportsmanship before victory,” they are proving that shared passion can transcend borders.

From table tennis, which helped open the door to China-U.S. exchanges 55 years ago, to pickleball, now increasingly popular among young people in both countries, this passing of the “little ball” from one generation to the next over more than half a century vividly demonstrates the enduring vitality of people-to-people exchanges between China and the United States and the deep, lasting friendship between the two peoples.

This year marks the 55th anniversary of China-U.S. “ping-pong diplomacy.” In 1971, a modest table tennis match shattered years of diplomatic isolation, reopening channels of communication and laying the groundwork for normalized relations. The event remains a landmark moment in modern diplomatic history. 

Over the decades, numerous initiatives have deepened mutual understanding. Pioneering cultural missions, including performances by the Philadelphia Orchestra, helped lay the foundation for sustained artistic exchange. Meanwhile, the historic Kuliang friendship keeps alive a people-to-people friendship spanning a century. Together, these efforts have woven a rich tapestry of shared experiences.

In the new era, the spirit of engagement embodied in “ping-pong diplomacy,” which brought the Chinese and American peoples closer together, is taking on new forms and gaining new vitality. 

Games like pickleball, known for their accessibility and social nature, effortlessly bridge linguistic, cultural, and geographical divides. For young Chinese and American athletes meeting for the first time, the court becomes a space for mutual learning, teamwork, and genuine connection.

These interactions reaffirm a fundamental truth: sustained people-to-people ties remain the bedrock of resilient China-U.S. relations, providing the trust necessary to navigate challenges and steer bilateral engagement forward.

Strong interpersonal connections are essential to stable diplomatic relations. Looking to the long-term development of friendship between the Chinese and American peoples, in San Francisco in 2023, Chinese President Xi Jinping proposed an initiative to invite 50,000 young Americans to China for exchange and study programs in a five-year span. 

In just over two years, the number of young Americans who have visited China for exchanges has surpassed 50,000, achieving the target ahead of schedule. Driven by the initiative, a growing wave of American youth are traveling to China to explore its landscapes, engage with emerging technologies, and experience daily life firsthand. 

By witnessing China’s developments directly, these visitors are moving beyond media narratives and algorithmic echo chambers, replacing stereotypes with nuanced, personal insights about mutual potential as partners and friends.

Many returnees have taken to social media to share their journeys, offering unfiltered perspectives to audiences back home. Their posts highlight how China’s rich heritage coexists with rapid innovation, while emphasizing the warmth, hospitality, and openness of its people.

As young Chinese and American travelers continue to bridging vast distances, they are planting seeds of mutual respect and shared curiosity. With time and cultivation, these connections will take root, fostering a more resilient, pragmatic, and constructive future for China-U.S.relations.

Today, China-U.S. relations once again stand at a critical juncture in history, and the strategic choices made by the two countries will once again shape the course of the world. 

By making friends and competing within the rules on the pickleball court, young people from China and the United States are offering valuable lessons for the two countries on how to interact with each other. 

Just as players on the court must follow the rules, China and the United States must coexist peacefully on this planet and refrain from crossing red lines or overstepping boundaries on issues concerning each other’s core interests. 

And just as athletes improve through learning from and competing with one another, China and the United States should explore ways to expand areas of cooperation and do more things that benefit both countries and the wider world. 

In recent years, young people from China and the United States have worked side by side aboard research vessels to unlock the mysteries of the ocean and joined forces at maker competitions to explore solutions to global challenges, demonstrating through action the enormous potential for cooperation between the two countries. 

Looking ahead, the steady and sustained development of the “big ball” of China-U.S. relations will continue to depend on countless “little balls” of people-to-people friendship. People from all sectors of both countries, especially the younger generation, should draw wisdom and strength from history, get to know and grow closer to each other through exchanges and cooperation, and move forward together by learning from one another. By strengthening the bonds of friendship, they can make new contributions to stable, healthy and sustainable China-U.S. relations.

A small ball can connect people across mountains and seas; a bond of friendship can transcend time and space. 

Just as pickleball draws on the strengths of several sports, the vast planet we share has ample room for China and the United States to pursue their respective development and achieve common prosperity, and for different civilizations to complement and enrich one another. 

China remains committed to expanding people-to-people and cultural exchanges with the United States, writing a new chapter of friendship between the two peoples, and injecting a steady stream of people-to-people strength into building a constructive China-U.S. relationship of strategic stability.

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