Hainan Island is known as the "Hawaii of China", but it is also home to a strategic military base.

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(CNN) --

Known as "China's Hawaii," a tropical island paradise where China's middle class enjoys sandy beaches, five-star resorts and duty-free luxury shopping.

It is also China's largest free trade port and home to the Boao Forum, an annual gathering of business and political leaders dubbed "the Davos of Asia."

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But Hainan, China's southernmost province, is also an island of strategic importance.

And just like Hawaii, it's also home to key military bases.

As US authorities reveal more information about the Chinese balloon shot down on February 4 after floating through US airspace, Hainan, an island thousands of miles from the United States, has come under fire.

China has rejected US claims that the balloon was a surveillance device, arguing instead that it was a civilian research aircraft that veered off course.

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Satellite images of the Yulin naval base of the People's Liberation Army Navy, on the southern coast of Hainan Island.

According to CNN, US intelligence services believe the Chinese balloon is part of a broad surveillance program run in part from Hainan by the Chinese military.

US officials told The New York Times they had been tracking the balloon since it took off from Hainan in late January.

CNN previously reported that the United States had begun tracking the balloon long before it entered Alaskan airspace.

US authorities have not provided a detailed location of the balloon's alleged launch site in Hainan, and it is not known whether the balloon was launched from a military installation.

But the island, located at the northern end of the South China Sea, holds great strategic importance in the eyes of the Chinese military.

Out of sight of vacationers and business travelers, the southern tip of Hainan is a major base for the People's Liberation Army (PLA) Navy, home to part of its Southern Sea Fleet.

Known as the "Hawaii of China", Hainan Island is a popular tourist destination.

The base not only allows the PLA Navy access to the disputed waters of the South China Sea, but also the crucial sea lane linking the Asia-Pacific region with India and the Middle East.

From this large naval complex, the Shandong, the second aircraft carrier in China and the first nationally built, was put into service in 2019.

The complex also houses nuclear-powered submarines armed with conventional and ballistic missiles, part of China's growing fleet.

The Yulin naval base made headlines in 2020 when commercial satellites caught a PLA Navy submarine entering a tunnel leading to the island's underground docking facilities.

Hainan also has bases for PLA planes and helicopters.

In addition, units of the maritime militia, a paramilitary force of alleged fishing boats whose existence China denies, operate out of Hainan, Western experts say.

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In late 2021, a report from the Center for Strategic and International Studies claimed that China was building new electronic warfare, communications, and intelligence-gathering facilities in Hainan.

As recently as September 2022, satellite imagery showed that China was expanding its submarine base in Hainan, adding two new piers to the existing four piers at the Yulin Naval Base.

With 10 million people, Hainan is about 20 times the size of O'ahu, Hawaii's most populous island and site of Pearl Harbor.

Hainan's economy is one of the smallest of all Chinese regions and provinces, with a GDP exceeding only that of faraway Ningxia, Qinghai, and Tibet.

Agriculture is the sector that contributes the most to its economy.

In 2020, China launched its plan to transform the entire island of Hainan into the world's largest free trade port by 2035, a policy aimed at reducing Hainan's reliance on traditional sectors and becoming a new engine of trade and investment in China.

Hainan is also home to the Wenchang Space Launch Center, located on the northeastern tip of the island.

Selected for its low latitude, the Wenchang site allows for the heavy payload needed for the launch of China's new space station, Tiangong.

It is capable of launching the Long March 5, the most powerful Chinese rocket to date.