On December 18, 2025, China launched special customs operations across Hainan Free Trade Port, officially designating it a separate customs territory.
This bold move establishes a clear regulatory boundary, allowing Hainan to serve as an open, high-standard platform – with freer entry from overseas, controlled access to the mainland and free movement within the island.
This milestone marks a new shift in cooperation between China and the Association of Southeast Asian Nations (ASEAN), the regional organization promoting political, economic and cultural cooperation.
After years of building highways, ports and power grids to link markets, the focus is now on aligning rules, data, services and green standards across borders.
The logic of integration is evolving: it is now less about cutting tariffs and more about smoothing behind-the-border friction.
Recognizing these challenges, China and ASEAN are expanding cooperation into digital trade, green standards and supply-chain coordination – moving toward rule-based facilitation.
In essence, China-ASEAN cooperation is shifting from large-scale infrastructure to targeted, high-quality initiatives in the digital and green sectors – prioritizing sustainability over sheer size.
Hainan: gateway, institutional test field
Hainan is important as a proving ground for "institutional opening," testing the credibility and scalability of rule-based openness.
The policy logic is not simply more tax breaks, but a governance experiment with streamlined procedures, transparency and risk-based supervision.
Hainan is designed as a platform for higher-standard opening toward Southeast Asia.
It can pilot new initiatives in services, cross-border e-commerce and green investment, and then expand them regionally.
Hainan's geography reinforces its strategic role. As China's southern gateway, Hainan connects the Chinese market with ASEAN's dynamic economies, facilitating ASEAN exports to China and enabling Chinese firms to expand regionally.
This positioning draws comparisons with Singapore. Rather than rivaling Singapore, Hainan will complement it.
Singapore excels in global finance and rule-setting, while Hainan offers deep integration with China's market and a sandbox for implementing high-standard trade rules.
Singapore's advantage lies in its mature institutions and global networks, while Hainan's strength comes from robust central support and its proximity to China's vast market.
If Hainan's reforms succeed, it could begin to share some of Singapore's hub functions.
Governance, implementation capacity
Opening up to higher standards is not laissez-faire deregulation, but governed openness – transparent rules, coordinated oversight and consistent enforcement.
China's reform playbook pairs central guidance with local experimentation, allowing pilot policies to be adjusted and scaled – an approach Hainan is now putting into practice.
China has developed institutional channels that facilitate dialogue and coordination between enterprises and relevant state authorities.
In the context of Hainan's further opening-up, these mechanisms can help companies stay informed about policy priorities, regulatory expectations and compliance requirements, supporting smoother adjustment as new rules are introduced.
By offering guidance and feedback loops, they encourage more consistent corporate conduct, strengthen compliance, and boost stakeholder confidence during policy transitions.
Modernization, shared future
This new phase aligns with China's broader modernization agenda, which emphasizes high-quality growth, innovation, green transition and high-standard opening-up – priorities that dovetail with a China-ASEAN focus on digital, green and rules-based integration. It also reflects a shift in the Belt and Road Initiative from hard infrastructure to "soft connectivity." After building bridges and ports, China and its partners are now developing digital and green initiatives in South-South cooperation.
But this new stage brings new tests: High standards only cut costs if applied consistently – otherwise dual-track regimes could emerge. Digital collaboration must balance openness with data security and green standards need credible metrics to avoid becoming barriers. Smaller enterprises will need support, from training to fair dispute resolution, to fully benefit. If these challenges are addressed, the next phase of China-ASEAN cooperation won't be measured in concrete and steel, but by the region's economic integration and sustainability.
(Jing Xu is an assistant professor at the School of Marxism, Tsinghua University. Jian Xu is an assistant professor of political science at the National University of Singapore. Edited by Lin Rui and intern Du Rongqi)