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Special Economic Zones
and Open Coastal Cites |
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When it decided to reform
the national economic setup in 1978, the Chinese government embarked
on a policy of opening to the outside world in a planned way and step
by step. Since 1980, China has established special economic zones in
Shenzhen, Zhuhai and Shantou in Guangdong Province and Xiamen in
Fujian Province, and designated the entire province of Hainan a
special economic zone. In 1984, China further opened 14 coastal
cities—Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang,
Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and
Beihai—to overseas investment. Then, beginning in 1985, the state
decided to expand the open coastal areas, extending the open economic
zones of the Yangtze River Delta, Pearl River Delta,
Xiamen-Zhangzhou-Quanzhou Triangle in south Fujian, Shandong
Peninsula, Liaodong Peninsula, Hebei and Guangxi into an open coastal
belt.In 1990, the Chinese government decided to open the Pudong New
Zone in Shanghai to overseas investment, and opened more cities in the
Yangtze River valley. In this way, a chain of open cities extending up
the Yangtze River valley, with Shanghai’s Pudong as the “dragon head,”
has been formed. Since 1992, the State Council has opened a number of
border cities, and in addition, opened all the capital cities of
inland provinces and autonomous regions. In addition, 15 free trade
zones, 32 state-level economic and technological development zones,
and 53 new- and high-tech industrial development zones have been
established in large and medium-sized cities. As a result, a
multi-level, multi-channel, omni-directional and diversified pattern
of opening, integrating coastal areas with riverine, border and inland
areas has been formed in China. As these open areas adopt different
preferential policies, they play the dual roles of “Windows” in
developing the foreign-oriented economy, generating foreign exchanges
through exporting products and importing advanced technologies and of
“radiators” in accelerating inland economic development.
Primarily geared to exporting processed goods, the five special
economic zones are foreign-oriented areas which integrate science and
industry with trade, and benefit from preferential policies and
special managerial systems. They have summed up their rich experiences
in absorbing foreign investment and developing foreign trade for China
to open up to the international market. In recent years, the special
economic zones have led the country in establishing new systems,
upgrading industries and opening wider to the outside world, serving
as national models. In 1999, Shenzhen’s new-and high-tech industry
became one with best prospects, and the output value of new-and
high-teach products reached 81.98 billion yuan, making up 40.5 percent
of the city’s total industrial output value and coming out in front in
the country.
Since its founding in 1992, the Shanghai Pudong New Zone has made
great progress in both absorbing foreign capital and accelerating the
economic development of the Yangtze River valley. The state has
extended special preferential policies to the Pudong New Zone that are
not yet enjoyed by the special economic zones. For instance, in
addition to the preferential policies of reducing or eliminating
Customs duties and income tax, common to the economic and
technological development zones and certain special economic zones,
the state also permits the zone to allow foreign business people to
open financial institutions, and run tertiary industries. In addition,
the state has given Shanghai permission to set up a stock exchange,
expand its examination and approval authority over investments and
allow foreign-funded banks to engage in RMB business. In 1999, the GDP
of the Pudong New Zone came to 80 billion yuan, and the total
industrial output value, 145 billion yuan. Up to now, 78 Chinese and
foreign-funded financial institutions have been set up in Lujiazui,
Pudong, of which 24 foreign-funded banks have been approved to engage
in RMB business. The 5,900 foreign-funded enterprises, with a total
investment of nearly US$30 billion, and over 5000 domestic enterprises
from all over the country, with a total registered capital of about 20
billion yuan, have formed six pillar industries: automobiles and spare
parts and components, microelectronics and computers, household
electrical appliances, bio-medicines, and optical, mechanical and
electrical products. A large number of projects funded by business
people from more than 60 countries and regions have taken root and
blossomed there. Pudong’s “dragon-head” role of radiating and leading
the whole country is becoming more and more prominent. |
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Opening Up West Region |
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At the turn of the new
century, while continuing to promote the opening up of the coastal
regions, the Chinese government has begun to implement the strategy
for the wide-ranging development of the western China. Western China
includes Shaanxi, Gansu, Qinghai, Sichuan, Yunnan and Guizhou
provinces, the Ningxia Hui, Xinjiang Uygur and Tibet autonomous
regions, and Chongqing Municipality. Western China has an area of 5.4
million sq km, making up 56 percent of the country’s total land
territory; and a population of 285 million, accounting for 23 percent.
Western China is rich in mineral resources, and has advantages in
energy (including hydraulic power), tourism and land resources. In the
1980s, Deng Xiaoping put forward the strategic concept for China’s
modernization drive, featuring “two situations” (one situation is that
the southeastern coastal areas will speed up their opening to the
outside world, and the other is that China should concentrate its
strength to speed up the development of its central and western
tegions. In the past 21 years, since the adoption of the policies of
reform and opening to the outside world, the development of the
coastal regions, especially the development of traditional industries,
has gradually become saturated, so the coastal areas need to look for
new markets. The development of western China is now extremely urgent.
The implementation of the strategy for the development of western
China, opening it wider to the outside world, and encouraging domestic
and foreign enterprises to participate in the development of
infrastructure facilities and natural resources in the region will
benefit China’s economic development in the 21st century. Hence the
Chinese government is working out an overall plan for the development
of the western region, and has formulated a series of preferential
policies and measures for encouraging foreign business people to
invest there. The Chinese government welcomes foreign investors to
participate in the development of the country’s western part. |
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Foreign Economic and
technological Cooperation |
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Since the 1950s, China has
provided economic aid to developing countries. Since the adoption of
the policy of reform and opening to the outside world, China has
quickened its pace of foreign aid, involving agriculture, forestry,
water conservancy, light industry, textiles, food, power, machinery,
chemicals, transportation, culture, education, public health and
public utility projects. Some of them are large and medium-sized,
while others are small projects featuring less investment, but quick
and high economic returns. By 1999, China had aided more than 130
countries and regions, and completed 1,500 foreign-aid projects.
Contracted projects and labor service cooperation with foreign
countries are brand-new undertakings developed since the initiation of
reform and opening to the outside world. To date, China has such
undertakings in 187 countries and regions. In 1999, the contracted
capital agreed to in newly signed contracts for overseas engineering
projects or labor services reached 13 billion US dollars-worth;
completed turnover amounted to 11.2 billion US dollars-worth; and more
than 380,000 laborers had been sent abroad.
China has also made initial progress in making investments abroad.
China has more than 160 foreign investment markets, and 5,793
investment enterprises outside Chinese territory. China’s total agreed
investments have come to 6.5 billion US dollars-worth. These overseas
investment enterprises are engaged in a wide range of businesses,
including foreign trade, real estate investment, information
consultancy, finance, insurance, catering, tourism, contracting for
labor services, culture, education, public health and technology
development. |
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Utilizing foreign Capital |
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China absorbs foreign
capital through foreign loans, direct foreign investment and other
investment by foreign business people (international leasing,
compensation trade, processing and assembling). So far, foreign
business people from more than 170 countries and regions have made
investments in China. Since the founding of the first Sino-foreign
joint venture in 1980, China has taken the utilizing of foreign
capital as an important aspect of basic state policy, and great
efforts have been made to promote it. In the beginning Sino-foreign
joint ventures first entered the processing industry, and later they
expanded toward the basic industries and export-oriented enterprises,
commerce, finance, information, consultation, real estate, and other
fields.
Though most Sino-foreign enterprises are located in the coastal
cities, some of them have gradually settled down in the inland cities.
In recent years, thanks to the constant improvement of China’s
investment environment, some international consortiums and
transnational companies have come to China, one after another. Of the
500 top transnational companies in the world, more than 300 have
invested in China. Foreign investments have become an important
capital source for China’s economic construction. In 1999, direct
foreign investments in real terms totaled 40.3 billion US dollars; and
projects with direct foreign investment numbered 16,918. Between 1979
and 1999, of foreign capital utilized by China, the accumulative total
of direct foreign investment came to 305.9 billion US dollars. By
1999, China had approved the founding of 342,000 foreign-funded
enterprises, of which over 100,000 have gone into operation. Most of
them have made satisfactory profits.Growth of Actually-used Foreign
Capital. |
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Foreign Trade |
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Opening to the outside
world has greatly promoted the development of China’s foreign trade.
China’s import and export volume increased from 1.13 billion US
dollars-worth in 1950 to 360.65 billion US dollars-worth in 1999, or
an increase of 319 times. The total import and export volume in 1999
increased by 17.5 times, as compared with that in 1978. In terms of
foreign trade, China ranked 32nd in the world in 1978, and rose to
ninth in 1999
Over the past 21 years, great changes have taken place in China’s
import and export trade. First, the structure of import and export
commodities has been constantly improved. The export volume of primary
products, with food, agricultural and sideline products, and crude oil
as the mainstay, has been reduced by a large margin—from 53.5 percent
of the total export volume in 1978 to 10.2 percent in 1999; and the
proportion of industrial products increased from 46.5 percent in 1978
to 89.8 percent in 1999. Remarkable progress has been achieved in the
export of machinery and electrical products, rising from 1.41 billion
US dollars-worth in 1980 to 77 billion US dollars-worth in 1999.
Second, foreign-invested enterprises, which grew from nothing, have
become new factors contributing to the growth of China’s foreign
trade. In 1981, the export volume of foreign-invested enterprises made
up 0.1 percent of China’s total export volume, and 0.5 percent of the
import volume. By 1999, the export volume of foreign-invested
enterprises made up 45.5 percent of China’s total, and the import
volume, 51.8 percent. Third, China’s international trade market is
becoming more diversified. In 1980, nearly 180 countries and regions
had trade exchanges with China, a figure which rose to 228 in 1999. In
1999, along with the recovery of the Asian economy, China’s exports to
other Asian countries restored growth, and its exports to North
America, Europe, Oceanic and Africa constantly grew. Fourth, foreign
trade has been expanded through various flexible trading forms.
Processing trade and small-scale border trade have increased by a
large margin. A situation in which ordinary trade, processing and
assembling with supplied or imported materials, and small-scale border
trade are competing with each other for development has been formed.
While running the special economic zones, China has undertaken a
series of reforms in the foreign trade system, such as expanding local
governments’ examination and approval authority over foreign trade and
exports, and enlarging foreign trade enterprises* autonomy over export
trade and operations. Consequently, the old system featuring
monopolized operation by the state, highly centralized management,
integration of government administration with enterprise operations
and the state assuming responsibility for profits and losses has
basically been changed: The state has gradually cut back on mandatory
plans for foreign trade enterprises, and a management system which
indirectly regulates and controls foreign trade through Customs
duties, foreign exchange rates, credits and tax refunds has been put
in place step by step.
In 1986 China formally applied for reinstatement as a signatory state
in the General Agreement on Tariffs and Trade (GATT), so as to make
its foreign trade conform more to international practice. Since the
World Trade Organization (WTO) was founded in 1995, China continually
applied to participate in it. During this period, China lowered its
import tariff rates on several occasions and realized the
convertibility of RMB in regular items. Over the past 14 years,
China’s enthusiasm for acceding to the WTO has never flagged and it
has put its commitments into practice. That is to say, with its status
as a developing country as the premise and the Uruguay round of
negotiations as the basis, China undertakes its obligations suitable
to its economic development level, actively strengthens negotiations
with the United States, European Union and other member states.
Bilateral and multilateral negotiations for China’s entry into the WTO
have reached the final stage. The day for China to join the WTO is not
far away. Meanwhile, China actively participates in the activities
sponsored by the Asian-Pacific Economic Cooperation Organization, and
plays an important role in the organization. The bilateral trade
relations between China and the United States, the European Union,
Russia and Japan have been constantly strengthened. |
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 Information
provided by
China National
Tourism Administration. |
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