Albina Muratbekova

Kazakh National University, Almaty, Kazakhstan

China’s Special Economic Zones

The development of Special Economic Zones is one of the highlights of remarkable Chinese economic achievements. SEZ in China is classified in two levels by their scales. SEZ is the whole city even whole province opened to special financial, investment and trade policy, while Economic and Technological Development Zones (ETDZ) is a relatively small piece of land earmarked in coastal and other open cities for industry and trade development.

As early as 1980, under the opening-up and reform policy, the Chinese Government set up the first group of Special Economic Zones in Shen Zhen, Zhu Hai, Shan Tou and Xia Men, all of which are located in costal areas of Southeast China, followed by other 10 costal cities, Hai Nan Province and Pu Dong area in Shanghai as the second group. To further open to the outside world and to spread successful experiences of SEZs, at the beginning of 1984, the government decided to establish Economic and Technological Development Zones (Hereinafter referred to as ETDZ) along coastal line on the basis of successful experiences of and favorable policies granted to the SEZs in the previous period. Consequently, China's first group of 14 National Economic and Technological Development Zones (NETDZ) were established from 1984 to 1988 successively. Since then, SEZ in China has been developing greatly following 3 dimensions: extending from SEZs to ETDZs; stretching from east costal region to inland middle and west region; upgrading from fundamental industries to hi-tech industries. To date, there are 54 national-level ETDZ, among which, eastern coastal regions 33, Middle West regions 21. Besides the NETDZs, hundreds of provincial and municipal ETDZs have been established all over China [1].

The original intention and plan to set up national development zones were very clear. Further opening the 14 coastal cities was based on the establishment of SEZ. It's a part of the opening-up strategy after the successful trial of SEZ. According to the original plan, the SEZs or NETDZ's are pivot economic regions of China with main function of developing industry; introducing urgently-needed advanced technologies; absorbing FDI; establishing Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures, solely foreign-invested enterprises and Sino-foreign contractual research institutes; developing joint production, research and design; developing new technologies, manufacturing high-grade export oriented products; providing new-type materials and key components to the inland area, and spreading new techniques and technologies and scientific managerial experience. The supporting policies are also made mainly for industry development. SEZs or NETDZ is required to become the trial park in exploration of China's industrial modernization. Some development zones should have been turned into international trade bases. The government offers supports in the fields of land, revenue and finance and makes special arrangements in economic and legal system, rights and important project examination and approval. Their advantages and characteristics are:[2]

 Economic regions with foreign investment most centralized. The jurisdiction of examination and approval of foreign-invested projects could be further relaxed and implemented generally. The 54 ETDZs have developed a total area of around 400 to 500 square kilometers, which is only a small portion of the country with their accumulated foreign direct investment accounting for 15% of the whole country. In some cities, 30% to 40% FDI is generated in ETDZ. Statistics show that over 200 world famous transnational enterprises have invested more than 400 industrial projects and received generous returns.

 Regions with economic developing most rapidly. It is widely recognized that SEZs and ETDZs have become new economic platforms. Throughout the past years, the major economic indices remained rapid increases, much higher than the average increases of the country. For example, In the year of 2002, 49 China's NETDZs scored a GDP of US$ 40 billion, up by 29.4% than 2001; industrial value added of US$ 28 billion (Accounting for 71% of GDP), up by 28.3%; total industrial output of US$ 100 billion, up by 25.5%; tax revenue of US$ 6.2 billion, up by 23.1%; foreign trade value of US$ 53.6 billion, up by 36%, of which export composed US$ 27.5 billion, up by 33.8%, contractual foreign investment of US$ 15 billion, up by31%, actually-utilized foreign investment of US$ 7.7 billion, up by 23.4%; 10 to 20 percentage points higher than the national growth margin respectively. The growth rate is obvious in 16 middle and western ETDZs in particular, even 10 to 20 percentage points higher than eastern ETDZs. In some cities, half of the economic growth is provided by ETDZs.

 Regions with capital and technology intensive enterprises, hi-tech industries in the leading place. SEZs and ETDZs lay emphasis on capital-intensive, technology-intensive, hi-tech and export-oriented enterprises. The investment scale of every project in the zones is twice than that of the whole country. A large number of investment projects are large projects with investment capital over 10 million US$, some of which over US$ 30 million or even over US$100 million. Hi-tech production value occupies a large proportion in some ETDZs. The industrial structures become increasingly reasonable. At present, industrial chains are taking shape and all kinds of hi-tech industrial park and business pioneering park are emerging. Most of zones have established incubator, business-pioneering center. Moreover, some set up science and technology venture fund to support hi-tech projects.

Regions with most development potential and obvious geographic advantages. SEZs and ETDZs are located in the major economic cities and transportation pivots, boasting an apparent geographic advantage, convenient transportations, rich energies, water and human resources. These provide a profound base and huge development potential.

Regions with advanced infrastructures and sound support system. Over 20-odd years' development, the infrastructures in the zones are increasingly improved. An international standard investment environment and one-stop service system has been established. A large number of zones have passed the attestation of ISO140000. Moreover, the legal system in the zone is taking shape and all the service and social functions are becoming mature. On the basis of "7 Circulations and 1 Level", the theory of "New 9 Circulations and 1 Platform" is presented. 9 Circulations are circulations of information, market, rules, fittings, logistics, capital, talents, technologies and services. 1 platform is China economic platform in 21 century. Many ETDZs have established their own websites and implemented online government service. Developing finance and modern logistics, strengthening human third party industries, optimizing human environment and protecting natural resources are important goals of ETDZ.

Regions with good investment policies and legal environment. According to Chinese law, all the productive foreign funded enterprises are levied by the income tax rate of 15% and allowed an exemption or deduction term. The provincial people's congresses have passed administrative regulations on economical and technological development zones, which provide a reliable legal guarantee for ETDZs. With the improvement of foreign economic and legal regulations, the legal environments in the ETDZs are optimized.

 Regions in line with international practice and regions of high standard of opening-up. SEZs and ETDZs have grown up in the market economy, more adaptive to the rules of market economy and WTO. Under the macro guidance of the central government, ETDZs take a different economic operation mode to ensure enterprises in the zone have full freedom to determine their management. After China's entry into WTO, ETDZs further perfect their economic operation system, predigest approval procedures, reduce administrative fees, reinforce the role of intermediate agencies and enhance the service function of government organs. ETDZs have become regions in line with international practice and of high standard of opening-up.

References

1. Xiangming Chen. Magic and Myth of Migration: A Case Study of a Special Economic Zone in China //Asia-Pacific Population Journal - 2011-Vol. 2, No. 3

2. L.Wong. Recent developments in China’s special economic zones: problems and prognosis. The developing economies, 2010