Economic challenges from Hainan must not deter Hong Kong
- City still has a lot of advantages despite new regulations that will allow the tropical island to attract domestic and international visitors as well as businesspeople
Hainan’s future has brightened after the central government charted a course for the island to be transformed into a world-class free-trade hub. While the changes unfolding for “China’s Hawaii” pose challenges for Hong Kong, the city should set its sights on seizing opportunities to collaborate with the province.
Located off the southernmost tip of China, Hainan is well placed to capitalise on air and sea routes linking the nation with its biggest trade partner – the Association of Southeast Asian Nations.
The island and its tropical beaches will be promoted as a tourist destination for Southeast Asians as well as a centre for duty-free shopping and offshore financing.
A simplified visa policy will make it easier for foreigners to visit or do business and an independent customs regime is due by late 2025.
Hong Kong and its neighbours in the Greater Bay Area development zone should not feel left out by what is expected to be a game-changer for China’s economy.
How will Hainan free-trade port affect the Greater Bay Area and Asean?
While Hainan’s development will focus on areas such as tourism, hospitality and other service industries, which have long been economic drivers for Hong Kong, the city has new roles to play as the region evolves into an economic hub.
Hong Kong is already a major investment partner in Hainan, accounting for more than 75 per cent of the island’s total foreign direct investment in 2020. At the same time, the city’s economy is shifting away from a dependence on tourism and reputation as a shopping paradise.
Tour package demand among mainland Chinese travellers has yet to take off despite the lifting of pandemic restrictions.
Hainan could soon prove irresistible to mainland visitors with attractions from the resorts of Sanya to duty-free shops filled with global brands. At the same time, Hong Kong’s retail and tourism sectors should no longer expect the same results with the same old formulas.
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The city should make good use of the time Hainan will need to develop, and enhance what it has to offer with better value-added experiences and by strengthening its role as a fashion and style trendsetter.
The city must also continue to put its best foot forward to ensure overseas companies and professionals understand its advantages – ranging from world-class business services to a cosmopolitan lifestyle.
Short-term competition is inevitable. But it should not blind Hong Kong to the longer-term opportunities it will share with the rest of China as the nation opens through free-trade zones like Hainan. It should also be a strong motivation for Hong Kong to take smart steps to restructure its economy for the years ahead.
