Earlier last year, China’s central government, in line with President Xi Jinping’s directives, included Hainan in the Belt and Road Initiative (BRI) project and turned the island into a business hub and free trade zone (FTZ).

Hainan Island has become a free trade zone

Since the official announcement, hopes are high for local businesses, but what is all the hype about? Can Hainan really become the next Hong Kong or Shenzhen?

Hainan’s economy in the old days was mainly based on agriculture and fishing. In 1988, under the economic reforms of Deng Xiaoping, Hainan became a special economic zone (SEZ) in its own right.

Over the last 30 years, the island has been struggling towards development, to finally boast a GDP of US$66 billion in 2017. Yet among provinces, this only ranked Hainan 28th on the national scale and 17th in terms of GDP per capita.

However, there has been tremendous improvement in the last 10 years, with heavy investment in the real estate and hospitality industries, especially in southern areas including Sanya that have become modern, upscale tourist destinations.

The province annually attracts millions of tourists from China and an increasing number from overseas. Last year, to increase Hainan’s international appeal, the government introduced a visa-free policy for tourists from 59 countries, although any visa application needs to be through an authorised travel agent and is only valid for Hainan.

Still, there are many hurdles to overcome to really turn the island into a financial and economic centre. FTZ is not just a label and there needs to be a lot of action to follow up and implement the new policies. To be successful, Hainan will have to open to the outside world and liberalise a number of activities. It will also have to offer adequate facilities and services.

The first thing that comes to mind is the administrative difficulties. Being a free trade zone implies drafting and implementing new laws and regulations in a large number of fields. Drafting new laws is not an easy task, so it remains to be seen when they will be put into practice.

The island is also trying to promote the yachting industry. Sanya, at the southern tip of the island, already has five marinas in operation and another three under construction.

Hainan is popular for yachting within China, but not established as a destination for foreign yachts

Sanya Serenity, which last year became Asia’s first marina to be awarded Platinum status by the MIA’s Global Gold Anchor Scheme, is a welcoming stopover for yachts cruising in the region. But so far visiting yachts have been rebuffed by the amount of paperwork needed for clearance, the heavy costs involved, the limits to navigation and the need for a bank warranty.

The Hainan Cruise and Yacht Association has been working with all government bodies in the past year to find solutions, keeping
in mind that developments need to have ‘Chinese characteristics’ and that Hainan, especially Sanya, occupies a very strategic geopolitical position as a gate to the South China Sea.

It is a heavily militarised zone and opening up the maritime traffic in the region is a tricky task for the navy, immigration and national security authorities.

Nonetheless, to promote yachting 
there needs to be a navigable network of destinations and some freedom for enjoying the sea and water sports. Entry and exit need to be facilitated for foreign visiting boats. So far, there has been no drastic change, but there may be some experimental regulations activated later this year.

Government bodies are also now actively working on the possible opening of a free navigation zone between Hainan, Hong Kong and Macau.

A similar free navigation zone has been experimented in the Greater Bay Area between Shenzhen, Zhuhai, Hong Kong and Macau since last year, but so far with little result, as yacht owners still complain about a procedure that is way too complicated.

Being nearly halfway between Taiwan and Singapore, Sanya is definitely an ideal port 
of call on the north-south routes in the China Sea. It is not just a technical stopover for refuelling; it’s also a nice destination for yacht owners, with numerous entertainment options on offer, and the only Chinese sailing base with beautiful weather year-round.

We hope radical changes can be made soon to allow Sanya the development it deserves. Keep tuned, as we believe this year and 2020 will be milestones in the history of Hainan.

Godfrey Zwygart is a former superyacht Captain with decades of experience in marine fields. He is currently Marina Director at Sanya Serenity Marina, as well as an expert for the Hainan Cruise and Yacht Association, and columnist and blogger for several publications both online and in print.

Note: This article first appeared in Yacht Style, Issue 46

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