This is an interesting development and the best way to think about it, perhaps, is that the European Common Union is sort of coming to Asia.

In Viet Nam Prime Minister Nguyen Tan Dung has approved a plan to set up nine additional economic zones along the country’s bordergate region by 2020, bringing the total number of EZs in the country to 30.

This is part of a larger economic development plan for the bordergate region up to 2020.

It focuses on sustainable development and long-lasting friendship and political security between Viet Nam’s border provinces and neighbouring provinces in China, Laos and Cambodia.

Nguyen The Dat, head of the zone’s State management team said that another bordergate economic zone on the trans-Asia highway, Moc Bai in southern Tay Ninh Province, also has great potential. (At the moment it is a rather sordid duty free zone for dealers but that first stage will pass. And it is a port city so does not apply in the context of co-operation with China. But the idea of a duty free EZ still applies. )

Located 70km from Ho Chi Minh City and some 170km from Phnom Penh, the 21.3ha zone opened in March, 2006 and has a commercial-industrial area and a duty-free supermarket.

The logical extension of these bordergate EZs is that China may have the equivalent, where applicable, on the other side of the border. Take it that Vietnam comes second after China in manufacturing potential and you can see a supersource emerging along the border areas.
Source:Vietnam News

Nine companies or entities from across China and India — each side of the border — have signed separate agreements to explore mutual benefits and help each other achieve joint development. These were signed under the aegis of Suzhou Municipal People’s Government.

Indian entities that signed the MoU included Zaza Technologies, Bangalore Chamber of Industry and Commerce, Standard Chartered, Capgemini Group, Sunpa Sobha Software, Patni Computer, Logistic Solutions, Hero Mindmine and Excelerate Technology.

This means that Bangalore, the IT Software Outsourcing hub of the world and Suzhou, the IT hardware manufacture outsourcing hub are going to work together which will be a major step forwards in Information Technology in both countries.

Chou Weiquiang, vice-mayor, Suzhou Municipal People’s Government, said, ‘The cooperation in the services outsourcing field between China and India is not only necessary for the software/hardware enterprises from both the countries to face international competition but also indispensable for the development of the services outsourcing industry in China and India as well.’

It is a remarkable development and could mean a major boost in the area.

Built around the Yangtze River delta, Suzhou has developed into one of the most important IT hubs of China and now it will be an ‘offshore outsourcing’ nerve center directly connected and co-operating with its Indian equivalents.

The services outsourcing industry of Suzhou (software alone) during 2007, had an output of $3.5 billion (including embedded software) of which exports accounted for $1.2 billion The city so far has attracted over 400 software enterprises, among which more than 80 are involved in software outsourcing business.

Add to that concentration of talent and enterprise the cooperation with the Indian side and you have a Chindia Silicon Valley. (And, no, the word Chindia was not invented for this article. Look it up in Google and you will find there are hundreds of entries.)
Source: PRWire

On an unlikely site called I Think, Therefore I Am, Edward Anderson has a long essay which is well worth reading as another perspective on China and the effect of the economic zones.

It reads, in a much edited form:

The current leadership in China is the People’s Republic of China (PRC). The modern, average Chinese citizen has a mixed perception of Mao, but overall they view Mao as a nostalgic founder figure, much like an American’s view of George Washington.

Dong Xiaoping became the President of China in 1981 after Mao’s successor and took advantage of the economic and political foundations laid before him to bring the free market to China. Xiaoping was the driving force that lead China into the modern World economy.

Dong created special economic zones along the coast that allowed free market trade. These special economic zones were extremely successful, by creating new wealth and prosperity

China further realized the power of the free market.

Cities such as Shanghai and Shenzhen grew at break-neck paces, grabbing the World’s economic attention. Shanghai in about thirty years became the fourth largest city in the World and a major financial hub, mainly because of its special economic zone status.

The successes of these special economic zones showed the Chinese government that the direction of future economic success did not lay in Marxist economic planning, but lay in the free market.

China continued to implement free trade into its economy, but not too fast as to create social unrest and lose political power.

Today, China is increasingly gaining economic political power; with this power China is ever more on the minds of Americans. The perceptions of China by Americans are critical in understanding the relationship between the two countries.

From the perspective of many Americans, China is blamed for many of the World’s problems. Lately, there has been a growing American sentiment against China. China is looked as a threat to the American economy and therefore is given a negative label.

An examination of the economic growth trends in China will give a prediction of the future economic outlook of China. Growth in China will not look like growth in America, since the demographics of China are much different than in America.

The differences in demographics once again show how a new perspective is needed to understand China.

This article is long. It is, arguably, slightly biased. It is informative. It suggests new approaches. You can read the full article by clicking HERE.
Source: I Think Therefore I am

The original saying was: ‘Better to have a bed in Puxi than a house in Pudong.’ That has now changed.

A taxi driver said, ‘Nobody wanted to go to Pudong about 20 years ago. Pudong used to be farm land and the only mode of transport for people going from Puxi to Pudong was the ferry.’

Pudong is now the future of the metropolis being pushed forward by projects like the Waigaoqiao Free Trade Zone.

Against the backdrop of the Oriental Pearl Tower, this the a scene of a new development under way in the Lujiazui financial centre in Pudong, Shanghai.

On April 18, 1990, the Chinese Communist Party announced big plans for the 570 sq km area with a population of three million.

First, it was the emergence of the Lujiazui financial center, then key projects like the Waigaoqiao Free Trade Zone, Pudong International Airport and the World Expo 2010 site.

Over the past 18 years, Pudong has seen an average of 18% growth every year. Last year, it achieved a gross domestic product (GDP) of RMB275 billion ($123.9bil), a 14.4% increase over 2006.

The ultimate goal of the Shanghai government is to build a capitalist environment in Pudong, based on the socialist system.

Pudong New Area District publicity bureau chief Chen Gaohong said in briefing reporters recently on the 18 years of development in Pudong sqaid, ‘The federal government requests the Shanghai municipal and Pudong district governments to play a bigger role in this respect.

‘The late Deng Xiaoping said that the development of Pudong would have to be different from other coastal economic zones such as the Pearl River Delta.

‘We must start off with a complete package from manufacturing and research and development to marketing, and focus on high-tech production.’

Earlier this year, Pudong announced plans to build one million square meters of apartments to accommodate non-local professionals.
Source: The Star Online

Daniel Inman has written a long and excellent article on evaluating cities in China and their potential.

What follows is but a small part of the article edited right down to fit in the space available:

Many of China’s cities are already economically significant on an international scale. Take Shenzhen for example, a city of over eight million people just across the border from Hong Kong. Thirty years ago, this former fishing town was chosen by Deng Xiaoping to be China’s first Special Economic Zone, which opened it up to trade with the outside world. Now it is China’s largest manufacturing centre, it has the country’s second largest port, and is home to two stock exchanges.

New cities will all grow into places with their own economic identity, dependent on a wide range of factors, such as geography, natural resources, and the qualities of the local population.

However, among this diversity they are all modernising in a way that will attract the kind of foreign investment that has accelerated growth in Shanghai, Beijing and Shenzhen. This means strong investment in both the hard and soft infrastructure needed to create an environment attractive to a foreign business.

Tianjin, a giant port city close to Beijing, pulled in nearly $6 billion in 2007 in foreign investment as a result of the Tianjin Economic-Technological and Development Area (TEDA). There are already 62 Fortune 500 companies with operations in TEDA and it is the money and technology that foreign companies provide that is helping to propel Tianjin into the first rank of Chinese cities.
More, much, much more, by clicking HERE.
Source: CNBC European Business

China’s southernmost Hainan Province, the largest special economic zone (SEZ) in the country, celebrated its 20th anniversary in its capital city of Haikou.

Chinese Vice Premier Li Keqiang (seen in our illustration) at the celebration ceremony said, ‘Setting up SEZs was an important measure of China’s reform and opening-up. The SEZs have played a pioneering role in prompting the reform.’

He asked the island province to build itself into a shipping hub, logistic center and export processing base for southeast Asia.

Founded 20 years ago, Hainan SEZ was a pioneer in experimenting with the market economy, developing the land with foreign investment, implementing a provincial insurance system, abolishing the agricultural tax and school fees for nine-year compulsory education.

The province also unveiled a blueprint aiming at building itself into a major international tourist destination by 2028.
Source: China View

Sometimes it is difficult to understand all the terms used. This is a brief primer.

Special Economic Zones (SEZs) are, for the moment, always located in mainland China. The government gives SEZs special economic policies and flexible governmental measures. This allows SEZs to utilize an economic management system that is especially conducive to doing business.

All of which seems pretty clear. And it has been going on since 1978 when the government decided to reform the national economic setup. Our illustration shows Shenzen, an early starter.

Since 1980, the PRC has established special economic zones in Shenzhen, Zhuhai and Shantou in Guangdong Province and Xiamen in Fujian Province, and designated the entire province of Hainan a special economic zone.

In 1984, the PRC further opened 14 coastal cities to overseas investment: Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai.

Since 1988, mainland China’s opening to the outside world has been extended to its border areas, areas along the Yangtze River and inland areas.

(For the record Hainan Island is China’s biggest special economic zone.)

Shortly afterwards, the State Council expanded the open coastal areas, extending into an open coastal belt the open economic zones of the Yangtze River Delta, Pearl River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in south Fujian, Shandong Peninsula, Liaodong Peninsula (Liaoning Province), Hebei and Guangxi.

In June 1990 the PRC government opened the Pudong New Area in Shanghai to overseas investment, and additional cities along the Yangtze River valley, with Shanghai’s Pudong New Area as its head.

Since 1992, the State Council has opened a number of border cities, and in addition, opened all the capital cities of inland provinces and autonomous regions.

Now it get a bit complicated because the nomenclature changes along with the developments.

At that time 15 free trade zones, 32 state-level economic and technological development zones, and 53 new- and high-tech industrial development zones were established in large and medium-sized cities. What are the differences between these categroies. They tend to have different preferential policies although the general aim is always the same — building up trade.

The five special economic zones are foreign-oriented areas which are primarily geared to exporting processed goods, integrating science and industry with trade. In 1999, Shenzhen’s new-and high-tech industry became one with best prospects, and the output value of new-and high-tech products reached RMB81.98 billion, making up 40.5% of the city’s total industrial output value.

To sum up the attractions (and they have seriously worked because these zones have been a great success are:

1. Special tax incentives for foreign investments in the SEZs.
2. Greater independence on international trade activities.
3. Economic characteristics are represented as 4 principles:

a. Construction primarily to rely on attracting and utilizing foreign capital.
b. Primary economic forms to be Sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises.
c. Products to be primarily export-oriented.

d. Economic activities primarily driven by market forces.

It helps a lot that it is a tropical paradise. China’s southern island province of Hainan has a blueprint to build itself into an international tourist destination by 2028. With an area of 34,000 square kilometers, tropical and subtropical Hainan was established in 1988 as a province and approved as a special economic zone enjoying preferential development policies.

Chen Cheng, Hainan’s vice governor, said at a press conference here the province would take about 20 years to internationalize its tourism facilities, services, products and improve the environment.

Well, yes, there is a lot in that but Hainan is already, in its own right, a wonderful tourist destination. Twenty years may be the time needed to reach its maximum. But the time it will take to become a major destination in its own right could probably be measured in months, not decades.

According to the action plans for the long-term goal of a first-class international tourist island the province will continue to implement its visa-free policies for tourists and open up aviation rights, introduce overseas travel agencies and hotel management corporations.

Last year, the island had 18.4 million tourist arrivals, including 750,000 from overseas, bringing in RMB17.1 billion (US$2.4 billion) in revenue. The total tourist numbers and revenue were 24 times and 150 times, respectively, greater than those of 1987. Let us not work on twenty year plans. Let us think, instead, of next year.
Source: China View

Ningbo Free Trade Zone (NFTZ) was one of fifteen free trade zones approved by the State Council since 1990 and is now over 15 years old.

Xia Qun, vice-director of Administrative Committee of NFTZ, said, ‘In 1992, the State Council approved the setup of the NFTZ; in 2002, the State Council approved Ningbo Export Processing Zone, and in 2005, the Ministry of Information Industry approved NFTZ as one of the first National Electronic Information Industrial parks. The dates are the milestones for the development of NFTZ.’

The 6.25-square-kilometer NFTZ has set up a free trade zone, an export processing zone, and a bonded logistics zone covering high-tech processing, international trade and logistics industrial clusters.

By the end of last year NFTZ has attracted 6,000 enterprises with registered capital of US$51.3 billion, of which 940 are foreign-funded firms from more than 60 countries and regions with investment amounts of US$5.3 billion.

Meanwhile the figures keep ascending.

Xia said independent innovation is the key for a Zone’s rapid development.

He said, ‘The administered committee of the NFTZ promotes the construction of innovation systems and promotes the achievements of advantageous technology and development of high-tech industry with building a State level IT industrial base as the objective, and independent innovation as the core.’

This year the zone expects an industry output value of RMB12.8 billion, international trade volume of US$3.2 billion and a fiscal income of RMB359 million for every square kilometer next year.

Xia Qun said, ‘The NFTZ is looking forward to a promising future.’ With figures like that who would argue?
Source: Ningbo Life

As one of China’s four special economic zones, the coastal city Shantou has outlined a ‘three economic belts’ development strategy to build on its leading position in Guangdong province.
That is:

An urban economic belt in the east.
An industrial economic belt in the south.
An ecological economic belt in the west.

Huang Zhigang, Shantou’s Party secretary said, ‘The strategy, which is of great significance to the city’s future development in the next decade, will help develop Shantou into a real environmentally friendly coastal city,’

The eastern urban economic belt, which starts from the Gulf Bridge in the west to Laiwu in Chenghai district, will be developed into the city’s Central Business District.

Construction of the planned 80 sq km along the coast will begin in October.

Of the planned land, about 20 sq km has to be reclaimed from the sea.

Huang Zhigang said, ‘Shantou has long been affected by limited land resources, So we have to reclaim land from the sea for the new urban expansion development.’

Construction of a 21-km-long sea wall and a 16-km-long road along the coast will begin this year.
Huang Zhigang, perhaps a trifle optimisticly, said, ‘We will also build a long scenic belt along the eastern coast area, providing a real beachscape facing the South China Sea,’

Meanwhile, the southern industrial economic belt, which starts from the bonded zone and Guang’ao Port in the east to Chaonan district, has a planned area of about 117 sq km.

Within the industrial belt, construction has begun on Huaneng Haimen Power Plant, one of Guangdong’s key industrial projects during the 11th Five-Year Plan (2006-10).

Guang’ao Port, another big project within the industrial belt, has also started construction.

A natural deep-water port, Guang’ao Port has so far opened seven international routes to the Mediterranean, Middle East, Philippines and Japan, and 14 routes directly to 25 domestic ports.

A new railway section connecting to the Shenzhen-Xiamen Railway is being built.

Shantou will also develop an ecological economic belt in the west. Covering an area of about 388 sq km, the ecological belt will mainly develop environmentally friendly agriculture, hi-tech industries, a science and education zone and an urban tourism zone.
Source: China Daily