At the annual Central Economic Work Conference, held in Beijing on December 10-11, 2025, Chinese leaders outlined priorities for 2026, emphasizing that “it will be essential to enhance innovation-driven development to accelerate the cultivation of new growth drivers,” signaling a broader transformation in the world’s second-largest economy. 

Innovation is not limited to technology alone. Institutional reform is emerging as another powerful catalyst.

The Hainan Free Trade Port (FTP) exemplifies this. As a hub of China’s high-level openness, it has implemented landmark measures: the country’s first negative list for cross-border service trade and the nation’s first international investment one-stop service platform, reducing paperwork by 55 percent and cutting approval times by nearly 70 percent. These institutional reforms lower transaction costs and create a more transparent, predictable environment for businesses.

At the Hainan FTP, a new industrial service model is gaining traction: bonded maintenance for high-end equipment.

On December 18, 2025--the day Hainan officially launched its island-wide special customs operations--China National Vehicles Imp. and Exp. (Hainan) Co. Ltd. began its first batch of bonded repairs on imported diesel engines at Haikou Comprehensive Bonded Zone. The engines are not typically allowed to be imported under Hainan’s negative list for restricted and prohibited goods. Their entry was made possible only through a specific exemption in the Ministry of Commerce’s Announcement No. 43, which permits 38 types of equipment to undergo bonded maintenance.

A technician performs bonded maintenance on a German-made engine at the Haikou Comprehensive Bonded Zone, Hainan Province, on January 13 (Duan Wei)

Under this model, engines are shipped from overseas, repaired under customs supervision, and then re-exported without entering China’s domestic market. Zhang Zirui, the company’s marketing director, told Beijing Review that repair costs for large diesel engines in Hainan are roughly half of those in Europe, with turnaround times cut by nearly 50 percent.

China’s complete industrial supply chain, combined with Hainan’s tariff exemptions and streamlined customs procedures, allows companies to source parts faster and operate at lower cost. The result is a high-value service industry with global reach.

By expanding services such as bonded maintenance, Hainan is positioning itself as a specialized hub for global repair and industrial services. More broadly, the experiment shows how institutional innovation--alongside technological breakthroughs--is helping China move up the global value chain and cultivating new engines of growth.

Copyedited by Elsbeth van Paridon

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