Hainan's economy is predominantly agricultural, and more than a half of the island's exports are agricultural products. Hainan's elevation to province-level status (1988), however, was accompanied by its designation as China's largest "special economic zone", the intent being to hasten the development of the island's plentiful resources.
Prior to this, the province had a reputation for being a "Wild West" area, largely untouched by industrialisation; even today there are relatively few factories in the province. Tourism plays an important part of Hainan's economy, thanks largely to its tropical beaches and lush forests.
The central government has encouraged foreign investment in Hainan and has allowed the island to rely to a large extent on market forces.
Hainan's industrial development largely has been limited to the processing of its mineral and agricultural products, particularly rubber and iron ore. Since the 1950s, machinery, farm equipment, and textiles have been manufactured in the Haikou area for local consumption. A major constraint on industrial expansion has been an inadequate supply of electricity. Much of the island's generating capacity is hydroelectric, and it is subject to seasonal fluctuations in stream and river flows.
Its nominal GDP for 2011 was 251.5 billion yuan (US$39.9 billion), making it the 4th smallest in all of the PRC and contributes just 0.53% to the entire country's economy. At that time, its GDP per capita was 19,166 yuan (US$2,805).
By the first quarter of 2010, Hainan had the highest increase in GDP of any province in China, with a year-on-year increase of 25.1%. The GDP of Hainan's Qionghai city grew 58.7%.
In December 2009, the government of China announced that it plans to establish Hainan as an "international tourist destination" by 2020. This announcement contributed to a surge in the province's economy, with a year-on-year increase in investment of 136.9% in the first three months of