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

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.

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

There are so many economic zones — sometimes slightly disguised with other names — that it is easy to get confused.

A bit of history may help put it in perspective.

Since 1980, China 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, China further opened 14 coastal cities—Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai—to overseas investment.
In 1985, the state decided to expand the open coastal areas, extending the open economic zones of the Yangtze River Delta, Pearl River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in south Fujian, Shandong Peninsula, Liaodong Peninsula, Hebei and Guangxi into an open coastal belt.
In 1990, the Chinese government decided to open the Pudong New Zone in Shanghai to overseas investment, and opened more cities in the Yangtze River valley.
This has ended up as a chain of open cities extending up the Yangtze River valley, with Shanghai’s Pudong as the ‘dragon 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.

In addition, 15 free trade zones, 32 state-level economic and technological development zones, and 53 new- and high-tech industrial development zones have been established in large and medium-sized cities.

It is massive. Huge. Almost beyond comprehension.

Not all of these zones are the same. Not all have the same abjectives. But effectively they all play multiple roles in developing the foreign-oriented economy, generating foreign exchange through exporting products and importing advanced technologies and as ‘radiators’ in accelerating inland economic development.

How well does it work? Take a single example in a single place. 78 Chinese and foreign-funded financial institutions have been set up in Lujiazui, Pudong, of which 24 foreign-funded banks have been approved to engage in RMB business.

Or, on a wider scale, there are at least 5,900 foreign-funded enterprises, with a total investment of nearly US$30 billion, and there over 5,000 major domestic enterprises across the country with a total registered capital of about RMB20 billion.
Source: China in Brief

Every time a government gets involved in business it gets a rush of acronyms to the head and does not explain them. Take NETDA as an example. It has a wonderful site but nowhere does it explain what NETDA means.

Eventually you discover that the Nantong Export Processing Zone (NTEPZ) is situated in Nantong Economic and Technological Development Area (NETDA).

NETDA is a state level development area with a planned eventual area of 2.98 square kilometers. The NTPEZ is close to the estuary of Yangtze River, and only eight kilometers to the new Suzhou-NangtongChangjiang Bridge which is under construction so that it is strategically positioned at the Gateway of the Yangtze River.

For logistics there could be not better position.

Ports along China`s coastline and famous ports worldwide can be reached via the river and seas; going up-stream along the river can get you to the provinces of Jiangsu, Anhui, Jiangxi, Hubei, Hunan and Sichuan, and further to Yunnan, Guizhou, Shaanxi and Henan.
As far as roads are concerned NETDA has links with Shanghai-Nanjing and Yanjiang Express-ways to its south and links with Nanjing-Nantong Expressway and the Yancheng -Nantong and Nantong -Qidong Expressways to its north.

NETDA is 100 km away from Shanghai Hongqiao International Airport, 150 km from Shanghai Pudong International Airport and 240 km from Nanjing Lukou Airport.

This is probably one of the top 10 development zones in China but it is not widely known because it is, perhaps, seen as part of the greater Shanghai connurbation.

There are plus points As an extension to Shanghai Port, direct customs- clearance station via water transport is in operation.

NETDA implements the system of in-advance declaration and in-advance on-line for processing trade. A computer system has been established to connect the Customs with the enterprises in NETDA through the Internet.
Source: NETDA

China has been reforming its policies in an effort to discourage overseas investment in energy-intensive, polluting and resource-based ventures — the so-called smokestack industries.

Delivering a work report to the 1st session of the 11th National People’s Congress (NPC) on Wednesday, Premier Wen Jiabao made known China’s determination to end its position as a global center of such industries.

He said, ‘We will limit or ban foreign investment in projects that are energy-intensive or highly polluting, limit or ban foreign investment in some areas of resource exploitation, and correct illegal practices for attracting foreign investment.’

Zhang Yansheng, chief of the Institute of Foreign Economics affiliated with the National Development and Reform Commission, said: ‘Given the size of the Chinese economy, I believe the international community will benefit from the country’s policy adjustments toward overseas investment in terms of resources, environmental protection and the balance of global trade.’

Overseas investors are now being encouraged to enter fields such as recycling, clean production, renewable energy, environmental protection and efficient use of resources.

They are restricted or banned from entering energy-intensive, polluting sectors or certain certain fields of resource exploitation, and export tax rebates for 1,115 commodities in these sectors have been ended.

Zhang Yansheng said the blind pursuit of foreign funds led to many short-lived smokestack factories that turned out low-end goods.

A report released by the China Council for International Cooperation in Environment and Development in late February disclosed that the number of overseas investors investing in polluting industries accounted for about 30% of overseas-invested ventures in 1995 and 84.19% in 2005.
Source: China View

The China-Singapore Suzhou Industrial Park has made great progress in the past 13 years due to policies encouraging innovation and investment.

The park covers about 4% of Suzhou’s land yet produces 15% of the city’s GDP, 25% of its foreign investment and 30% of foreign trade.

It was built in May 1994 in the east end of Suzhou in Jiangsu province and operates under the principle of ’selective investment’.

It mainly targets capital-intensive, technology-intensive and flagship projects.

A joint project between the Chinese and Singaporean governments, the industrial park has set up a comprehensive network to attract investors and guarantee the park secures multibillion-dollar projects.
The park has recently put more emphasis on projects that highlight science, technology and service.

It has approved over 3,000 foreign-backed companies with total actual foreign direct investment of $13.4 billion. The park’s trade volume has increased to $56.7 billion from a mere several million when it first opened.

It has created more than ten policies to improve innovation and encourage investors to set up research and development centers. It’s also launched plans to encourage intellectual property right protection and lure skilled professionals. It may be a model for industrial parks.
Source: China Daily

Chengdu will host the first leg of the 13th International IC-China Conference & Exhibition, the largest semiconductor event in China, on the last two days of this month. This will be at the Chengdu New International Exhibition and Convention Center and it underlines the fact the city is a major electronics hub in West China.

Chengdu in Sichuan Province has a population of 10,597,000, which makes Chengdu the fifth largest city in China in terms of population, following Shanghai, Beijing, Tianjin and Chongqing.

(To get this into perspective there is only one city in Britain with a population over one million and that is London. And while New York has eight million odd — not as many as Chengdu but trying hard — there are only nine cities in the United States with populations over one million. By any standards Chengdu is one of the major cities of the world although many Westerners look blank when you mention its name.)

Some quick facts:

Chengdu Hi-tech Zone was initiated in 1988 and ratified as a state-ranked hi-tech industrial development zone in 1991.
With a planned area of 82 km2, the Zone consists of the south zone and west zone.
Chengdu Hi-tech Zone south zone was the major starting industrial area of the Hi-tech Zone.
Chengdu Hi-tech Zone west zone with a planned area of 35 km2. This is the international manufacturing base of the Hi-tech Zone. The park is focused on the microelectronics-oriented IT industries, pharmaceutical industries based on modernized traditional medicine and precision mechanical industries characterized with advanced technology.
Sichuan Chengdu Export Processing Zone (EPZ) was the first state-ranked EPZ in west China.
Chengdu’s Hi-Tech Industrial Development Zone houses at least 30 Fortune 500 companies and 12,000 domestic companies, including China’s own Lenovo. Chip giant Intel has one of its IC assembly plants in Chengdu. Intel’s rival AMD is set to open an R&D center in this city. Other multinational tech companies with presence there include Nokia, Motorola, Microsoft, Alcatel and IBM.

There is an interesting YouTube about the zone. Click here.
Source: EE Times Asia

Acting Shandong governor Jiang Daming has said the eight-city cluster on the Shandong peninsula should position itself as a regional advanced manufacturing base and take advantage of its close proximity to Japan and South Korea.

The cluster comprises Jinan, Qingdao, Yantai, Zibo, Weihai, Weifang, Dongying, and Rizhao.

As a whole, they generate two-thirds of the province’s gross domestic product: RMB2.6 trillion($359 billion) last year.

The province plans to grow its GDP from the cluster by 15% and foreign direct investment by 40% annually until 2010.

A blueprint for the cluster for 2006-20, calls for six industrial zones to be developed on the Shandong peninsula.

These will cover the petrochemical and medicine industries in Dongying-Zibo, the electronic and IT industries in Jinan, home appliances in Qingdao-Rizhao, the automotive industry in Yantai-Weihai, textiles in Weifang and the marine industry in Rizhao-Qingdao-Weihai-Yantai.

Jiang Daming said, ‘About 70% of listed companies, 70% of foreign-funded firms and 80% of exported products in Shandong are from the city group.’

Shandong will speed up building a base for Japanese and South Korean manufacturing companies on the peninsula centered on Qingdao, Yantai and Weihai.

There are more than 6,000 South Korean and 1,500 Japanese companies on the Shandong peninsula. About 70% of all South Korean firms in China have a presence in Shandong.

Xia Geng, mayor of Qingdao, said there are 5,000 South Korean companies in the city and the number is expected to double in five years.

The coastal city is promoting the establishment of a bonded zone to attract more foreign and domestic investors to set up manufacturing bases.

Qingdao will try to facilitate the construction of a railway ferry project between China and South Korea, so goods can be moved cheaply.
Source: People’s Daily Online

Zhongguancun is an early industrial zone which is in the northwest part of Beijing and could be thought of, in a sense, as China’s ‘Silicon Valley.’

This is not a zone that has been designed from scratch. It has evolved rather than followed a strict plan.

Since the mid-1980’s it has been transformed from a quiet suburb designated for scientific research and higher education a major hub of high-tech business and research and development (R & D) labs. The following snapshots show the region’s startling transformation in a matter of years.

If you look at early pictures of the place in, say, the early 1980 you see it is a peaceful backwater with

each institute having a residential compound.

By 2005, the area hosted over 17,000 certified new technology enterprises; nearly 60% were in information communication technology or related sectors which is why you can think of it as China’s Silicon Valley. Most of the companies were spin-offs from universities and the nearby Academy of Sciences.

Compared to regions in other developing countries it has unique features. All Chinese technological commercial firms had to be created — from scratch — in the post-reform era that began in the 1980’s.

Further, ZGC does not feature multinational corporations (MNCs) as dominant players though MNCs have been welcomed as an integral part of the mix.

Technological progress in ZGC has been driven primarily by domestic demand rather than export needs.

Over 85% of ZGC’s revenue has come from domestic sales of products and services.

Many of China’s well-known ICT companies are found in ZGC: Lenovo, the world third largest personal computer manufacturer; Baidu, China’s leading Internet search engine company; UFIDA, China’s largest privately owned software company; Founder, China’s largest digital media company; Datang, one of China’s largest telecommunication solution companies; Aigo, China’s leading portable storage and digital entertainment product maker, and Sina.com and Sohu.com, two of China’s most popular Internet portals.

The advance of firms in ZGC is driven by the ability to create and implementadvanced technologies for the Chinese market.

This article is a very condensed part of a a chapter in The Inside Story of China’s High-Tech Industry: Making Silicon Valley in Beijing by Yu Zhou who is associate professor of Earth Science and Geography, Vassar College. Click on Source to read the rest of the chapter.
Source: Japan Focus