On December 18th, the Hainan Free Trade Port officially launched the island wide closure operation, which is a landmark measure for China's high standard construction of the Hainan Free Trade Port and unwavering expansion of high-level opening up to the outside world, with milestone significance. Island wide customs closure refers to the establishment of a special customs supervision area on Hainan Island, implementing a policy system of liberalization and facilitation characterized by "opening up the 'first line', controlling the 'second line', and allowing freedom within the island". Specifically, the opening up of the "front line" refers to the implementation of a series of free and convenient entry and exit measures between Hainan Free Trade Port and other countries and regions outside China's customs territory as the "front line"; Controlling the 'second line' refers to treating the relationship between Hainan Free Trade Port and the mainland as a 'second line', and implementing precise management for the content of the 'first line' liberalization; 'Island freedom' refers to the relatively free circulation of various factors within the Hainan Free Trade Port. From promoting the flow of commodity factors to steadily expanding institutional openness and upgrading. Hainan is steadily expanding its institutional opening-up and increasing its efforts to connect with high standard international economic and trade rules. This will further enhance institutional transparency and the level of rule of law, ensuring a stable business environment with high-level institutional supply, and fundamentally reducing the institutional transaction costs of global factor aggregation in Hainan. From trade facilitation to investment access, extending from border measures to post border measures, shifting from strengthening in-process and post event supervision to digital intelligent supervision, and forming a replicable and promotable model of a free trade port with Chinese characteristics through institutional integration and innovation. From regional openness to a new development pattern of dual circulation of services. The strategic goal of building Hainan Free Trade Port is to transform it into an important gateway leading China's opening up to the outside world in the new era. By leveraging the advantages of the free trade port system and geographical advantages, Hainan can connect domestic and international markets, which is a key node in building a dual circulation system between domestic and international markets. On the one hand, the construction of Hainan Free Trade Port promotes the expansion and opening up of the domestic market, forming a high-level open platform that attracts international capital, technology, talent, and industrial agglomeration. It has also become a hub platform for integrating into regional economic integration, especially an important hub for China to connect with the Regional Comprehensive Economic Partnership Agreement (RCEP), and enhance China's node position in the Asian industrial chain and supply chain system. On the other hand, Hainan is linked with the Guangdong Hong Kong Macao Greater Bay Area, Yangtze River Delta, Beijing Tianjin Hebei, Yangtze River Economic Belt and other regions, forming a new pivot for opening up through high standard institutional innovation. It has become an important node for China to integrate regional open resources at a higher level, implement regional coordinated opening up, and optimize the layout of opening up. In the future, Hainan will form a strategic channel connecting domestic regional economic centers with international markets through rule linkage, mutual recognition of systems, and logistics coordination. From being driven by preferential policy dividends to being driven by a rule of law business environment. Although preferential policies such as the "Double 15%" income tax for enterprises and individuals played an important role in attracting investment in the early stages, long-term competitiveness must be built on a first-class business environment. The 2021 Hainan Free Trade Port Law of the People's Republic of China establishes a free trade port policy and institutional system around trade, investment, cross-border capital flows, personnel entry and exit, providing legal expectations and guarantees for various open policies and operating entities, ensuring the continuity of institutional arrangements, and attracting global capital, talent, technology and other factors to gather. Hainan is promoting minimalist approval and digital governance, relying on international trade "single window" and customs intelligent supervision platforms to optimize customs clearance processes, compress clearance time, and create an efficient and convenient business environment. The more we expand opening up, the more we need to coordinate development and security, and firmly guard the bottom line of security. Enhancing security capabilities under open conditions is an important challenge for the high standard construction of free trade ports and a key indicator for measuring institutional stability. High standard construction is not only reflected in institutional design, but also implemented through measures such as rules, trade, investment, industry, and regulation. Expand the scope and depth of institutional openness, actively connect with international high standard economic and trade rules. Hainan actively promotes the integration of institutional frameworks such as trade, investment, and digital economy with international norms, breaking down the long-standing barriers to entry and non operation in the field of service trade, and achieving a "no ban, no entry" standard that meets international high standards. Hainan is actively participating in the formulation of rules for cross-border data flow and intellectual property protection. Hainan will continue to expand its institutional openness in terms of rules, regulations, management, and standards, and actively connect with international high standard economic and trade rules. Improve the stability and attractiveness of the business environment through transparency and certainty in systems and policies. Strengthen the connection function between internal and external circulation, and enhance the synergy between international and domestic markets. Hainan has implemented high-level openness in the cross-border flow of goods, services, funds, and personnel, promoting the integration of Hainan's free trade port system with RCEP origin, trade facilitation commitments, and customs clearance facilitation measures with the ASEAN market, and unleashing the synergistic effects of free trade port policies and RCEP. Smooth cross-border flow of factors, attract overseas goods, international capital, technology, talent, and industrial agglomeration, and provide support for enhancing the factor supply capacity of the domestic production system and Chinese enterprises' global resource allocation. Through headquarters economy, offshore trade, offshore duty-free, etc., achieve an integrated layout of "bringing in" and "going out". Implement trade and investment liberalization and facilitation policies with high standards. Implement a negative list of "zero tariffs" on production equipment, and a positive list policy of "zero tariffs" on imported products for transportation, yachts, raw materials, and consumption by island residents, in order to reduce operating costs for enterprises; Promote the implementation of the negative list for cross-border service trade and advance the institutional opening of service trade; Building a "single window" for international trade and investment, focusing on trade and investment liberalization, facilitation, and integrated innovation; Implement the "Regulations on Foreign Investment in Hainan Free Trade Port" and implement the "shortest" negative list in the country; Establish a system that facilitates enterprise investment and cross-border flow. This will help enhance Hainan's attractiveness to the industrial and value chains, promote the aggregation of investment attraction, headquarters economy, cross-border business, etc. in Hainan, and also put forward requirements for seeking a dynamic balance between openness, convenience, and controllable safety supervision. Promote the construction of a modern industrial system and prevent low-end lock-in in the value chain. The construction of traditional free trade ports tends to remain stuck in low value-added trade facilitation, falling into a low-end cycle of processing trade and making it difficult to form sustainable competitiveness. Hainan Free Trade Port should attract high-end industries and headquarters economy through institutional advantages, and promote the agglomeration of modern service industry, digital economy, marine economy, etc. Give full play to the strategic driving role of advantageous and characteristic industries such as deep-sea, aerospace, and southern breeding, and enhance the modernization level of the industrial chain. Emphasize the coordinated promotion of technological innovation and institutional innovation, and accelerate the cultivation of new quality productivity. Build a high-end industrial chain and innovation chain under open conditions, and enhance the position of the value chain. Build a modern regulatory system. Continue to promote the transformation of the regulatory system from traditional supervision to modern intelligent supervision, such as building smart customs, smart ports, and smart customs clearance systems. Strengthen the ability to assess and accurately inspect risks in the "second line", promote traceable supervision and multi-dimensional risk warning throughout the entire chain, and enhance cross departmental collaborative supervision and emergency response capabilities. In the future, it is necessary to focus on strengthening the prevention and control of smuggling and arbitrage risks, and enhancing the three-dimensional monitoring and law enforcement system; Strengthen cross-border fund supervision, improve risk control and dynamic monitoring mechanisms; Strengthen data security and digital sovereignty protection, and ensure controllability and management when aligning with rules such as the Digital Economy Partnership Agreement (DEPA). Author: Tang Yihong (Dean of the School of International Economics and Trade, University of International Business and Economics)