City aims to stimulate with duty-free shopping project (2)

Hainan started providing tax refunds to tourists in April. Chinese visitors can purchase duty-free goods worth up to 5,000 yuan ($790) at selected stores twice a year, with duty on most goods ranging from 15 to 35 percent.

The first store in Sanya had a sales volume of more than 800 million yuan in the first eight months. A second was opened in Haikou, the provincial capital, last month.

Experts said duty-free stores will boost China's domestic consumption, although it will be a slow process.

Hainan's duty-free zone, which is based on similar projects at Jeju Island in South Korea and Japan's Okinawa, came after the State Council's vow to build the province into a top international tourism destination by 2020.

"Many cities are now applying to be the 'second Hainan'. In the long term, there will certainly be more, but the process will not be quick," said professor Liu Huan at the Chinese University of Finance and Economics.

"It takes time for the central government to study the effects of the pilot program and to discreetly choose the next one."