On December 18th, just three days later, Hainan Island, China, will officially begin customs clearance operations. As someone who has lived in Hainan for over three years, I firmly believe that the closure of Hainan's customs will have a far-reaching impact on China's economic landscape for the next few decades. Therefore, I plan to discuss my perspective on the Hainan customs closure in several articles. ❚ What is customs clearance? Simply put, it's "opening up the first line and controlling the second line." - First line (Hainan and overseas): The door is open, and most imported goods entering Hainan are exempt from tariffs, allowing for free flow through simplified procedures. - Second line (Hainan and the mainland): Checkpoints are established, and goods from Hainan entering the mainland need to be declared and taxed according to import regulations; however, personnel exchanges remain convenient. ❚ Direct impact on ordinary people - Do I need extra permits to go to Hainan? No. Mainland residents traveling to Hainan for tourism or business only need their ID cards; they don't need travel permits like those for Hong Kong and Macau. Flights and ferries to and from the island continue as usual. - Shopping is cheaper. Residents and tourists on the island can purchase imported goods with "zero tariffs," such as daily necessities, medical devices, and automobiles. Prices may be about 30% cheaper than on the mainland because tariffs and some value-added tax are waived. - Offshore duty-free shopping continues. The existing offshore duty-free policy, with a quota of 100,000 yuan per person per year, is expected to be retained and may be optimized. ❚ Key Benefits for Businesses - Corporate Income Tax: Enterprises in encouraged industries will be taxed at a reduced rate of 15%, compared to the usual 25% in mainland China. - Individual Income Tax: High-end and scarce talent will be taxed at a maximum of only 15%. - Value-Added Processing Exemption (Important): Imported raw materials processed in Hainan, as long as the value added exceeds 30%, will be exempt from import duties when sold back to the mainland. This represents a significant cost advantage for manufacturing and processing enterprises. ❚ Common Misconceptions - Closing the border is not closing the island: It does not mean closing Hainan off, but rather making it more open, transforming it into a special economic zone similar to Hong Kong or Singapore. - Second-tier status is not a severance: Hainan remains within the customs territory; only a special firewall has been established for trade and economic rules. "In short, after the border closure, Hainan will be more like Hong Kong in terms of trade and economics, but in terms of personnel exchanges, it will remain a mainland city, a giant duty-free special zone of the country."

Sigh, housing prices have plummeted.

Yeah 🙏😭 The house my family bought in Lingshui has already dropped in value by several million.

I also own one in Wanning, sigh 😑

🙏Let's see if there's any hope after the border is closed 😂

Good news has arrived 😂

Haha 😂 There should still be opportunities in the long run. I've seen rumors that Hainan is going to open up casinos.

In 2019, we went to Haikou for an inspection, and Huobi was among those there. All talk and no action.

Hmm, it seems like a step backward. Back then, it was unbelievable to see such a huge Huobi logo; I can't even imagine it today.

To put it bluntly, my former partner started a company in Hainan this year because of the tax reduction policy. Dealing with banks and finding intermediaries to handle company registration was incredibly inefficient, incomparable to more commercially developed areas in mainland China. It left him with a huge headache.