In starting its concept of special economic zones back in the seventies China was thinking inside the country. It was planning the industrialization of China.

Especially since the 3rd Plenary Session of the 11th CPC Central Committee in 1978, the PRC government reformed the national economic setup.

During the 1980s, the PRC passed several stages, ranging from the establishment of special economic zones and open coastal cities and areas, and designating open inland and coastal economic and technology development zones. It is a process the continues but is undoubtedly a massive success, albeit with attendant problems which are being dealt with in an orderly manner. The success of these zones has not escaped the attention of other countries.

In Peshawar, the administrative center of Pakistan, Provincial Minister for Industries Syed Ahmed Hussain Shah said a ‘national trade corridor’ would be established on N-35, Malakand, in the name of China City to enhance trade with China.

He said the establishment of the proposed ‘Reconstruction Opportunity Zones’ (ROZ) in the border regions of Pakistan and Afghanistanwould improve the provincial economy, generate employment opportunities, and help stem terrorism in the area.

Meanwhile Sindh Minister for Industries and Commerce in Pakistan, Rauf Siddiqui has suggested establishing a 100km long industrial zone on the land lying between Karachi and Hyderabad.

Syed Ahmed Hussain Shah said that to eliminate rising unemployment in the country and strengthening local economy, we had to convince foreign investors including China and other countries to invest in Pakistan.

Dr Junaid Ahmed, Advisor to the Finance Ministry called on the government to establish Pak-China, Pak-Korea, Pak-Iran, Pak-Arab Economic Zones, in which industrialists from these countries could be provided opportunities to invest. When China started special economic zones it started a world revolution.
Sources: The News and Trading Markets.

The idea of zones being given their own wireless networks is something that was bound, eventually to happen.

Dragon Lu, executive vice president of Internet value-added service provider Shenzhou Unicom, spoke of the idea of building wireless networks in zones using what he calls 4G technologies, to provide cheap VoIP (Voice over Internet Protocol) services and broadband access, as well as carry various applications including video telephony, mobile TV and location-based services.

He said, ‘Initially we plan to build wireless broadband networks in nine cities, namely Beijing, Shanghai, Shenzhen, Dongguan, Chongqing, Guangzhou, Changsha, Changde and Wuhan. We have a license to provide Internet access services in these cities. We are currently in talks with investors in the remaining 16 cities and will apply for the licenses for those cities later.’

Basically the company is setting up ‘hot zones’ which are totally covered by WiFi.
Source: China Business News

IBM will establish the first Cloud Computing Center for software companies in China, at the new Wuxi Tai Hu New Town Science and Education Industrial Park in Wuxi, China.

Cloud computing is an approach to shared information technology (IT) infrastructure in which large pools of systems are linked together to provide IT services.

Cloud computing allows corporate data centers to operate more like the Internet by enabling computing resources to be accessed and shared as virtual resources in a secure and scalable manner.

The center will be built using IBM’s ‘Blue Cloud’ technologies, a series of cloud computing software based on open standards and open source software which link together computers to deliver Web 2.0 capabilities such as mashups (love the name), open collaboration, social networking and mobile commerce.

This new center will offer Chinese software companies the ability to tap into a virtual computing environment to support their development activities.

IBM will work with Wuxi Tai Lake Industry Investment and Development, the Wuxi municipal government, and its business partners to build the China Cloud Computing Center. This will be a shared facility providing each software company in the park with its own virtualized computing resource.
Source: IBM

A panel of Chinese senior government officials have been addressing investment and career opportunities at the Hyatt Regency, San Francisco Airport.

Sun Xuewei, deputy director of the General Office in the Guangzhou Hi-Tech Industrial Development Zone (seen in our illustration), has helped entrepreneurs establish and grow their businesses for more than a decade. He was one of the main speakers on ‘Investment, Development and Entrepreneurship in China’.

He made presentations on high-tech development zones across China and favorable policies for attracting entrepreneurs.

Two other officials who gave presentations were Wu Xiaohua, director of the Department of Research Project Management at the Academy of Macroeconomic Research, a section of the cabinet-level National Development and Reform Commission responsible for providing economic guidelines for decision-makers in China.

The event was sponsored by the Chinese Overseas Exchange Association.

According to Manufacturing and Technology News in 2006, China surpassed the United States as the world’s largest exporter, reaching $404 billion compared to U.S.$367 billion. China’s manufactured exports are expected to more than double those of the United States by 2011. Its economic boom has built up $1.2 trillion in currency reserves, the largest in the world. None of which negates the need to bring scientific and technological co-operation between the two countries. This seminar was part of that process.

Source: Asian Week

How the advent of special economic zones turned around the economy of China and why, inevitably, inexpensive goods will become more expensive.

Commentator and investment strategist Andy Rothman says economic development pushed by Beijing will be great for Chinese workers and the environment, but now all of us, that is the customers in the non-Chinese part of the world, will have to pay part of the cost.

In an excellent commentary the article shows that if China is to improve its standards for its people and, global warming and pollution the simple other end of the equation is that goods will cost more.

To illustrate the way in which this will happen he went back to the first wave of economic restructuring, in the 1980s which saw special economic zones established on the coast, where cheap labor fueled foreign-invested factories.

Soon inexpensive goods flooded into the US. This pushed down prices and restrained manufacturing wages.

He said that the second wave, in the 1990s, was the transfer of economic power from state-owned companies to entrepreneurs. ‘It was a process symbolized by China’s decision to join the World Trade Organization. Over a six year period, 46 million state sector workers, the equivalent to Germany’s entire work force, were laid-off in China. The private sector grew fast enough to pick up the slack, and now contributes a surprising 70% of China’s GDP.’

Now we come to the third wave which he confirms is just getting under way. It is an effort to push China’s manufacturing platform up the value-added chain.

He said, ‘Today, most of China’s exports are just assembled from imported components, and Beijing is hoping that in the future, more of the profit-creating parts will actually be made in China. The government is raising the minimum wage and enforcing environmental regulations. It’s also eliminating subsidies for the export of low-value, dirty products ranging from leather to toys, and steel and chemicals. This doesn’t mean China will quickly go high-tech, but Beijing is saying it no longer wants to be the world’s sweatshop for junk.’

All of this is great for Chinese workers and the environment, but it also means that the global deflationary impact of cheap Chinese goods is coming to an end.

Now all of us will have to pay part of the cost of higher Chinese wages and limits on overtime, and as Beijing enforces pollution controls, we will all have to start paying part of that expense, too.
Andy Rothman is with CLSA Asia-Pacific Markets which is an investment firm in Shanghai.
Source: Marketplace

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