Transcript Economic Zones

Economic Zones
• Presentation Outline:
• Special Economic Zones (SEZs)
• Economic and Technological Development
Zones (ETDZs)
Economic Zones
• Special Economic Zones (SEZ)
Shenzhen, established in 1980
Zhuhai,
Shantou
Xiamen
Hainan Island
• Purpose -- restrict the contagion effect (if any)
• Special tax status
• favorable investment climate for foreign investors
• SEZ continued
• low wage, cheap land and convenient
geographic location (water and air
transportation)
• export tax waived
• import duties and other taxes waived
• after-tax profits to be repatriated without
penalty
• decentralization of authority (red-tape
reduced)
Shenzhen
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Set up as the special economic zone in 1980
Testing ground for market socialist economy
Close to Hong Kong
No price control
No mandatory production goals
Ambition to be the main export and foreignexchange earnings center
• Base for technology, finance and banking center
Shenzhen- continued
• Migration of foreign-owned industries
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falling work efficiency
fewer preferential policies
more red tape compared with other cities
increasing higher labor and material costs
Xiamen
• City close to Taiwan
• special zones targeted to Taiwanese investors
• 1992, Ziaman’ s GDP/capita grew 5 times a
decade ago and 3 times the national average
• Used to have limited port facility. Now new wharf
(built) financed by World Bank and a Hong Kong
company
• Infrastructure projects (highway, railway, airport
funds from local and central governments-increasing difficult
Xiamen--continued
• Favorable terms for foreign investors
• large pool of unskilled workers
• weak on high-tech expertise
Shantou
• City between Guangdong and Fujian province
• Investments come from Hong Kong (mainly) and
other countries such as Singapore, Malaysia, and
Indonesia.
• Factory rent is low (1/3 of Shenzhen) and low
labor cost
• Economic and cultural centers
• Extensive infrastructure projects
• Traffic is a problem
Hainan
• Ambition to be a “second Hong Kong”
• Economic activity centers on property and finance
• 1992, first stock market trading in 4 property
companies and an import-processing firm -- later
on closed
• Airport links to Hong Kong and Southeast Asian
capitals
• tourist and finance center.
Zhuhai
• Smallest of all SEZs, closer to Macao (used
to be a Portuguese colony)
• good port facility handling 30,000 ton
vessels
• Good road links to Guangzhou
• trade Agricultural products
• light industries such as toys
Economic and Technological
Development Zones
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14 coastal cities
more skilled and better educated work-force
better communications
better industrial infrastructure
a tradition of commerce
Guangzhou
• Political, economical and cultural capital of the
Southeast China
• vibrant and fun-loving city
• Port city
• Many foreign banks to set up offices there
• broad industrial base with strength in light
industries (textiles, electronics, pharmaceuticals)
Shanghai
• A City with more than 13 million people
• 1% of China’s population contributed to 1/5 of
industrial output and 2/3 of international trade
• New Development area- Pudong
– Lujiazui Finance and Trade zone
– Jinquao Export Processing Zone
– Waigaoquio Free Trade Zone
– Zhanjiang Hi-tech Park
Shanghai-continued
• Competitive factors:
• Strategic location - good port and middle of
China
• Unique characteristics - heritage
• preferential treatments
• access to market
• quality of management
Lujiazui Finance and Trade Zone
• Catalyst for Pudong development
• central district business area
• future for Shanghai stock Exchange
building
• central bank and other banks offices
• Jinqiao Export Processing
– industrial center
– served by two ports
• Waigaoquio Free Trade Zone
– small no. of firms (least successful)
– uncertain tax and tariff regime
• Zhangjiang Hi-Tech Park
– bio-technical engineering, microelectronics,
laser computer and software and
telecommunications
Tianjin
• Gateway to Beijing
• low taxes, cheap land and cheap labor
• Closer to South Korea, which is an
important investor in that city
• Good port
Dalian
• Once occupied by Japan, somewhat influenced by
Japanese culture
• more international scope --Korean and Hong Kong
firms are moving in the city
• good port and airport
• focus on entreport
• predominance of money losing state-owned
enterprises