China aims to establish a free trade zone in Hainan by 2020 and will encourage multinationals to set up their international and regional headquarters there, as part of plans to open up the province's economy to foreign investors.

The guidance, published on the government's official website, was jointly issued by the ruling Communist Party and State Council. It comes after President Xi Jinping announced on Friday that the country would grant foreign firms greater economic freedom in the southernmost province.

Known for its sandy beaches and resort-lined coast, Hainan is the headquarters of China's aviation-to-financial services conglomerate HNA.