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China's SEZs May Continue as Future Economic Models
Explosions to clear the land near a small southern fishing village 20 years ago did more than shake up the sleepy town. They changed China's landscape forever. Major construction followed those booms and the first Special Economic Zone was born. It was located in Shenzhen just across the border with Hong Kong. Soon, a number of other SEZs were set up along China's coastal regions.
What's so special about the special economic zones? They enjoy special treatment by the government, entitling them to privileges other parts of the country have to wait years to see. These include more autonomy in management, low tax and tariffs, preferential policies for investment and flexible financial policies.
DR. HE LIPING(China Finance and Banking Institute)said:"20 years ago, China was completely confined to a planned economy. The Special Economic Zones have broken off this confinement and started economic exchange between China and other countries. They also helped emancipate people's minds."
Designed as an experimental plot, the Special Economic Zone is a place to try out all kinds of reform policies and new practices. And it's one of the first places foreign companies look at for investing capital and technology.
In the last 20 years, these experimental plots have proved to be a remarkable success. Take Shenzhen for example. Its' annual growth rate has reached a staggering 30% on average. What's more important is that the successful practices in the SEZs have been widely applied to other parts of the country. The SEZs have literally become a national economic model.
But as China's market economy further develops and with more areas opening to the outside world, the rest of the country is gradually catching up. Many of the favorable policies which once applied only to the SEZs are now enjoyed by other regions. However, some experts believe the SEZs will continue to be used to lead the way in China's reform and economic development.
DR. HE LIPING(China Finance and Banking Institute)said:"After China joins the WTO, one big difference still remains between the Chinese economy and foreign economies. That is, the Chinese currency is not interchangeable with other currencies. I think the SEZs will make a good experiment in this regard."
Experts say the SEZs can also be used to further try out reforms for enterprises, property rights and personnel exchange. The Special Economic Zones can be used as a way to work out the kinks of further integrating China's economy with the world's. Moreover, the SEZs will continue to be an entry point for new ideas to be introduced nationwide.
Financial experts are also discussing the possibility of setting up SEZs in the nation's central and western regions. They hope the zones will help tap the economic potential of the vast inland regions, now the target of a major national development campaign. But others argue SEZs may not be a suitable model for the western regions due partly to geographical differences.
Still this doesn't rule out a version of the SEZ being used in China's heartland to economically revive areas that bustled with trade a few centuries ago.
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