Special Economic Zones in China

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    Special economic zones (SEZ’s) (经济特区) are special administrative unit within the People’s Republic of China (PRC) that enjoy broad economic and regulatory concessions in order better attract foreign capital and spur economic development.

    They first emerged towards the end of the 1970’s at the outset of China’s reform and open era, and have since become a key feature of the country’s economic policy and regulatory system.

    China’s paramount leader Deng Xiaoping (邓小平) first proposed the idea of establishing “special export zones” (出口特区) in April 1979, to serve as special export processing zones.

    In July 1979 the Central Committee of the Chinese Communist Party (CCP) and China’s State Council  approved the establishment of four special export zones – three of them in the Guangdong Province cities of Shenzhen, Zhuhai and Shantou, and one in the Fujian Province city of Xiamen.

    In May 1980 the term “special economic zone” was adopted in lieu of “special export zone,” with the issuance of the “Approval of the Minutes of the Conferences of the Two Provinces of Guangdong and Fujian” (关于广东、福建两省会议纪要的批示).

    On 26 August 1980, the 15th meeting of the Standing Committee of the 5th National People’s Congress (NPC) approved the “Guangdong Province Special Economic Zone Regulations” (广东省经济特区条例), announcing that the Guangdong Province cities of Shenzhen, Zhuhai and Shantou, as well as the Fujian Province city of Xiamen, would be set aside as special administrative regions that would be referred to as “Special Economic Zones.”

    The move marked the finalisation of the administrative and legal measures for the establishment of special economic zones in China, and their official launch.

    During the period from 27 May to 14 June 1981 the State Council convened a work conference on Guangdong and Fujian Province, as well as the special economic zones situated in these two provinces.

    The conference formulated “10 policy measures applicable to the nature and needs of the special zones,” as well as further refined the themes and direction for each of the special economic zones.

    Shenzhen and Zhuhai were designated as “comprehensive special zones,” encompassing industry, commerce, agricultural and tourism, while the special zones of Xiamen and Shantou would focused in export processing.

    In a discussion with Vice-Premier Gu Mu (谷牧) held on 15 June 1982, Deng Xiaoping vindicated the initial success of the special economic zones.

    “At present, those who speak highly of the special zones are many,” said Deng. “We must firmly continue with the special zones and cannot waver. At present they have been handled well. Both within China and abroad it is acknowledged that there are no problems that cannot be fixed.”

    Deng endorsed the successes of the special economic zones more publicly during an inspection tour of Shenzhen, Zhuhai and Xiamen held from 24 January – 10 February 1984.

    “The development and experience of Shenzhen has proven that our policy to establish special economic zones is correct,” said Deng while in Shenzhen.

    In a speech delivered on 24 February 1984, Deng emphasised the external orientation of the special economic zones and the need for greater opening.

    “We established the special economic zones for the implementation of opening policy, and there is a guiding ideology that must be clarified – which his that this isn’t about retraction, but opening.”

    During the period from 26 March to 6 April the Central Committee of the CCP and the State Council held a conference on China’s coastal cities, which called for the special economic zones to be “handled better and quicker,” as well as for the expansion of the Xiamen special economic zone to cover the entire island, and the implementation of policies for free ports.

    Shenzhen rapidly emerged as the the most prominent of China’s first four special economic zones, abetted key policy decisions made by the Beijing.

    On 1 July 1992, the 26th meeting of the Standing Committee of the NPC approved a resolution to confer Shenzhen with the power to formulate its own laws and regulations, elevating its status as an administrative unit.

    On 27 May 2009 the State Council approved the “Shenzhen Municipal Comprehensive Accompanying Overall Reform Plan” (深圳市综合配套改革总体方案).

    The Plan defined Shenzhen as “one region and four cities” (一区四市), including a “national comprehensive reform pilot zone” (全国综合配套改革试验区), a “national economic hub city” (国经济中心城市), a “state innovation model city” (国家创新型城市), an “international city” (国际化城市) and a “demonstration city for socialism with Chinese characteristics” (中国特色社会主义示范市).

    China is currently host to a total of seven special economic zones including:

    1. The Shenzhen special economic zone in Guangdong Province, approved on 26 August 1980.
    2. The Zhuhai special economic zone in Guangdong Province, approved on 26 August 1980.
    3. The Xiamen special economic zone in Fujian Province, approved on 7 October 1980.
    4. The Shantou special economic zone in Guangdong Province, approved on 16 October 1981.
    5. The Hainan special economic zone in Hainan province, approved on 13 April 1988.
    6. The Kashgar special economic zone in the Xinjiang Uighur Autonomous Region, approved in May 2010.
    7. The Khorgas special economic zone in the Xinjiang Uighur Autonomous Region, approved in May 2010.

    The State Council highlighted the key significance of China’s special economic zones in the “Guidance Opinions on Supporting Henan Province in Accelerating the Development of a Central Plains Economic Zone” (国务院关于支持河南省加快建设中原经济区的指导意见) released in October 2011.

    These include:

    1. Using foreign capital to introduce technology, raising the quality of products and strengthen the competitiveness of products.
    2. Using foreign commercial sales channels to adapt to the needs and habits of the international market place, thus expanding exports and increasing forex revenues.
    3. Facilitating the introduction of advanced technology and understanding global economic information.
    4. Facilitating the study of modern management and business experiences and training up management personnel.
    5. Expanding channels for Chinese to go out into the world, and opening a window for the world to understand China’s reform and opening policies.