China’s Special Economic Zones Experience Gained

hinese Special Economic and economic opening. Building and changing trends, the Chinese CZones (SEZs) vary in scope on that experience, central and Government created new zones such and function. Some are designated provincial authorities set up high as the China-Singapore Cooperation geographical spaces where special tech development zones in the late Park and upgraded existing SEZs to policies and measures support take advantage of new opportunities. specific economic functions. Others Since the beginning of the 21st century, include free-trade areas, industry SEZs need a large number of regional zones have parks, technical innovation parks been established to stimulate and and bonded zones that facilitate to adapt to anchor regional development. experimentation and innovation over Various management models have a wide range of industries. changing been followed. These include a) China’s experience with SEZs has conditions and administrative management, with developed over time. It began in the managerial functions performed by early 1980s when market-oriented continue to spur government-instituted administrative reforms were introduced in selected bodies; b) administrative committee, SEZ areas such as Shenzhen. These innovation. with management by government- were followed in the mid-1980s by appointed committees; and c) joint the establishment of open coastal management by SEZ partners and such as Zhangzhou, designed 1980s to capitalize on global capital, government-instituted administrative to stimulate economic growth by technology and talent. In the 1990s, in bodies. leveraging their geographical location response to China’s economic growth Types of Chinese SEZs SEZs have contributed significantly to China’s development. They have • Based on existing administrative Administrative Areas permitted experimentation with • Newly established administrative regions run as SEZs market-oriented reforms, and acted Geographical Areas • Based on geographical features and resources as a catalyst for efficient allocation of domestic and international resources. • Economic or industrial cooperation areas established International Cooperation They have also deepened economic with another opening by attracting international • Industrial and specific industry parks designated by Local Industrial Parks capital, technology, and technical and local governments managerial expertise that stimulated • Established to support the development of certain industrial development and China’s Industry Clusters industries • Clusters of industries greater integration into the global economy. In recent years, national • Industrial parks established by enterprises with their Corporate SEZs own supply and market chains Continued on back... Existing SEZs in China • In 2014, there were 6 SEZs, 14 open coastal cities, 4 pilot areas and five financial reform pilot areas. • There were also 31 bonded areas, 114 national high-tech development parks, 164 national agricul- tural technology parks, 85 national eco-industrial parks, 55 national ecological civilization demon- stration areas, and 283 national modern agriculture demonstration areas.

Continued from page 1 across a number of areas. Policies has to be combined with top-down need to be transparent, targeted, governmental support. (iii) SEZs SEZs have contributed 22% of China’s consistent, actionable, and inclusive. can promote industrial expansion by GDP, 45% of total national foreign Industrial upgrading and market cultivating market leaders, supporting direct investment, and 60% of exports. research and development, and SEZs are estimated to have created Chinese building brands. (iv) They can over 30 million jobs, increased the incubate local ideas by integrating income of participating farmers by experience learning, innovation and production. 30%, and accelerated industrialization, (v) They can bring together resources agricultural modernization, and with SEZs has and expertise from government, urbanization. industry, and research institutions to move into more advanced value SEZs need to adapt to changing indicated a chains. conditions and continue to spur innovation. They face a number of number of factors Africa can benefit from China’s challenges, which requires that they experience and adapt to local take a long-term perspective, attract that contribute to circumstances. Key lessons are that (i) and develop new industries, reduce good infrastructure is essential, and (ii) duplication, deepen reforms and their success and effective organization and management encourage local entrepreneurship. effective operation. should focus on security, policy support, investment promotion, environmental Accurate functional positioning governance, service oriented will allow SEZs to maximize management, and introduction of their contribution according to expansion depend on industry and talent. China’s experience indicates that their strengths and comparative market-focused planning. Planning geography, resources, market, human advantages. In general, SEZs can pilot also needs to include identification of resources and capital are all necessary and test institutional innovations, capital investments and requirements for successful SEZs. This suggests that while free-trade oriented zones can for infrastructure and supporting SEZs in African should be experiment with financial models services. located in areas with good transport, to attract investment. Joint inter- Chinese experience with SEZs logistics and access to resources. and port development zones has indicated a number of factors Additional factors for success include can leverage resource sharing and that contribute to their success and a developed market economy and clustering for regional development. effective operation. (i) SEZs need local industry, a high concentration Industry clustering can take to be linked to economic opening of talent, innovative human resource advantage of geographic location and and capitalize on innovation. (ii) A policies, and access to quality financial resources. Experience indicates that bottom-up, problem solving approach markets and investment facilities. g effective strategic planning is required

Experience Gained in the Development of China’s Special Economic Zones, China Development Bank