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Wuzhou: the Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone

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Wuzhou: the Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone 4 March 2015 Economists' Pick > Research Articles > Research Articles Wuzhou: The Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone In October 2010, the National Development and Reform Commission (NDRC) established four demonstration zones – including Wuzhou – with the express purpose of accommodating industries looking to relocate to Guangxi[1]. According to figures from the Wuzhou Municipal Bureau of Commerce, about 1,040 enterprises from eastern Guangdong have relocated their production plants to Wuzhou since 2010. With the Zhujiang-Xijiang Economic Belt Development Plan now elevated to national strategic level, Guangxi has been further encouraged to accommodate any Guangdong industries looking to relocate. In October 2014, Guangdong and Guangxi jointly signed the Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone Implementation Plan. This plan has accelerated the construction of the Pilot Zone and its neighbouring areas in a series of phases, and is set to usher in a new era of cooperation between Guangdong and Guangxi with regard to industrial relocation. Geographical Location of the Pilot Zone The Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone (Pilot Zone) comprises the Main Zone and the development zones. With the boundary between the cities of Wuzhou and Zhaoqing as its central axis, the Main Zone covers a total area of 100 square kilometres and spans both banks of the Xijiang River. As well as serving as the administration, office and integrated management centre for the Pilot Zone, the Main Zone will also form part of the Pilot Zone’s logistics base. To this end, it will link up with the Wuzhou Round City Highway, Lijiazhuang wharf and the commercial logistics park being planned for Zhaoqing. The focus of the Main Zone will be on developing a specific range of industries, notably electronic information, food production, forestry products and chemicals, biotechnology, new materials, equipment manufacturing, medical and health, energy saving and environmental protection. Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone The two development zones are located in Shexue (in Wuzhou) and Pingfeng (in Zhaoqing), with each occupying an area of 20 1 Wuzhou: The Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone square kilometres. As an integral part of the Pilot Zone, the development zones are under a unified management and benefit from the same incentives and advantages as the Main Zone. The Shexue Zone is only eight kilometres from the Main Zone, with the Wuzhou Round City Highway as its major transportation link. In terms of its specialisation, the Shexue Zone will develop high-end equipment manufacturing, new materials technology and modern services. The Pingfeng Zone is 15 kilometres from the Main Zone, with Yuegui Avenue acting as its major transport link. The sector focus here is equipment manufacturing, new materials technology and other related industries. Phased Development of Infrastructural Facilities The development of the Pilot Zone will take place in three phases, all implemented between 2013 and 2030. The priorities for Phase One - set to be completed in 2015 - will be constructing interprovincial infrastructure facilities within the Pilot Zone, setting up a co-ordinated development policy system, and developing an area of around 15 square kilometres. The 2015 GDP target of the Pilot Zone is Rmb15 billion. As of the end of August 2014, the Pilot Zone had signed contracts with 63 enterprises, including Microsoft, BYD and Sinotrans. Significantly, these are all companies that primarily focus on high-tech sectors, particularly telecommunications, electronics, electrical appliances and software. At present, the Flan Printing Group, ZTEICT of Shenzhen, and Wuzhou Huangpu Chemical Pharmaceutical have all established operations in the zone. Phase Two will take place between 2015 and 2020, with a proposed development area of 50 square kilometres. A major priority of this second phase will be improvements to the transportation network facilities both within and outside the Pilot Zone. It is also foreseen that secondary and tertiary industries will lead industrial development in the zone. In addition to accommodating industries relocating from Guangdong, efforts will also be made to foster emerging industries and modern services. The industrial development of the Pilot Zone is expected to drive and optimise the industrial Guangdong-Guangxi Interprovincial Pilot system in the Xijiang economic belt. The GDP Cooperation Special Zone Office target of the Pilot Zone for 2020 is Rmb30 billion. Phase Three is scheduled for the period 2020-2030, when development and construction will be completed. This will establish the Pilot Zone as a co-operation platform for industrial relocation and industrial transfer from Guangdong to Guangxi. The Pilot Zone’s GDP target for 2030 is Rmb100 billion. Development Goals of the Pilot Zone As a base for accommodating and upgrading relocated industries, the Pilot Zone is intended to promote both the clustering of labour-intensive industries, as well as nurturing the growth of new industries and modern services. It will also have an emphasis on accommodating certain industries, notably electronics, food production, equipment manufacturing and forestry. Efforts will also be made to encourage enterprises to move from low value-added products towards high value-added, 2 Wuzhou: The Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone specialised and branded items as part of their industrial relocation process. Taking into consideration the needs of manufacturers for upstream and downstream supporting industries, the Pilot Zone will also strive to extend its chain of supporting industries. The development of high-tech industries and emerging industry clusters, such as new materials technology, biotechnology, energy saving and environmental protection, will also be encouraged within the Pilot Zone. Fully utilising the Xijiang golden waterway and its improving transportation networks, the Pilot Zone has been envisaged as a commercial logistics centre as well as an international logistics centre for eastern and western China, Hong Kong, Macau and ASEAN. Positive efforts will also be made to develop producer services, including finance, R&D, design and consultancy. First-Mover in Interprovincial Co-operative Management Through the co-operation between Guangdong and Guangxi - and between Zhaoqing and Wuzhou - an interprovincial zone development management model has been established, with “the province/region as the engine, the city as the main body, and independent operation”. A joint conference, under the auspices of the mayors of the two cities, is the decision-making body for the development and construction of the Pilot Zone. This joint conference is responsible for planning, building, managing and operating the Pilot Zone. This is line with Guangdong and Guangxi’s commitment to implement unified planning for industrial development and infrastructural facilities construction, as well as formulating a unified policy for recruiting enterprises to the zone. Enterprises operating in the Pilot Zone can enjoy the benefits of the existing preferential policies of both Guangdong province and Guangxi autonomous region, including tax incentives. While the Guangdong business income tax rate is 25%, for instance, under the Go West initiative, Guangxi-based[2] industries operating in a number of designated categories can claim a 15% preferential income tax rate. Wuzhou-registered enterprises in the Pilot Zone are entitled to this lower tax rate. Apart from tax breaks, under the Several Opinions on Further Advancing the Work of Industrial Transfer (Yue Fu Ban [2010] No.61), the Pilot Zone also allows industrial projects classified under the encouraged category in the Catalogue for Guiding Industrial Restructuring in Guangdong Province, and with a high land utilisation efficiency rate, to acquire industrial land at 70% of the minimum standard land price. This helps to lower the land-use costs for enterprises. Transportation Advantages The Pilot Zone is traversed east-west by the Xijiang River. Under the Guangxi Xijiang Golden Waterway Construction Plan, the section of the Xijiang River between Wuzhou and Zhaoqing will be upgraded to become a 3,000-ton class channel. At the same time, the channels in Hejiang and Guijiang will be improved to enhance the river’s overall navigability. It is expected that, by the 2017 completion date, connections between the Pilot Zone and the Pearl River Delta, the Beibu Gulf and ASEAN will be further strengthened. Together with the existing five wharves – Lijiazhuang, Tangyuan, Zijincun, China Grain Reserves Corporation (Sinograin) and Pingfeng (under construction) – the annual throughput could total more than 50 million tons. According to one Zhaoqing- based logistics company, improvements to the Xijiang golden waterway will help to lower shipping costs and make the company more attractive to potential cargo sources. 3 Wuzhou: The Guangdong-Guangxi Interprovincial Pilot Cooperation Special Zone In addition to the waterway improvements, work has also begun on the construction of land transport infrastructure to link the Pilot Zone to its neighbouring areas. Work on the Guangzhou-Foshan-Zhaoqing expressway (to the north of the Main Zone of the Pilot Zone) is under way and the project is scheduled for completion in 2016. This year, work has also started on the Liuzhou-Zhaoqing railway, which
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