Market Profiles on Chinese Cities and Provinces
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3.2009

HAINAN PROVINCE

Major Economic Indicators

Economic Indicators

2007

2008

Value

Growth
(%, y-o-y)

Value

Growth
(%, y-o-y)

Gross Domestic Product (RMB bn)

122.3

14.8 1

145.9

9.8 1

Per Capita GDP

14,555

13.7 1

17,175

8.7 1

Added Value Output
- Primary industry (RMB bn)

36.1

8.0 1

43.7

7.7 1

- Secondary industry (RMB bn)

36.4

25.8 1

43.4

7.0 1

- Tertiary industry (RMB bn)

49.8

13.0 1

58.7

13.3 1

Value-added Industrial Output 2 (RMB bn)

27.8

31.2

32.1

15.5

Fixed-assets Investment (RMB bn)

50.3

19.5

70.6

40.5

Retail Sales (RMB bn)

36.2

17.4

44.8

23.9

Inflation (Consumer Price Index, %)

5.0

6.9

Exports (US$ mn)

1,364.6

- 0.8

1,586.9

16.3

- By FIEs (US$ mn)

517.3

8.3

652.6

26.2

Imports (US$ mn)

2,149.9

46.2

2,937.8

36.6

- By FIEs (US$ mn)

938.9

45.7

1,752.2

86.3

Utilised Foreign Direct Investment (US$ mn)

1,120

49.6

1,283

14.6

Notes: 1 In Renminbi real term 2 For all state-owned and other forms of enterprises with annual sales over RMB 5 million
Sources: Statistical Yearbook of Hainan 2008, Release of Hainan Statistical Bureau, China's Customs Statistics

General Background

Hainan has a total area of 33,920 square kilometers. The total population stood at 8.54 million in 2008. Hainan - abbreviated as Qiong, is composed of the Hainan Island, Xisha Islands, Nansha Islands and Zhongsha Islands. Hainan used to be a special administrative region of Guangdong province, but was designated as a province and a special economic zone (SEZ) in 1988.

The island is rich in natural resources. Its inland and offshore deposits of oil and natural gas rank one of the highest in China. Hainan has gas reserves of 99.6 billion cubic meters in the main sea basins including the Yingge Sea. Since 1996, Hainan has provided gas to Hong Kong through a 770-kilometer pipeline, supplying 2.9 billion cubic meters annually. Hainan is rich in certain mineral resources. Its reserve of Titanium is about 70% of the national total. It is also China's major sea salt production base. The Yinggehai Salt Field, one of the top salt fields in China, is located in the province.

In its 11th Five Year Programme (2006-2010), much emphasis will be put on modernising agriculture and providing ancillary infrastructure and assistance; and developing the province into a recreational tourist destination. Development of the natural gas and petrochemical industries will also be the focus.

Industries

Hainan has the largest share of primary sector in its GDP among all provinces of China. Fishery is an important contributor to the agricultural sector. The island's long coastline makes it a favorable breeding ground for shrimp, shellfish and other aquatic products. Sanya and Qinglan are Hainan's major fishing ports.

Composition of GDP (%)

1996

2007

Primary

36.2

29.5

Secondary

20.9

29.8

...Industry

12.6

22.8

Tertiary

42.9

40.7

Source: Hainan Statistical Yearbook 2008

Hainan has an abundance of tropical cash crops like coconuts, pepper, coffee, tea and rubber. It is the most important tropical fruit production base and seeds-breeding base in China. Major fruits include pineapple, lychee and longan. Hainan is one of the largest banana producers in China. The province is also a herbal medicine production base. It produces more than 2,500 kinds of herbal medicines.

In recent years, sectors such as fishery, vegetables and fruits developed rapidly. In 2007, the gross output of fishery grew by 10.1% while that of vegetable and fruits grew by 15.1%.

Hainan's manufacturing sector is relatively small. Besides transport equipment, other major industries are relating to the natural resources. Rubber, foodstuffs and other light industries used to be the major traditional industries of Hainan. Over the past decade, the province has expanded its industrial base to include metallurgy, petrochemicals, chemicals, pharmaceuticals, automobiles, food processing, tobacco, textiles, building materials, machinery and electronics.

Hainan is the largest rubber production base in China. A wide range of rubber products such as tyres, conveyor belts and latex gloves are produced. Electronics is an emerging industry in Hainan. Industries related to food processing and beverages are also growing strongly. "Yeshu" Brand Natural Coconut Juice is one of the best-known brands in China.

Tourism

Hainan is keen on utilizing its tropical tourism resources such as mangrove forest, coral reefs, beaches, tropical cash crop plantations and rainforest.

Sanya, a tropical beach resort located in the south of the island, is designated as one of China's 11 major tourist and holiday resorts by the State Council. Hainan also offers numerous tourist festivals and celebrations. "The Hainan Coconut International Festival" which is held annually attracts thousands of overseas and domestic visitors. Other cultural and recreational activities included film festivals and international golf contests. The Boao Forum for Asia, modelled on the World Economic Forum, is held every year in Boao of Hainan for Asian leaders to discuss issues.

The local government strives to turn Hainan into an international tourist destination and has developed four resort areas: Sanya Beach Holiday Development Zone, Haikou Entertainment & Shopping Development Zone, Tongza Li & Miao Ethnic Traditions & Holiday Development Zone and Xinglong Hot-spring Resort Development Zone.

Total number of tourists and receipts of tourism (2008)

2008

% change

Number of domestic tourist (million)

19.6

10.8

Income generated (RMB bn)

16.5

10.3

Number of overseas tourist (thousand)

979

- 5.5

Foreign exchange income (US$ mn)

2,732

4.4

Source: Statistical release 2008, Hainan Statistical Bureau

Aviation is vital to Hainan as an island. It has 2 international airports in Haikou and Sanya. To facilitate tourism, the Civil Aviation Administration of China has agreed to open the 3rd, 4th and 5th aviation freedoms in Hainan. Hainan is the first place to enjoy such treatment in China. As a result, it would be easier for foreign airlines to establish a presence and run international services.

Foreign Trade

Hong Kong was the leading export market for Hainan. In 2008, Hainan exported US$576 million (+36.1%) to Hong Kong. Other major export markets inclued the US and Japan. Major export items include minerals, natural gas, food, beverages, textile materials and products, transportation equipment.

Major import sources were the US, Japan, Germany and France. Major imports included steel, equipment and appliances and electrical products etc.

Foreign Investment

Hong Kong is the biggest investor in Hainan. Hainan is the ancesetral homeland to many SE Asians, and investments from these ethnic Chinese represent an important part of Hainan's FDI. Other major investors were from the US, Taiwan and Singapore.

Foreign-invested projects mainly engaged in transportation and telecommunication services, tourism and hotels and real estate development, and energy. Haikou and Sanya were the leading cities in Hainan to attract foreign investment.

Consumer Market

In 2008, retail sales of consumer goods in Hainan rose by 23.9% to RMB44.8 billion, and annual per capita disposal income of urban households reached RMB12,608 (+14.6%). Haikou and Sanya are the major consumer centres in Hainan, accounting for 60% of the total province's retail sales of consumer goods.

Composition of Per Capita Expenditure of Urban Household (%)

1995

2007

Food

59.3

42.8

Clothing

6.4

5.5

Medicine & medical services

2.6

6.1

Transport, post & communications services

3.0

16.9

Recreation, education and cultural services

10.0

10.1

Residence

6.8

9.9

Source: Hainan Statistical Yearbook 1998, 2008

With continued rises in income and economic reforms, the consumer expenditure pattern is also undergoing structural change. With the share of food declined, expenditures on services, in particular transport and communications and housing have gained in relative share.

So far, only a few foreign supermarkets such as Carrefour and Rt-mart from Taiwan have emerged in Hainan. Naoguo Shopping is one of the well-known local retailers.

Economic Indicators of Major Cities (2007)

Cities

Population
('000)

GDP
(RMB bn)

Per capita
GDP (RMB)

Gross Industrial
Output* (RMB mn)

Retail Sales(RMB mn)

Haikou

1,529

40.6

26,741

32,434

18,938

Sanya

535

13.0

24,520

1,988

2,940

Wenchang

560

6.9

12,435

1,380

1,806

Qionghai

476

6.5

13,653

848

1,893

Danzhou

1,009

8.8

9,205

3,347

1,799

* For all state-owned and other forms of enterprises with annual sales over RMB 5 million.
Source: Hainan Statistical Yearbook 2008