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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)

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Economic Zones

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  1. Economic Zones • Presentation Outline: • Special Economic Zones (SEZs) • Economic and Technological Development Zones (ETDZs)

  2. Economic Zones • Special Economic Zones (SEZ)Shenzhen, established in 1980Zhuhai, Shantou XiamenHainan Island • Purpose -- restrict the contagion effect (if any) • Special tax status • favorable investment climate for foreign investors

  3. 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)

  4. Shenzhen • 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 foreign-exchange earnings center • Base for technology, finance and banking center

  5. Shenzhen- continued • Migration of foreign-owned industries • falling work efficiency • fewer preferential policies • more red tape compared with other cities • increasing higher labor and material costs

  6. 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

  7. Xiamen--continued • Favorable terms for foreign investors • large pool of unskilled workers • weak on high-tech expertise

  8. 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

  9. 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.

  10. 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

  11. Economic and Technological Development Zones • 14 coastal cities • more skilled and better educated work-force • better communications • better industrial infrastructure • a tradition of commerce

  12. 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)

  13. 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

  14. Shanghai-continued • Competitive factors: • Strategic location - good port and middle of China • Unique characteristics - heritage • preferential treatments • access to market • quality of management

  15. 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

  16. 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

  17. 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

  18. 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

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