For decades, globalization was widely accepted as an almost inevitable trajectory. The more open an economy, the prevailing logic held, the greater its prospects for growth.
Frictionless ports, low tariffs, investment deregulation, and unrestricted capital flows were treated as the essential ingredients of economic advancement. Countries competed to become nodes of global trade, dismantling barriers and entrusting economic outcomes largely to the forces of the global market.
Over the past decade, however, it has become increasingly evident that this earlier model of globalization no longer delivers on its promises. The 2008 global financial crisis, the Covid-19 pandemic, trade wars, rising geopolitical tensions and accelerating technological fragmentation have exposed the fragility of unfiltered openness.
Excessive dependence on global supply chains has created and exposed strategic vulnerabilities rather than resilience. As a result, major economies are turning against the once-dominant assumption that economic openness is synonymous with strength.
China’s Hainan Free Trade Port acquires its strategic significance in this shifting landscape. Much of the commentary surrounding Hainan has been narrowly framed, whether it will rival Singapore, or whether it will emerge as Asia’s next dominant port.
These questions are not entirely misplaced, but they miss the deeper significance of the project. Hainan is not merely a logistics hub or a regional development initiative. It represents a recalibration of how China conceptualizes the relationship between the state, the market and globalization itself.
Rather than choosing between full liberalization and isolation, Beijing is pursuing a more calibrated approach. Hainan has been designed as a controlled experimental space, a limited geography in which globalization is allowed to operate selectively.
In effect, it functions as a policy laboratory, enabling China to capture the benefits of global trade and investment without exposing its entire economic system at once. This is where the concept of selective globalization takes on institutional form.
In earlier Chinese economic discourse, this logic was captured by the metaphor of the “birdcage economy.” The bird may fly freely, but only within carefully defined boundaries.
Hainan as a globalization filter
The most fundamental distinction between Hainan and other free ports lies in its function as a filter rather than a gateway. Many free trade zones around the world operate as open doors, allowing goods, capital and business actors to flow seamlessly into the domestic economy.
Hainan, by contrast, draws a clear institutional line between the global sphere and China’s domestic market. Within the island, customs, fiscal, and investment regimes are deliberately liberal. Imports face minimal tariffs, administrative procedures are streamlined, and foreign investors enjoy relatively clear and predictable legal frameworks.
Yet when goods and capital move from Hainan into mainland China, the state reasserts control through tariffs, standards and national regulations. Globalization is permitted to enter, but it is not allowed to diffuse unchecked.
This architecture creates an institutional buffer. China does not reject globalization, it refines it. The binary choice between full openness and rigid protectionism is replaced by a third path: localized, measured, and controllable openness.
In an era of intensifying geopolitical fragmentation, such an approach is particularly relevant for an economy as large and complex as China’s. This model also reshapes the relationship between the state and the market.
In the traditional globalization narrative, openness was often equated with a retreat of the state. Hainan suggests the opposite. Here, the state acts as the chief architect of globalization itself, deciding where openness is permitted, which sectors are prioritized and which boundaries remain non-negotiable. The state is not a passive bystander but an active designer.
For foreign investors, Hainan offers both opportunity and a clear political signal. The opportunity lies in ease of doing business, low tariffs and efficient logistics. The signal is China remains open, but that openness is structured by state design rather than driven by blind liberalization.
Expectations of an entirely open China are replaced by a more conditional and selective reality.
Geoeconomic instrument, risk management tool
Beyond its economic function, Hainan operates as a geoeconomic instrument. Amid strategic rivalry with the United States and rising global uncertainty, Beijing requires mechanisms that keep China connected to the world economy without exposing its domestic system to external shocks. Hainan serves precisely that purpose.
The zone acts as a buffer between China and the global economy. Multinational firms can trade, invest and operate through Hainan without becoming fully entangled in the regulatory, political and strategic sensitivities of the mainland. From Beijing’s perspective, this allows capital and trade flows to continue while containing the systemic risks they often bring.
From an international political economy standpoint, this reflects a heightened state awareness of globalization’s risks. Where earlier phases of globalization prioritized efficiency and scale, today risk has become a central variable in policymaking. Hainan illustrates how China has internalized lessons from global crises and geopolitical conflicts into the design of its economic institutions.
This strategy, however, is not without trade-offs. Concentrating liberalization in a single location also concentrates foreign capital, data and global interests. In theory, this could become a strategic vulnerability.
Yet Beijing’s willingness to proceed suggests a high degree of confidence in its institutional capacity and regulatory control. The risks are deemed manageable, while the long-term benefits are judged to outweigh them.
The future of globalization
Hainan’s strategic impact extends well beyond China’s borders. Southeast Asia, in particular, will feel its effects. Many ASEAN economies have positioned themselves as alternative production and logistics hubs as global firms seek to diversify away from China. Hainan has the potential to alter that calculus.
With its mix of fiscal incentives, regulatory clarity and proximity to China’s domestic market, Hainan is poised to attract higher value-added activities, regional distribution centers, final-stage assembly, supply chain management, services trade and even regional headquarters. This does not imply that ASEAN will be displaced, but it does suggest a structural shift in the region’s role.
Southeast Asian states now face complex strategic choices. Some may deepen their integration into China-centered supply chains, accepting roles as component suppliers or specialized production bases.
Others may accelerate domestic industrialization, deepen internal markets and build their own industrial ecosystems to avoid being locked into low value-added positions. In this sense, Hainan acts as a catalyst, forcing the region to reassess its long-term development trajectory.
More broadly, Hainan challenges the traditional globalization model built around politically neutral ports and pure transshipment efficiency. For decades, port competitiveness was defined by speed and neutrality.
Today, advantage increasingly lies in vertical integration, where ports are embedded within production systems, regulatory frameworks, financial services and domestic markets. Hainan offers precisely such an ecosystem, not merely a standalone logistics facility.
In short, Hainan reflects a transformation in globalization itself. The world is not moving toward outright deglobalization, but toward a form of globalization that is more political, more segmented and more selective. Major states are no longer passive participants in global markets; they are actively shaping the terms and limits of their engagement.
For regions such as Southeast Asia, the lesson is clear. Economic openness remains essential, but openness without strategy is increasingly dangerous. The future of globalization will not be defined by opening every door at once, but by deciding which doors to open, when and under what conditions.
In that context, Hainan is not merely a Chinese port, it is a mirror of the emerging global economic order: interconnected but governed by increasingly deliberate and geoeconomically driven boundaries.
Ronny P. Sasmita is senior international affairs analyst at Indonesia Strategic and Economics Action Institution, a Jakarta-based think tank
