Innovation: Incentives of SEZs' Development

Established amid the tide of reform and opening up, China's special economic zones (SEZs) hosted a celebration on November 14 to mark the 20th anniversary of their founding in Shenzhen, one of China's five SEZs in the southern coast.

Transcending the old planned economic system and exploring new ways of development in the 1980s, the SEZs found the right path to develop a market economy in the 1990s, enjoying amazing achievements on an incredible economic fast-track. Above all else, innovation appears to be the soul and power source behind the SEZs' sustained development.

"Highly rapid economic growth makes miracles in the SEZs. But more important is the demonstration role the SEZs have played in systematic innovation," said Wang Mengkui, director of the Development Research Center of the State Council.

Wang said it is impossible to value the significance of the SEZs' experience in establishing the socialist market economic system and opening to the outside world, which has greatly helped the people in the other parts of the country to emancipate the mind toward development.

It is now a common view among Chinese that the policies adopted in the SEZs 20 years ago are not surprising when compared with the current efforts to develop a socialist market economy in China.

A series of policies in the early years of the SEZs were labeled "special" because they were considered "unorthodox" under the planned economic system of the time. Under the theory of the market economy, however, what the SEZs did was pioneer work towards the establishment of a socialist market economy in China.

Li Yiping, a professor at the People's University of China, said it is because of the successful experiences the SEZs had in their early stages that China decided to establish the socialist market economic system after late senior leader Deng Xiaoping made his historical inspection tour to south China in 1992.

During the tour, Deng, known as the chief architect of China's reform and opening up, pushed the development of a market economy in China.

Making innovations in the economic system is the driving force to promote economic growth, and economists say that a new system would be like a kind of intangible investment and would yield rich social benefits when established.

The SEZs, especially Shenzhen, are pioneers in China for establishing the basic framework of a socialist market economic system. This has enabled them to keep their leading positions in the country's economic development since the mid-1990s when the preferential policies they enjoyed are no longer "special."

In recent years, the knowledge-backed economy has risen as a new force in Shenzhen, and scientific and technological innovations have contributed considerably to the development. Last year, Shenzhen reported a total value of new and hi-tech products topping 82 billion yuan (US$9.9 billion), accounting for 45 percent of its gross industrial output value. New and hi-tech industries have become the city's key sector in economic growth.

It is the new system that makes Shenzhen, a former fishing village with no advantage in professional personnel, a hi-tech city rivaling Beijing and Shanghai, said Professor Li.

A robust market mechanism adopted in Shenzhen has attracted capital and personnel from all over the country for the city's rapid development.

Compared with 20 year ago when the SEZs were initiated, the current domestic and international environment for China's social and economic development has changed tremendously.

The shortage of commodities, which long haunted the country, has come to an end, and the systems and policies formed in the past need to be reformed. With a socialist market economic system taking shape, conditions are favorable for further economic growth in China.

In addition, China's impending entry into the World Trade Organization signals that the country's economy will be further integrated into the world economy, Wang said.

The historical task of opening up and reform in China is not yet complete, and the SEZs will continue functioning as "experimental fields" for the country's economic restructuring, Wang pointed out.

In the 21st century, research needs to be made to learn new things and handle consequential new issues, he said, adding that "The innovative spirit, which has supported the SEZs' past development, will be the nation's treasure forever."

The four SEZs of Shenzhen, Zhuhai, Shantou and Xiamen have set their new goals this year to take the lead in realizing modernization.

Xia Yulong, a leading Chinese researcher on Deng Xiaoping's theory, said the SEZs, "a great arena" as he describes, are playing a leading role in the country's course of realizing modernization in the new century.

Whether they are able to keep up the innovation will determine their development and prosperity in the future, Xia stressed.

"Innovation is a systematic work. It's a must that SEZs spare no efforts to make innovations in the economic system, science and technology development, management and ideas," he noted.



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