SEZ: A great initiative of China’s reform

The term “special economic zone” (SEZ) was first proposed by China in 1979 and was implemented in Shenzhen. Over the next four decades, China has set up seven SEZs, in response to world development trends and the demands of the people. At the forefront of reform and opening up, the SEZs have witnessed China’s transition from an extreme predicament to a miraculous development. The SEZs have not only trailblazed a new path for China’s rapid and healthy development, but also provided an accessible paradigm for the other emerging countries.

I. SEZs are vivid reflections of China’s reform and opening-up process

The establishment and development of China’s SEZs have gone through an exploring process from planning, proposing to promoting, which vividly reflects strategy of China’s reform, opening up and innovation.

Guided by the policy of reform and opening-up, China established four SEZs in Shenzhen, Zhuhai, Shantou and Xiamen in1980. In 1984, it further opened 14 coastal cities including Shanghai and Ningbo. Since 1985, seven economic open zones, including the Yangtze River Delta and the Pearl River Delta, have been set up one after another, forming a coastal economic open belt. In 1992, the massive central and western regions started to benefit from the reform and opening policy. 15 bonded zones, 32 economic and technological development zones, and 53 high-tech industrial development zones were established in the large and medium-sized cities. In 2018, China launched the Hainan Pilot Free Trade Zone and Free Trade Port. In 2019, China deployed the plan of Guangdong-Hong Kong-Macao Greater Bay Area (GBA) with the highest level of openness and the strongest economic vitality. So far, China has formed an all-round, multi-level, and wide-ranging pattern of opening to the world that combines coastal, river, border, and inland areas. These open areas, benefiting by the implementation of different preferential policies, have played a role in developing an export-oriented economy, earning foreign exchange through exports, and introducing advanced technologies. A lot of useful experience was accumulated for China to enter the international market.

During the past over four decades, Shenzhen has transited from a border town focusing on processing trade to the fourth modern metropolis in China in terms of economic output. Shanghai has become the most promising aviation hub in the Asia-pacific region; Xiamen has developed into an internationally renowned industrial, trade and tourism coastal modern city; Zhuhai, Shantou, and Hainan are also booming and prosperous, showing the SEZs with Chinese styles.

II. The main characteristics of China’s SEZs

In essence, China’s SEZ is one of the main forms of free port zones in the world, which is oriented to attract foreign investment and advanced technology and scientific management methods by launching preferential policies, and ultimately to promote the economic and technological development of the country as a whole. Generally, it is characterized with following metrics:

1. Designate specific areas as SEZs. SEZs are normally close to ports or embrace convenient transportation with the lower logistical costs.

2. Introduce preferential policies and mechanism. In the SEZs, the companies can enjoy the reduction and exemption of tax and duties, having higher level of discretion in a convenient and safe investment environment.

3. Implement special management mode. The administrative authorities of the SEZs have some discretion to formulate regulations on management of the zones based on the local conditions.

4. The products are mainly oriented to export. Foreign investment and foreign exchange reserves are surging by exporting of products and services, which dramatically promotes the economic development of the country.

III. The important role of SEZs in China’s reform and opening up

1. “Experimental fields” for opening up and scientific development. Since the reform and opening up, SEZs are the windows to the outside world as well as the most prosperous areas of foreign exchanges. On the one hand, with the support of the central government’s policies, the SEZs have attracted massive capital, talents, technology and management experience and created vast employment opportunities. On the other hand, as the channel of the interconnection of domestic and international resources and markets, the SEZs have made perfect explorations and provided preciousexperience for the development of socialism with Chinese characteristics.

2. “Trailblazers” in industrial upgrading and independent innovation. During the global industrial transition, China’s SEZs have absorbed international advanced management experience and gathered a number of fields involving electronic information, biotechnology, aerospace, environmental protection. The high-tech industry cluster has gradually formed an important base of national high-tech industries. While optimizing of the industrial structure, they have also greatly improved the protection of intellectual property rights and independent innovation capabilities, giving full play to their leading and exemplary roles in the country.

3. The explorers of coordinated development and harmonious progress. Firstly, in view of the vast territory, large population, and complex conditions, China implements a continuous upgrading strategy of experimentation, summary, and promotion for SEZ’s development. During the 40 years’ practice, the SEZs have taken the lead in exploring regional interconnection, increasing the construction of high-speed rail networks, expressway networks, airport clusters, port clusters, water resources allocation, and scientific and technological infrastructure. Secondly, based on the principle of high-quality development, construction of strategic industrial clusters are orderly promoted. An orderly industrial gradient transition has been achieved from the initial pilot project on the eastern coast, to the rise of central China, the development of the western region, the revitalization of the northeast and other old industrial bases. Finally, equalization of social security public services in the coordinated development of the regions has been realized, which is the most essential to a harmonious society. The economic volume and technological development of each region may not be absolutely balanced, but the SEZs have offered vast experience in public services, such as medical care, education, employment and so on, which has paved a new way for China to gradually develop towards social equalization.

4. The best practitioner of mutual learning among civilizations and sharing destiny

Since 1986, Shenzhen has become an international sister city with 88 cities in 56 countries and regions. Relying on its geographical advantage over Portuguese-speaking countries, Zhuhai is working with Macau to vigorously establish a platform for cultural exchanges and cooperation between China and Latin American countries. Xiamen is also attracting more and more foreigners to study, work, and settle down. The Guanren community in Xiamen is home to more than 1,500 people around 46 countries and regions.

Since 2020, exchanges among countries have been deeply blocked by COVID-19, but the civilized bridge at people’s hearts has not been broken. Millions of boxes of medical masks printed with verses of the ancient Korean poet Xu Yun were sent from Shenzhen to Busan. On the container of pandemic prevention materials sent from Bao’an District of Shenzhen to Avignon, France, the famous French saying “Go ahead and victory will come” is printed. Joining hands to combat with COVID-19 is a lively practice of inter-civilization exchanges and overcoming challenges together. In China’s SEZs, various civilizations and cultures coexist in harmony, showing the pursuit and adherence to the common values of all humanity at all times, and become the best interpretation of the development of a community with a shared future for mankind.

IV. The significance of China’s SEZs to the world

Worldwide changes of a scale unseen in a century are undergoing. It is our common goal to pursue sustainable economic development, social prosperity, personal happiness and dignity, and win-win cooperation for all humanity. All countries should seize the critical historical opportunity, find a suitable development path according to their own national, social, and people’s conditions.

Pakistan has made useful attempts in the development of SEZs, including establishing nine SEZs and ten export processing zones, with different blueprints and flexible preferential policies tailored to local conditions.

I truly hope that the development experience of China’s SEZs will be beneficial for Pakistan.

The writer is the Consul General (CG) of Peoples Republic of China in Karachi