LECTURETTE

A Survey of the Efects of Special Economic Zones

on China's Economic Development
Introuction
1. China is wide and densely populated, its borders being shared
with many countries. The country has long stood as a developing
country, and faced a lot of political problems as an aftermath of the
internal uprisings and external interferences during the 19th
Century. Thus, its economy was often under the monopoly of the
powerful nations and then kept detached from the outside world so
as to decline too much. Among the conicts, political as well as
military, those in connection with !apan lasted for about "# years
from the near$end of the 19th Century to the mid %#th Century.
&nder the leadership of 'ao (e )ong, China established itself as the
*eople+s ,epublic of China only in -ctober, 19.9. The centrali/ed
economic system was adopted with the assistance of the
government between 19.9 and 1901, which was before the
2conomic ,eforms. 3tarting from 19"1, the country adopted the
4reat 5eap 6orward in an attempt to become a developed nation.
7ut miscalculations and unsystematic measures 8ust led to the
deterioration of the country+s economy, forcing 'ao (e )ong to
resign from his position. Then, subse9uent to the ideological clashes
in the *arty were the chaotic failures of both the industrial and
agricultural sectors in China.
%. After the death of 'ao (e )ong in 190:, )eng ;iaoping
carried out economic reform plans to develop the nation+s economy
in accordance with the then changing situations of the world. The
1901 2conomic ,eforms under )eng ;iaoping+s administration
brought about important turns for the future economic progress of
China. To increase production in the agricultural sector and uplift
social standards, the -pen )oor 3ystem was introduced to its
economy, and reforms were made on its economic structure. The
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new budding countries in Asia in the 19:#s and 190#s < namely,
Taiwan, =ong >ong, >orea and 3ingapore < became examples for
China in implementation of export$based policies. 7ene?ting from
their experiences and successes, China decided to build four special
economic /ones in 3hen/hen, (huhai, ;iamen and 3hantou. These
special economic /ones were intended to import high technology,
boost up export, increase foreign exchange, create 8ob
opportunities, take over foreign management skills and economic
expertise and attract foreign investment. The establishment of
these special economic /ones as a by$product of the 1901 2conomic
,eforms made obvious progresses on China+s economy, bringing a
9@ or so annual economic increase and then replacing !apan as the
3econd 2conomic *ower nation of the world. 3o there is no denying
that the special economic /ones have played an important role in
China+s economic development from the outset to the present
situation.
Aims an !"#ectives
A. The aim of this paper is to survey the eBects on China+s
economy of the special economic /ones carried out under the
2conomic ,eforms, to set up ideals and examples, and to explore
the possibilities of special economic /ones in 'yanmar which shall
contribute to the country+s future economy.
C$I%A'S EC!%!&IC 'AC()R!U%D A%D RE*!R&S
The Economic 'ac+,roun
.. China, which had been ruled by a series of dynasties
throughout its long history, came into contact with foreigners in the
1:th Century, with the arrival of *ortuguese merchants in 1"1: and
of the Christian missionary groups in 1:#1. 6rom that time onwards,
China had relations with such foreigners as the *ortuguese, 3panish,
)utch, 2nglish and ,ussians. Cn the later periods, it faced the wars
with these 2uropeans for certain economic and commercial reasons
(2)
as well as invasions of the colonialists. Cn Ding )ynasty, its fre9uent
war remunerations to foreign countries resulted in budget de?ciency
in the >ing+s ?nance, and so the >ings had to solve the problem by
levying large taxes from their citi/ens and then creating political
instabilities or conicts. The second half of the 19th Century also
saw the occasional outbreaks of wars between China and its
neighboring countries. China was often sub8ect to the bullies of
!apan, ,ussia and several 2uropean countries.
". The colonialist wars in the early %#th Century revived
patriotism in China, with a growing interest in politics among the
educated youths of the country. After the 1910 -ctober ,evolution
of ,ussia, the 3ocialist blocs and 'arxist groups were organi/ed in
China. -n 1 !uly 19%1, the Communist *arty was properly formed by
1% Chinese communist leaders at its 6irst Congress. 'eanwhile, the
>uomintang *arty stood as an oEcial party doing its organi/ing work
continuously. Cn parallel with the strong organi/ing skill of the
>uomintang *arty, the Communist *arty sought members for the
bene?ts of the working classes such as workers and peasants. Cn
19%0, the Communist *arty had about "#,### full$edged members
and around A#,### communist youths. Chiang >ai$shek sei/ed
power in 19%: after the death of 3un Fat$sen on 1% 'arch 19%".
Chiang >ai$shek in power removed the communists from the
>uomintang *arty in 19%0.
:. Cdeological clashes broke out between the >uomintang *arty
and the Communist *arty, resulting in a series of combats and wars.
*rior to 19.9 in which the modern *eopleGs ,epublic of China was
formed, China had been a developing country messed up with
territory wars and political conicts. After such a long time of
diEculty, the Communist *arty of China under 'ao (e )ongGs
leadership established the *eopleGs ,epublic of China on 1 -ctober
19.9.
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0. A really systematic economy emerged with the establishment
of modern China. 6rom its set$up in 19.9 until 1901, the centrali/ed
planning was carried out and success was seen in solving the
soaring ination rates and providing the ful?llment of foods. The
implementation of farming communes and nationali/ation of
industries were done in the ?rst 6ive$Fear *lan Hfrom 19"A to 19"0I.
'acro$level industriali/ation was set up with the help of the 3oviet
4overnment. Cn 19"1, 'ao (e )ung decided to launch the 4reat
5eap 6orward programme to cope with the increasing economy of
the 3oviet &nion and the &3.
1. Cn 19:%, 'ao (e )ong admitted the failure of his 4reat 5eap
6orward programme and resigned from his position, which was
succeeded by 5ieu ;iaok Chi. The reformists including 5ieu, *remier
Chou 2n$lang, )eputy *rime 'inister )eng ;iaoping and
administration and business management. 7ecause of a greater
extent of freedom in agricultural transactions for peasants as well as
other reforms, 5ieu and Chu improved ChinaGs economy. Cn 19::, so
as to get rid of the counter$revolutionists in the *arty, 'ao (e )ong
started cultural revolution, during which a lot of government
oEcials, experts and entrepreneurs got executed or banished. This
resulted in the destruction of the countryGs agricultural and
industrial sectors and the deterioration of its economy. At the death
of 'ao (e )ong in 190:, )eng 3haogn *eng reformed the aBairs of
the *arty and the country in an attempt to start the -pen 'arket
*olicy.
China-s Economic Reforms
9. China adopted the centrali/ed economic system for nearly A#
years from the establishment of modern China in 19.9 to 1901. As a
result of this, China was left far behind many countries economically.
Taking lessons from the weaknesses of the red$tape system which
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had been adopted for about three decades between the
establishment of modern China in 19.9 and 1901, the 11th Central
Committee Congress H1901I of China+s Communist *arty decided to
reform the country+s economic system. Ct can be said, therefore, that
the Chinese economic reforms started after 1901. To bring out the
economic reforms, the following policies were adopted by the 11
Central Committee Congress H1901IJ
H1Ito improve the agricultural, industrial, technological and
defense sectors
H%Ito improve the country+s economy using the -pen$door
2conomy to increase links with the outside world in the
economic and commercial ?elds, and
HAIto change the situations, providing the economic
infrastructure step by step in both the urban and rural
areas.
1#. Cn implementing these policies, the intended periods were
set upJ
H1Ithe *irst .hase < to increase the industrial and agricultural
production of 191# by four times by the year %###
H%Ithe Secon .hase < to become a medium developed nation
by the year %#%1
HAIthe Thir .hase < to become a ?rst$rate developed rich
nation by the year %#.9
11. Cn -ctober 1909, *rime 'inister =ua >ou 6ong went on
goodwill visits to Kest 2uropean countries and brought back
promises for ?nancial and technological aids from 6rance, 4ermany,
7ritain and Ctaly. The 1%th Congress of China+s Communist *arty held
in 6ebruary 191# decided to adopt )eng ;iaoping+s economy$
oriented policy in place of 5eader 'ao (e )ong+s politics$oriented
policy.
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1%. The following basic tenets were laid down upon the
implementation of policies and ob8ectives for China+s thorough
economic reformsJ
H1Ito adopt the open$door economy for the owing in of the
foreign investments and technology as well as for the
updating of ongoing concepts and systems used in the
local businesses, to continue the existing 3ocialist system
in politics, and to maintain industrial production and basic
infrastructure in the 3tate+s hands
H%Ito locali/e reforms rather than uniform them, in consideration
of the diBerent populations, climates, soil conditions and
resources in China+s diBerent states and provinces
HAIto carry out the pro8ects one by one and to speed up only
when success is met and in consideration of the
circumstances
1A. Cn carrying out China+s economic reforms, the links between
the country+s diBerent economic aspects and the outside world
played an important part. The open door economy was used as an
ideological weapon, with which the conditions in the country were
ad8usted. The economic reforms between the 190#s and the 191#s
focused on the rural areas while those carried out in the 199#s
emphasi/ed the urban areas.
1.. 2conomic bene?ts were remarkably seen together, with the
changing formation of the country+s economic structures, after two
decades+ implementation of economic reforms. A safe stage was
reached for changing from the centrali/ed economy to the market$
based economy. )uring the economic reforms, there was a gradual
increase in foreign investment, exports and economic growth. The
stock $markets, real estate markets and investment markets
emerged though they had been never heard of before. The policy on
foreign currency exchange rates is also starting to change with
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other attempts to solve the problems of trade de?ciency,
unemployment, economic disparity and economic growth disparity
between the urban and rural areas.
Esta"lishment of the Special Economic Zones in China
1". *remier Chu 2n$leng who took the responsibility of the country
in early 19:. implemented the four$dimensional moderni/ation,
from which the term +3pecial 2conomic (ones+ originated in Chinese
language. The +/one+ in the term refers to a part of the country
which is entitled to the transaction rights and the export rights that
are not easily available in other /ones of the country. The Chinese
government recogni/ed the important roles of the 3pecial 2conomic
(ones inJ
H1Itaking over the high$tech industries
H%Ilearning modern technological and management skills
HAIcreating 8ob opportunities
H.Iincreasing exports and earning foreign income
H"Iincreasing the economic growth in the region
H:Ibuilding economic links between local businesses and other
Chinese societies in =ong >ong, 'acao and Taiwan
H0Ibene?ting experiences from the market forces and economic
reforms
H1Isetting up links between the economically stagnated local
regions and the economically developed foreign regions.
1:. 4enerally, the Chinese government established the special
economic /ones with the following ob8ectivesJ
H1Ito seek foreign investment, and modern technology and
e9uipment, and to train the local workers with them
H%Ito increase constructive rivalry among trade organi/ations for
the improvement of the country+s industriali/ation,
management and economic development
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HAIto earn more foreign income and plant foreign investments
and high$tech in the other regions of China through these
special economic /ones
H.Ito keep these /ones as test$/ones in the country+s economic
reforms so as to reali/e the signi?cance of economic reforms
and then to build links with the production sector as
demanded by the market economy, and
H"Ito increase 8ob opportunities for the 8ob$seeking youths.
10. )eng ;iaoping continued to speed up the four$dimensional
moderni/ation programme after laying down the reform plans in
1900.
Taking examples of the new budding countries in Asia, he attempted
to build links with the outside world in China which had been
economically stagnated due to political instability and ideological
conicts. Aware of the importance of technology in stagnated China,
the Chinese leaders prioriti/ed in the policies the access to high
technology for the country+s economic improvement.
11. The 11th Congress of China+s Communist *arty held in 1901
incorporated establishment of special economic /ones as part of the
policy under the economic reforms. As China could not improve by
its own and must seek foreign aids for the development of the
country+s economy, the establishment of special economic /ones
had been an eBective means for ?nding technology, investment,
and management from foreign countries.
19. Cn !uly 1909, the 3tate Council issued a direction for the
remarkable development of transportation, foreign trade and foreign
investment in 4uangdong and 6u8iant *rovinces. Cn )ecember in the
same year, the local authorities of the 4uangdong *rovince
promulgated a new technology bill for implementation of special
economic /ones. The bill reduced not only the tax and tariB rates, as
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much as half of the imposed tax on the same commodities
compared with other regions, but also the lease rents, at the same
time allowing tax exemption for importing machinery and raw
materials. *lans were also arranged to attract more foreign
investment by ensuring the cheap labour in China compared with in
=ong >ong.
%#. 2ven a year before the issue of declaration for establishment
of A special economic /ones in 4uangdong *rovince, the Chinese
government experimented on a s9uare kilometer land patch in
3hen/hen as an export production /one. The ob8ectives for
experimenting on such special economic /ones included
experimenting on business managements and on ?nancial and
labour reforms, with the purpose of developing the /ones in the
whole country if the experimented /ones showed success.
%1. Cn the 3pecial 2conomic (ones, other services such as hotel
and tourism, retail sales businesses, agricultural business and
housing pro8ects were encouraged to ensure foreign investment in
every aspect. Thus, by surveying the production /ones of some
Asian countries which used the export$oriented strategy and
applying the theories in full range, the Chinese government
modi?ed the original +export production /ones+ concept into the new
concept of special economic /ones.
%%. -ut of the many regions in the country, the Chinese
government chose as the ?rst special economic /ones the regions
who have more contacts with the outside world. Cn the 191#s, four
32(s were established, out of which three are 3hen/hen Hnear =ong
>ongI (huhai Hnear 'acaoI and 3hantou Hin a ma8or city of overseas
Chinese nationals in 4uangdongI. The other 32( is ;iamen Hin
6uchan across TaiwanI. The ?fth special economic /one was
established in =ainan in 1911, timely with the *rovincial 3tatus
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Cmprovement measures. All the 32(s are along the coast providing
easy access to and from the overseas countries.
&ap Sho/in, the *irst .hase Se0s In China
%A. As a way of boosting up some parts of the open door
economic policy and taking experiences from the established /ones,
1. coastal cities were opened in 191. with investment incentives for
new foreign investors. 2conomic and technological /ones were also
set up for the development of techno$oriented industries and news
enterprises.
%.. 3tarting from 6ebruary, 191", the three delta regions around
Lthe *earl river, and 6uchan river and Fansi river became -2(s,
provided with special incentives for the ow of foreign investment
and increased production of exports. &nder the scheme of -2(s
were included 3hanghai and its environs. Cn these coastal regions,
favorable conditions and special statuses were created so as to
develop export$oriented pro8ects.
%". The Chinese government attempted to introduce the market
economy in his country while after the ,eform *lans international
8ob separation, international marketing and resource exploration
were being experimented. This being so, the special economic /ones
served as the foundation of developments for the diBerent regions.
%:. The special economic /ones which were established earlier
were small ones, intended as a forerunner for implementing the
freer policies regarding trade, customs and other matters. The ?rst
prescribed rules and regulations for the 32(s came up with the
4uangdong 32(sG 5aws in the 191#s. This regional 32( law was
devised by the Central 4overnment with the help the legal experts,
based on the diEculties and experiences seen in that particular
region.
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%0. The 32(s 5aw of China oBers the following incentives to the
potential foreign investorsJ
H1I .rotection of .rivate .roperty1 The 32(s allow the foreign
investors to set up new industries and enterprises with their
own capital or in 8oint ventures with the local Chinese
entrepreneurs. The government gives protection of their
private property.
H%I Incentives for Customs Tarifs1 The foreigners only need
to pay taxes by 1"@ $ %.@ on their income as long as they are
paying the AA@ tax on the local enterprises income. They are
entitled to the exemption from port customs tariBs.
HAI .olicy for farm use1 Though the Chinese 5aw has
prescribed all the land in China as 3tate$owned, the investors
have the right to develop and use the leased land as well as
the right to hand over and mortgage it. Cf the work concerned
shall last over 1" years, then the land borrowers will have the
exemption from the cost of having the right to use the land for
the ?rst ?ve years and need to pay only half its cost for the
next ?ve years.
H.I .olicy for la"our1 The foreign investors are allowed to hire
or ?re the employees at their own will and according to the
laws prescribed.
%1. The Chinese government has based the following principles in
setting up the special economic /onesJ
H1I The establishment of 32(s is mainly intended to attract
foreign investment.
H%I 7oth the Chinese locals and foreign investors are allowed to
do 8oint ventures or 1##@ foreign investment.
HAI The production is export$oriented.
H.I The business transactions depend mainly on the movement
of the market forces.
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Chapter 2
The Conitions of the Special Economic Zones in China
Emer,ence of the Special Economic Zones in China
%9. Kith the success of the forerunning 32(s in 3hen/hen, (huhai,
3hantou and ;iamen, other 1. coastal cities were added as the
economic /ones with special rights starting from April 191.. These
port cities were dispersed in every direction extending from Taliang
in the Morth to 6u8ou in the 3outh. Though these cities are not fully
developed into 3pecial 2conomic (ones, the minimum taxation is
prescribed to lure foreign investment and economic cooperation.
2specially, these cities were intended as the gate into the other
regions of wide China for the high technicians, managers and those
with international market experiences. 4uarantees have been given
to those entrepreneurs who invest in these areas for tax exemption,
and in exchange for hi$tech transfers, rights to sell their products in
the country and abroad.
A#. =ainan on the southern coast of China is also an important
region for the improvement of China+s economy. Though the area is
as large as Taiwan, its population is only one third of the latter+s. The
3tate Council laid down investment policies for this region in !uly
1909, with greater investment incentives than those for 4uangdong
*rovince. *rogrammes were developed for agriculture, live$stock
breeding, small$scale industriali/ation, mining, oil exploration,
tourism and transport, and leased contracts to Thailand, =ong >ong,
the &3, 3ingapore, 'alaysia and Australia. The pro8ects with
3ingapore include not only the cultivation of oil$coconut but also the
construction of 1# beach hotels, a golf course, and beach resorts
oBering yachting sports, which gives a good ground for the
development of tourism in the region. =ainan+s socio$economic
status is intended to near Taiwan+s.
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A1. ,egarding the establishment of successful 32(s in China, the
Chairman of the Cnternational 2nergy ,esources *olicy Committee
from !apan spoke in praise of these /ones, their 9uick emergence
and eBective results, while on his visit to the 3hen/hen 3pecial
2conomic (one in 'ay 191.. 3ome 3ocialist leaders and progressive
Kestern leaders saw the establishment of the /ones not as a
Chinese$style experiment, but as a practical reinforcement to the
theory.
A%. Ct is expected that construction pro8ects and investment will
develop gradually in the near future though the economic growth in
other 32(s may not be as 9uick as in 3hen/hen. 3ince the regions
around 32(s are found to have more contacts with the outside
world, the 32(s can become the gateway to the network of
economic and technical cooperation as well as cultural exchange
among many countries. They will be the archway to the inner parts
of China from the 32(s.
AA. The development process of 32(s in China has been moving
slowly and systematically since 1901. 2vidence of economic success
originating from these special economic /ones has convinced people
of the importance of economic reforms and its bene?ts, and the
/ones have therefore en8oyed the support of the local
entrepreneurs. Cn the later periods, many pro8ects came up under
diBerent names but with a similar nature to the 32(3.
A.. The special economic /ones set up periodically under the
1901 2conomic ,eforms can be studied separately. Cn the 191#s, the
following special economic /ones were ?rst establishedJ
HaI 3hen/hen
HbI (huhai
HcI 3hantou
HdI ;iamen
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HeI =ainan
A". 6ollowing the success of initial economic /ones, other 1. port
cities were provided with special economic rights for the
development of regional economy in the year 191.. These port
cities areJ
HaI )alian
HbI Dinghunang )ao
HcI Tian8in
HdI Fantain
HeI Dingdao
HfI 5ianyungang
HgI Mantong
HhI 3hanghai
HiI Mingbo
H8I Ken/hou
HkI 6u/hou
HlI 4uang/hou
HmI (han8iang
HnI 7eihai

A:. 6ollowing the success of 32(s and development pro8ects in
portal cities, more economic /ones were extended in the coastal
regions in 191" with the intention of attracting foreign investment
and bring about diversity. These /ones areJ
A0. Cn 199#, when the Chinese government opened the 7udong
3pecial 2conomic (one, the whole coastal regions of China became
open$door economic regions.
A1. 6ollowing the development of coastal regions, 1A inland
frontier cities were also changed into border trade cities starting
from 199%. These cities areJ
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HaI =unchun
HbI =eine
HcI 3uifenhe
HdI 'an/houli
HeI 2renhot
HfI Techeng
HgI 7ole
HhI Fining
HiI =ekou
H8I Kanding
HkI ,uili
HlI *ingxing
HmI )ongxing

A9. 'oreover, seven potentially good cities were opened in the
frontier and coastal regions. These cities areJ
HaI Manning
HbI >unming
HcI &ramgi
HdI =ohhot
HeI =arbin
HfI Changchun
HgI 3hihia/huang
.#. To open wider the door to the outside world and to attract
more foreign investment in the country, 1A free trade /ones were
launched in 199# where special rights are being provided
concerning trade barriers and administration helps. 6oreign trade
and exports were focused on these /ones, namelyJ
HaI Kaigaogiao < "." s9 km $ 3hanhai
HbI Tian8in < ".## s9 km < 3outh China
HcI )alian < 1.%" s9 km < Morthwest China
HdI 3hatou8iao < #.%# s9 km < 3in8ianghwangkan *ort
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HeI 6utian < 1.A" s9 km < 'id 3han/hen
HfI 4uang8hou < 1..# s9 km < Morth =ong >ong
HgI (hang8iagang < %.## s9 km < 3outh of Fansi river
HhI =aikou < 1.9A s9 km < near !ianphan
HiI Dingdao < %."# s9 km < !iandong *rovince
H8I Mingbo < %.A# s9 km < near Keiling 3eaport
HkI 6u/hou < 1.1# s9 km < 6u/hou *rovince
HlI ;iangyu < #.:# s9 km < (ian *rovince
HmI 3hantou < 1.A# s9 km < 3hantou *rovince
HCn these /ones, there are altogether "11A industrial enterprises,
among them A.#. are foreigner$owned.I
.1. !ther Economic Zones1 Apart from the mentioned economic
/ones, some cities, big and medium$si/ed, of the country have the
following economic /onesJ
HaI A% 3tate$level economic and technological development
/ones,
HbI "% advanced industrial development /ones
.$!T!3 The Economic Impact of Special Economic Zones
)ro/th of the Special Economic Zones in China
.%. To bring improvement in established 32(s, policies should be
laid down before potentially developable regions are chosen. Khen
establishing 32(s, fundamental principles must focus on two basic
considerations of bringing bene?ts to foreign investors and to the
3tate. Though the general principles are basically the same, the
details are diBerent from region to region. The general principles are
as followJ
HaI The Central Committee approves the basic principles of
each /one drawn by the relevant /one authorities after
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they have been submitted for revision to the 3tate *arty
Committee.
HbI The economic /ones are forerunners for the economic
growth of the entire nation, not only as the regional
exporters.
HcI The relevant /one authorities are entitled to the free use
of discretion and 8udgment in matters of foreign
investment.
HdI 5and property is basically the 3tate$owned, but land
release is permitted for investment. The duration, rent
rates, and modes of payment may diBer according to
the priority nature of the work. 6avors are naturally
given to those businesses re9uired by the 3tate.
HeI Tax exemption is given to the imported machinery and
raw materials, vehicles and other necessary utilities for
production of goods.
HfI Cncome tax is durable only at 1"@ but, in the early two
years of the -pen$door 2conomy, investment of &3N "
million and above will en8oy a cheaper rate of income
tax. =igh$tech enterprises will similarly en8oy a cheaper
rate.
HgI Accrued interests and the salaries of foreign citi/enship
workers are allowed to go out of the country through the
banks concerned, after all the necessary payments have
been made.
HhI ,e$investment from accrued interests will be exempted
from tax and duties.
HiI Any investors < foreign citi/enship holders and
expatriate Chinese nationals < are allowed to migrate
without visas from 'acao or =ong >ong to China and
vice versa.
H8I The investorsG property and rights are under the 3tateGs
protection and support.
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HkI *roducts from the 32(s are exportable, and are allowed
on sale if the taxes are paid as prescribed.
HlI 6oreign expertise and administrative oEcers are allowed
in any enterprise so long as they abide by the existing
laws.
.A. 2stablishment of 32(s in China has brought about the growth
of 8oint ventures and foreign investments in the growing economy of
the country. !ust after stabling 32(s in China, *remier !iao (hiang on
his visit to Kashington spoke of China$&3 trade in the Mational
Council, emphasi/ing that China was in need of foreign investment
and technology and that China had opened its door without any
intention of closing it back. =is statement oEcially showed ChinaGs
strong determination to open its economic door to the world to the
widest extent. 3ubse9uent to the establishment of 32(s in China,
the number of 8oint ventures between China and foreign companies
has increased annually with momentum. Cn 191A alone, about 1##
8oint ventures emerged in China, in the e9ual number of those that
had been established in the previous four years.
... Mew investments have gradually come up with the increasing
number of local businesses and 8oint ventures. 2ven the
disinterested foreign entrepreneurs have turned their attention to
investment in China. The foreign direct investment in China in 191A
reached over &3N 1## million in the e9ual amount of investment
that the previous four years between 1909 and 191% had earned.
!oint ventures have grown in number with increasing foreign
investment. To draw attention to 8oint ventures, investment growth
workshops were conducted regionally. Conse9uently, hundreds of
foreign investors agreed to invest as 8oint ventures in the 32(s.
.". Cn the meantime 'ameili, the )eputy )irector of ChinaGs 6oreign
2conomic ,elations And Trade 'inistry, revealed that there would be
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1## 8oint ventures by the end of the year, in spite of the then
existing %% 8oint ventures in the ?rst half of 191A. =e added that
8oint ventures would bring foreign technical transfer and import
capital. !oint ventures were established in the implementation of
macro$businesses, especially in industrial and energy sectors. 6und
raising and advice seeking were done by such investment groups as
corporations. 3ince the enhancement of 8oint ventures was in
accordance with the governmentGs policy, the local corporations
reached agreements with over .# foreign companies, bringing "
8oint ventures into existence at that time.
.:. Kith the increasing number of foreign ?rms and 8oint ventures,
altogether .##,### factories and workshops in China were repaired
and moderni/ed with the help of technology imported through those
8oint ventures. 7y using new technology, progress could be made in
competitive production of commodities. !oint ventures also serve a
good help to ChinaGs experience in foreign exchange. 6or instance,
Fuan A# billion He9uivalent to &3N 1" billionI was used to make
outmoded factories up$to$date, when the 8oint venture owners had
to share the cost of the imported materials, thus involving foreign
exchange in the process.
.0. Khile foreign investment was focused, impositions of rules on
local investment were also minimi/ed so as to allure the local
entrepreneurs. The !oint Oenture 5aw issued in 3eptember 1909
included exemption of long$term taxes as the special right to foreign
entrepreneurs, increased production of China$made materials,
establishment of 8oint ventures, and free decision$making in
business enterprises.
.1. =owever, the foreign investors were not 9uite clear about the
practice of their property in accordance with the foreign investment
law published a few years ago. 3o the Chinese government
(19)
promulgated the ?rst *roperty Act on 1% 'arch 191. to encourage
the local entrepreneurs and to reduce the anxiety of foreign
investors. Ct also served as a reaction to foreign investorsG pressure
on the government to protect their technological e9uipment from
becoming victims to the stealth of intellectual property. Thus
highlighting ChinaGs encouragement and support forwards the
foreign capitalists. Cn *olicy matters, measures were also taken to
reduces the delays of bureaucracy, which can hamper the
investment processes of the foreign investors.
.9. Cn 191A, big investment 8oint venture enterprises like
3hanghai 4lassblowing 2nterprise and 7ei8ing !eep Corporation
came into existence. Kith the capital investment of &3N 1## billion,
the glass blowing pro8ect was started 8ointly by the 3hanghai 7ank
7ranch, the 3hanghai 4lassblowing 6actory, the 7ei8ing Tang
7rothers *lc. Company from 7ritain, and the &TC 5imited from =ong
>ong. Kith this 8oint venture, the 7ei8ing Tang Company imported
modern glassblowing technology. The 7ei8ing !eep Corporation was
set up by the 7ei8ing 'otorcar 6actory and the &3 'otorcar
Corporation, en8oying the copy rights in using the technology of the
&3 Corporation. The &3 'otorcar Company started with the capital
investment of &3N 1 million plus another &3N 1 millionGs worth of
technological aides. The pro8ect amounting to the total investment
of &3N "1 million brought A1..@ pro?t to the &3 'otorcar Company.
Kith agreements to re$invest up to .9@ of the pro?ts gained in the
business, the 8oint venture was operated.
"#. 4ood signs were seen as time went on since the
establishment of . economic /ones with the exporting capacity of
=ainan as a 32(, the direct ow of foreign investment into these
regions. The following tasks show the exports of the 32%s, the ow
of foreign investments and economic situations.
(20)
E4ports from China-s SEZs "et/een 5678 an 2998 :in "illion
US;<
*DI in China-s SEZs :in million US;<
.rouction from China-s SEZs :in "illion Chinese =uan<

"1. Thus, China has used 32(s as a tool for brie?ng economic
growth and involving foreign investments in trade and technological
transfer from developed industriali/ed countries including the &3.
"%. The establishment of 32(s in China has been an eBective
performance not only for individual regions development but also
the economic growth of the entire nation. After success of export$
based /ones in some 2ast Asian countries, China e9uipped itself
with some ingredient parts of capitalism on its fundamental
socialism with protection of self interests, which has hampered its
economic growth for some time. Kith two systems having two
opposite characteristics, China has faced lots of diEculties in
harmoni/ing them.
"A. Cn the 191#, a great success was seen beyond expectations
from the initial establishment of 32(s. 7ut such sudden reforms
brought about social and economic instabilities and complaints.
,egarding them as the natural conse9uences of the hard times,
China went on with its reforms and policy of open$door economy,
seeking ways to overcome the diEculties through discussions and
negotiations concerning economic and social imbalances in the
region. Ct exploited the experiences from the formerly established
32(s, programmes which drawn up for providing help to other
regions developments.
".. Cn the family of nations, there were both believes and skeptics
about the Chinese economic reforms. The ow of foreign investment
was only in a limited condition, technical transfer, foreign exchange
(21)
earnings and 8ob opportunities were not achieved as had been
expected. -nly 1#@ of the foreign investment during the initial
period came to the industrial sector. =i$technical transfer was
almost impossible because the existing enterprises in the industrial
sector were only small$scale businesses, sub$contract ones light
industries and labour$based cheap production enterprises.
6urthermore, diEcult entry into Chinese market, the state of
Chinese currency not easy for exchange, unfamiliarity with rules and
regulations and so on hampered the foreign investors a lot. Co$
operative and 8oint sector systems were commonest form of
investment in China in the meantime.
"". Kith export$based foreign investment, establishment in
industries, the centre of goods distribution and unsuccessful 32(s,
progress was not made in technological transfer and foreign
exchange earnings. The products from those /ones were 8ust
ordinary, most sold in the region and only %#@ exportable. 3ince the
investments were in their ?rst$phase, a large portion of investment
went not only to the infrastructure. Cmport increased with a greater
speed and exports, causing business$related crimes and other social
problems as well as high ination and low cost$eBectiveness.
":. Cn 191., The Cultural 4overnment of China revised the eBects
of its economic reforms, drawing lessons from experiences obtained
from the 32(s, launching of free trading in Coastal cities and inner
regions. The government recogni/ed the potential bene?ts of the
open$door market economy while seeing the diEculties of these
32(s.
"0. 6rom the 191#s to the 199#s, China launched 32(s under
various programmes in the coastal regions and other cities, which
can be regarded as the doors extended to the world from China.
'eanwhile, the world saw ChinaGs economy booming with its
(22)
growing economic growth, the steady ow of foreign investment and
the better export 4)* ration. 7ut some experts found that the role
of formerly 32(s was hurt by the extended rights e9ually granted to
other coastal cities.
"1. )ue to these economic /ones, economic growth was seen, but
since it did not meet expectations, policies were revised later. Action
was taken to conduct proper implementation of high$tech and
economic management in 32(s. 2nterprises related with received
attention in place of ignorance in the former times.
"9. 2conomic growth due to 32(s was remarkable, with increasing
8ob opportunities. The opportunities per worker in these 32(s
outstripped that in other regions. 7ut these often arose social and
economic crimes, bribes, smuggles, environmental damages and
labour strikes.
:#. Cn the 199#s, changes in policy matters were made after
revision of the former policies of 32(s, the Chinese government also
encouraged other governments in the regions to launch
development programmes and thus increased foreign investments.
2ven in the local retails, ?nances, transport, estates and shipping,
foreign investment was allowed to enter.
:1. Though open$door economy was adapted all the way into the
far$fetched regions, disparities were growing out of control. The
inner parts were left behind the developing coastal regions. *oor
labour rights and fre9uent labour strikes also decreased the
compatibility of 32(s and the eBectiveness of macro$strategies.
Therefore, China has always been seeking its weaknesses and new
strategies to deal with them while at the same time en8oying the
bene?ts from the establishment of 32(s.
(23)
Chapter >
The Contri"utions of SEZs to Economic )ro/th in China
:%. There were remarkable diBerences at every stage of
development, the concerning accruing bene?ts and encountered
problems in the establishment of 32(s. 7ut obvious bene?ts of their
establishment were clearly seen. 6or instance, 4uandong, 6u8iang
and =aina had become prioriti/ed regions for local and foreign
investments bringing the increasing )4* growth and industrial
production.
:A. China attempted to build 32(s throughout the country but
exerted the total authority in 0 32(s, often referred mathematically
to as . P % P 1 meaning . 32(s in the 191#, % 32(s in the 199# and
1 Tian8rang$*eihai development set up in %##:.
:.. The bene?ts of establishing 32(s had eBects on ChinaGs
economic production and commercial sectors as well as other social
economic conditions. 7y creating open and free economic situations
including 32(s, together with economic reforms in the entire nation,
ChinaGs competitive skills were changed remarkably during the last
few years of the %#
th
Century and the beginning of the %1
st
Century.
)ro/in, Trae in China in Relation /ith the )lo"al Trae
:568?@2999<
51 Aorl E4port &ar+et Share :B<
51 .rimary E4port
21 %atural Resources@'ase Inustrial .roucts
>1 %on %atural Resources@'ase Inustrial .roucts
Lo/ Tech
&eium Tech
$i,h Tech
21 Aorl E4port &ar+et Share :B<
51 .rimary E4port
21 %atural Resources@'ase Inustrial .roucts
(24)
>1 %on %atural Resources@'ase Inustrial .roucts
Lo/ Tech
&eium Tech
$i,h Tech
>1 &ain E4ports
Toys an Sports materials
Shoes
Communication@relate
Information Stora,e Devices
Clothin,
Computer Components an Accessories
Te4tiles
Travel pac+a,es
.lastic
*urniture
&ac@Economic Conitions
:". ChinaGs 32(s contributed a lot to the accumulative 4)p, 8ob
opportunities, attracted foreign investments and technical
innovations of the country. 6urthermore, the modern management
practices became familiar to the local enterprises. The 32(s set up
initially in %##: and before contributed "@ of the whole nationGs
accumulative 4)*, %%@ of the accumulative industrial exports and
9@ of foreign direct investment. 7ut ChinaGs macro economic
conditions grew much in the meantime with the 32(sGs contribution
of "@ 4)*, 1"@ exports and %%@ foreign investment ow.
*roduction per capita was also changed remarkably as shown in the
following graph.
China-s .rouction per Capita
Contri"ution of *irst .hase SEZs an ETDZs
.articular
SEZ
(25)
.ercenta,e ration in contri"ution to the /hole country
ETDZ
.ercenta,e ration in contri"ution to the /hole country
::. Cn %##:, China had ". economic and technological
development /ones, ". =C)(s and 1" 6T(, which contributed 11.1@
4)* cumulative and 19.1@ exports. The total 4)* of 3hanhai$
7udong reached ,'7 9:.#" billion and exports Hworth &3N 11
billionI 32(s and 2T)(, therefore, contributed 11."@ of the total
export in %##:, and %1.1@ of the total 4)* in %##0. The
composition of exports was also found to have changed from
agricultural to industrial.
Chan,in, Composition of E4ports from China :B<
Comparison "et/een E4ports an Imports in China :in "illion
US;<
*lo/ of Investment
:0. The 32(s were the main places for attracting foreign
investment. Cn %##0, the foreign investment in China peaked at &3N
0..1 billion with 6)C entry in " 32(s at &3N 0.A billion. Cn the
3hanhai$7udong regions and Tian8iang$3hanhai regions, 6)C was at
&3N 0.% billion with &3N %.: billion to 6T(s. 3o the ow of foreign
direct investment into 32(s comprised .:@ of the whole nation in
%##0.
Co" opportunities
:1. The growth of 8ob opportunities due to 32(s was very high.
According to the %##: statistics, the ?rst 32(s employed 1" million
people, providing %@ of the countryGs total 8ob opportunities. Cn
%##0$%##1, the 3hanhai$7udong region contributed nearly 10@ 8ob
opportunities of the 3hanhai 'unicipality. Cn the Tian8iang$3hanhai
/one, there was "..@ of the whole Tian8iang 'unicipalityGs
employment i.e, #.AA million employees in number. ". 2T)(s and
(26)
". =C)(s provided ".A" million and :." million people with
employment while 0 32(s, 2T)s and =C)(s have together employed
.@ of the whole countryGs populace. HChina has a population of 00#
millionI. The proportion of workers by sector has also changed
sector$wise. The population of agricultural workers has reduced
while industrial workers have grown in number.
.opulation of Aor+ers "y Sector :in million<
Technolo,ical Transfer
:9. 32(s have been important and reliable places for ChinaGs new
high$tech businesses. Cn %##0, ". =C)(s arranged for high$tech
businesses as well as science and technical business. -ver "####
businesses registered oEcially, which included 0#@ or so registered
businesses in the country. 11."@ of the workers working in the /one
comprised 1.% million science and technical staB who were
producing AA@ high$tech products of the nation.
0#. 6or the past 1" years since the establishment of =C)(s, the
production of 32(s amounted to more than half of the high$tech
production of the country. Cts export comprised one third of the
countryGs high$tech exports. Costs accrued gradually in research and
development work since it was the focus of the place with ,'7 A1..
billion spent in %##% comprising %...@ of the whole countryGs
research cost. 7etween %##% and %##:, it went up three times,
peaking at ,'7 1#".. billion Hi.e, A".%@ of the nationGs research
spending.I
01. 2vidence has shown clearly that 32(s in China have been
helpful to the development of the technological sector. Cn the 191#s,
China aimed at high$tech price production, and today it has
possessed a big market share of its high$tech products in the
international market. Ct is obvious from such success that 32(s are
(27)
the main propellers for ChinaGs high$tech enterprises, giving a lot of
contribution to the improvement of technology.
(28)
Chapter D
Esta"lishment A SEZs in &yanmar
.otential Areas1
0%. 3ince 32(s have evidently given good contributions to
economic growth during the last three decades, they have drawn
every nationGs attention. 'yanmar, in an attempt to build an all$
round developed modern nation, is also drawing programmes to
construct 3pecial 2conomic (ones in the country. *otential areas in
the country were sought by drawing data from the M4-Gs surveys,
and asking advice from the experienced local entrepreneurs. &sing
the existing infrastructure, the potential areas are chosen on the
basics of low initial investment, accessibility to bus$terminals and
airports, and availability of manageable human resources.
0A. The following areas have good potentials for the
establishment of 32(s in 'yanmar.
1. Thilawa HThanlyin $ >yauktan ,egionI
%. )awei ,egion
A. >yaukphyu ,egion
.. 3ittway ,egion
". 'use ,egion
:. Tachileik ,egion
0. 'andalay ,egion
1. 'awlamyine ,egion
9. *a$an ,egion
1#. Tamu < >alay ,egion
0.. Thilawa HThanlyin < >yauktanI. Thilawa 32(s, situated in
Thanlyin Tsp, Fangon )ivision, is the ?rst 32(s to receive a lot of
foreign investment. Ct was constructed with the cooperation of
Chinese 2xperts who saw the region potential for a successful 32(.
Cf the pro8ect is to start, then it will create at least %##,### 8ob
opportunities for the citi/ens.
(29)
0". Thilawa 32(s is situated closed to Thilawa port, %"km away
from Fangon. Thanlyin 7ridge$1 has a %#$ton loading capacity and
Thalyin 7ridge$% which is under construction with bear :#$ton loads.
Thilawa port is on the Fangon river and is opened in 1991 e9uipped
with : 8etties and container cranes. Mot far from the Fangon
Cnternational Airport, the place is good for the establishment of a
multi$function type 32(. ,esearch has shown that it is the best place
for distribution of goods to any region in the country.
0:. Da/ei Re,ion1 )awei region is 8ust A## km from 7angkok,
Thailand. 4eographically, it serves as a deep sea port in the Cndian
-cean and a gate way to 2ast$Kest 2conomic Corridor of the 4'3 in
the sub$'ekong ,egion. The future 3'( in )awei ,egion has the
potential for trade investment from A32AM nations, bringing bene?ts
from them.
00. &nder the present circumstances, there are good potentials in
the region for the establishment of international standard tourist
resorts and development of tourism. The region is close to the future
Asia =igh$Kay, and provides not only feasibility for building an
Cnternational )eep 3ea *ort, land routs to Thailand, 5aos, Cambodia
and Oietnam not via the 3traits of 'elacca, -il Chemical industries
by using natural gas from Fadana -Bshore -il Cndustry, and but also
resources for fuel demands and marine resources.
01. 6rom )awei ,egion, kinks can be made to Thilawa *ort by sea.
Ct can comfortably be connected with Fangon, 8ust %" km away.
Korkers can easily commute to the region and engineering
expertise can be obtained readily with spare parts of the machines.
There is easy availability of labour because it is not away from
Fangon, Thanlyin, >yauktan, >hayan and Thongwa townships. Kith
(30)
the existing infrastructures, the exports process will be 9uicker and
smoother, good for the establishment of an 32(.
09. (yau+phyu Re,ion1 3ituated on Fanbye` island, ,akhine, the
region is a good exist to the sea in the 7ay of 7engal. Kith %# m $ to
$ %" m deep strait and surrounded by small islands, the region is
expected after some preparations to become a deep sea$part for
small to the biggest oil oceaners. The Fangon$>yaukphyu motorway,
.## miles long, has connected the region to Fangon. 3hwe -Bshore
-il 5ocation, %" miles west of >yaukphyu, is pro8ected to reserve 1%
TC6 of natural gas. Ct is likely to produce .,### barrels of natural gas
and crude oil on the daily basis, which will provide the re9uired
electricity and fuel oil when the 32( is established. Ct is a potential
area as a good sea port for export and import with Funan 3tate,
China as well as an 32(.
1#. Sitt/ay Re,ion1 3ittway *ort has existed since the 7ritish
times and the oldest seaport for trade and commerce. 2ver before
Korld Kar CC, trade had prospered here in connection with other
seaports like >olcutta, Chittagong, Fangon, 'alaysia, 3ingapore from
where merchandise ships are said to have run twice a week. This
being so, the place has already had good grounds for economic
development. Cn 3ittway region, the >alatan$river all round
development programme and 2stablishment of the 3ittway )eep
Kater *ort are expected to be ?nished by the year %#1A. 3tarting
from Movember %#1#, a new port region will be explored near the
present$day *aungdawgyi of 3ittway, for which stone walls are being
laid down, earth re?lled and soil tested. The Cndian Asanume
Company has a branch opened in 3ittway to supervise the pro8ect.

11. The establishment of 3ittway deep water port and the all
round development of the >alatan river will bring bene?ts to both
'yanmar and Cndia. After completion of the pro8ect, the >alatan
(31)
river will be able to link the rood on the Cndia 7order, which is :% km
away, through *aletwa, %%" km from 3ittway. The route with be
connected to the ".
th
Mational ,oad of Cndia, and will provide a
network among 3ittway, >yauktaw, *aletwa, 3etpyitpyin, Aing /aw,
Chin *aing, ,eed and Titim. A trade route between ,akhine and
'i/oram, Cndia, as well as between ,akhine and Chin will also be
possible.
1%. As for Cndia, it will be able to avoid delays due to ood and
landslides carriage of merchandi/e and the way from >olcutta to
Kest 7engal, and from the Morthern 3tate to 'i/oram in Mortheast
region. 6urthermore, the trip from >olcutta to the 'i/oram will be
shortened.
1A. &use Re,ion1 'use, situated in Ching$'yanmar border in
northeast 'yanmar on the road to Chin, is an important place for
border trade. As well as an exit from Funan 3tate of China, 'use can
be an exist to the sea via 'andalay to >yaukphyu )eepwater *ort
and Fangon *ort. The city is on the way which trade ows from 'use
through 'andalay to Thailand or Cndia. Khen 3hweli =ydro *ower
*ro8ect can produce .## 'egawatt, an 32( with 2*( and 6T( will be
implemented.
1.. Tachilei+ Re,ion1 3ituated in far east 'yanmar, Tachileik
serves as a medium for border trade between Thailand and China.
Textiles and ConsumerGs goods are being exported to Thailand
through >engtung$Tachileik route. Thailand exports durians, rubber,
oil and cosmetics to China. ,egional development can be carried out
by providing goods sheds for exportQimport merchandise, setting up
an 6T( and giving services.
1". &analay Re,ion1 The Tanta$-o Cnternational Airport is in
Tanta$-o township %# km from 'andalay. 3o a special economic
(32)
/one could be established in 'andalay region so that electronic and
other products, light and high$tech goods, with be exported by ight
from Tanta$-o with easy availability of human resource.
1:. &nder the existing circumstances, 'andalay ,egion has
geographical advantages for air transport, with a network of
connecting the main roads from its central part of the country. The
region, by using the transport means along the Ayeyarwady river,
can easily transport the 'yanmar products to other economic /ones.
Also, it has other advantages ranging from accessibility to hydro$
power plants such as Fe$ywa and *aung$laung, accessibility to the
Ayeyarwady river that will help industries, resourcefulness of
humans for labour readiness for the development of cultural
tourism.
10. &a/lamyain, Re,ion1 The Cnternational high$way motor
road is to be built between 'awlamyaing *ort of 'yanmar and the
)anam *ort of Oietnam which is regarded as the 7ridge of A32AM.
This road, passing through 5aos and Thailand on its 1,%## miles long
way, helps to avoid the use of 'elacca 3traits and increases local
trade opportunities. The establishment of an 32( in 'awlamyaing
,egion would have completed a greater part of 2K2C pro8ects,
leaving 8ust a 1# km long motor$way and 'awlamyaing )eep$water
*ort to be built. The currently used railway will continue to be used,
and the fuel re9uirements will easily be ful?lled by the natural gas
that Fetagun and Fadana -Bshore -il lands provide.
11. .a@an Re,ion Special Economic Zone1 *a$an region, is a
smooth land area, %.# km from Thailand 'yanmar 7order, on the
bank of the Thanlwin river. Ct is on the trade route between Thailand
and 'yanmar. Ct can have a suEcient supply of electricity provided
by the natural gas from >anpauk$Thaton 4as *ipeline. 32(
programmes are to be launched on the economic development
(33)
programmes 8ointly conducted by . A32AM nations, namely$
Cambodia, 5aos, 'yanmar and Thailand.
19. Tamu@(alay Re,ion1 The region is near the Cndian 7order in
Chin 3tate, northeast 'yanmar. Ct is on the trade route between
Cndia and 'yanmar. The Tamu$>alay$7agan 'otorway, which
'yanmar will hold responsible for building as part of the Cndia$
'yanmar$Thailand =ighway, will play an important role in the future.
'erchandise 3torehouses can be built before the establishment of
6T( for China$Cndia trade. Agreement has been made to launch
=tamanthi =ydro *ower *ro8ect in northern 3again with the help of
Cndia. The pro8ect is estimated to be able to produce :##$1###
megawatts, which can help the changing process into an 32(.
9#. &ya/ay Re,ion1 3ituated on Thailand$'yanmar 7order,
'yawady plays a central role in border trade. The Fangon$*a$an$
'yawady 'otorway is usable in every season, which has been
provided with a suEcient number of bridges. The trade between
'yanmar and Thailand amounted to &3N A.10: billion in the year
%##.$%##". The establishment of an 32( with 2*( and 6T( would be
helpful to the development of the region.
SEZ Re,ions uner Implementation
91. Thalyin@(yau+tan Re,ion :Thila/a<1 Thilawa 32( is near
Thilawa port in Thanlyin$>yauktan township, southeast of Fangon.
The land area is 1%.1A: s9uare kilometres Haround "1 s9uare miles
or A%## acresI. 7ecause an international port for containers within a
good environment, measures are being taken to establish a
'yanmar$China !oint Oenture Thilawa 3pecial Cndustrial /one. The
capital share ration agreed to is .#@ from 'yanmar and :#@ from
!ingshing Co.5td of 3hanhai, China. The 32( HThilawaI
Cmplementation Committee was formed of %. members with the
'inister for Cndustry$1 as chairman, according to the announcement
%Q%##" dated %1 !anuary %##".
(34)
9%. The group of enterprises to be constructed in the 32(
HThilawaI include electronic enterprises, the industrial enterprises,
the environmental protection enterprises, the pharmaceutical
production enterprises and small$scale industries. The
implementation in the Thilawa (one will be divided into six parts <
namely Admin 3upport 7uilding, 'odern Cndustrial (one, 2xport
*roduction (one, Cnternational 3upport Area, 3cience and ,esearch
)evelopment Area, and 6oreignersG ,esidence Area. The targeted
electricity demand will be supplied in . stages. The daily
re9uirement for gas is estimated at 1## cubic meter per hour for the
industries and for the whole /one 1%#,### cubic meter per diem.
The capital investment will be &3N %.1% billion.
9A. Da/ei Re,ion1 )awei )eepwater ,egion is a new gateway
running through the regions under implementation by 'yanmar and
Thailand 8ointly. Ct is an alternative for the currently used waterway,
the 3traits of 'elacca. The new )awei$7angkok trade route would
become the most cost$eBective and time$eBective cross$border
trade route for investors, entrepreneurs and merchants. 7esides its
high competitiveness, the region would give a strategies link
between 2ast Asia and 3outh Asia with a network of motor roads
and railways as well as gas and oil pipeline and communication
webs.
9.. After the implementation of the )awei )eepwatere *ort
merchandise from 'iddle 2ast, Africa and 2urope would not need to
cross 'elacca 3traits to go to China, Thailand, Oietnam, 5aos and
Cambodia. The merchandise ships from )awei )eepwater *ort
would save . days He9uivalent to 1%"# nautical miles or %A1: kmI,
compared with those from 3ingapore. This deepwater port will play
an important part in getting rid of trade barriers for Asian countries
including 'yanmar and Thailand. After the completion of the
(35)
pro8ect, goods could be transferred within a day between )awei and
7angkok.
9". Kith the )awei )eepwater *ort *rogramme, the industries
/ones and roads Hmotorways as well as railwaysI to 7angkok,
Thailand, will come up with the establishment of 'yanmarGs ?rst
32(. The estimated cost for the programme is &3N 1A billions and
the Cndian Company will take responsibility for the construction of
the pro8ect.
9:. The )awei )eepwater *ort, situated on the shortest way
between 3outh China 3ea and the Andaman 3ea will become the
most important port between south Asia and 2ast Asia in the future.
90. (yau+phyu Re,ion1 >yaukphyu in ,akkine 3tate, 'yanmar,
is a port city on 'egday Csland on the west coast of Kest 'yanmar.
The economic aims for this region is to promote this region, now as
a river port, to a deep sea port for increasing 8ob opportunities of
the citi/ens and for doing business transactions with big ocean$lines
and container ships.
91. >yaukphyu )eepwater 3eaport will transport goods between
Chittagong H7angladeshI, Fangon or >olcutta and Cndian ports. Ct
8oins the 'yanmar coastal region to >ouming Hthe city in 3outhwest
ChinaI along the 'use$5ashio$'andalay$'inbu$3ittway$>yaukphyu
through Funan *rovince.
99. Sitt/ay Re,ion1 To improve border trade between 'yanmar
and Cndia, by means of an '-& rati?ed on % April %##1 between
'yanmar R Cndia. Cndia aims to build the >alatan river *ro8ect
starting from 11 )ecember %#1# to 1A !uly %#1A by deadline. This
pro8ect includes the establishment of 3ittway *ort, All$round
Transport *rogramme along the >alatan river near 3ittway, ,akhine
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3tate in western 'yanmar, and the linking of the trade between
3ittway and >olcutta by coastline R motorway.
1##. The >alatan river pro8ect intended for trade enhancement
between 'yanmar and Cndia will link 'i/oram 3tate in northern Cndia
to the 7ay of 7engal to increase trade exchange between the two
countries. The mutual trade amounted to &3N 1.19 billion in the
?scal year %##9$%#1#, %:@ higher thean %##1$%##9. The Cndia$
'yanmar value shows Cndia is the fourth biggest trade partner after
Thailand, China and 3ingapore. Though on the agenda since 1%
years ago, the pro8ect could be started only in %##1, leaving Cndia to
?nish it as 9uickly as possible.
1#1. The capital investment in 32(s is large in si/e, with the
entrepreneurs focusing on export. 3mall companies, small 8oint
ventures and limited companies cannot compete while public
companies and big entrepreneurs need to be involved. )eepwater
ports along ,akhine coastal region is a natural asset of resources.
Mautical transport for economic growth in links with the international
community is a reliable economic business, so the 3ittway
)eepwater *ort 3cheme will be creating potentials for economic
growth in ,akhine and in the region.
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C$A.TER ?
!EEREIEA A%D SU))ESTI!%S
!vervie/ on China-s Esta"lishment of SEZs
1#%. 'odi?cations of procedures and prescriptions of laws should
have been done in accordance with time and situations in which
32(s were established in China.
:A< Stron, Determination an .ra,matic Leaership for
Reforms
Cn the early periods when uncertainties abounded, Chinese leaders
adopted slow$and$steady approach to reforms, which could help
them overcome diEculties and political disturbances, and ensure a
macro$economic stable environment for the open$door economic
policy. Cn 199%, the visit of Chinese leader )eng ;iaong *eng to
southern China showed the governmentGs intention to make reforms
in its economic system. ,ather than imitating other countries, China
decided rightly to choose its own style with Chinese characteristics
in changing into the 'arket 2conomy.
:'< *avoura"le .olicies an !r,ani0ational Authority
To allure investments in 32(s, favourable policies were adopted
such as leasing land cheaply, stopping tariBs and taxes, clearing tax
procedures, pro?t movability, investment at will, tax exemption in
importing raw and semi$raw materials, license control for domestic
production. These policies not only provide favourable privileges like
housing, research funds and stipends for the workersG children, but
also attract skilled workers scattered over the country and abroad.
-rgani/ational authority is allowed both politically and economically
in these 32(s and 2T)(s, with legislation power for municipality and
procedures in their work. At that time, the legali/ing power was not
only in ChinaGs Mational Congress and the 3tanding Committee but
also in the *rovincial *eopleGs Congress and the standing
Committees. Cn observation of new policies, the relevant
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Committees were allowed freer authority for the development of the
/ones. 6or instance, from 5abour Contracts and pay negotiations to
employment of labour can be done on the legal basis. 3hen/hen
region has showed success the governmentGs creative experiments
on realistic policies. Cn 1911, 3hen/hen received the same statues
with 4uanchon from 4uandong administration. Cn 199%, the Central
4overnment granted legislation to the region, thus making
3hen/hen the ?rst to change labour wage rates in the country.
&nlike the adopted conditions, the minimum pay schemes and social
insurance programmes were started. Cn Tian8iang 2T)(, too,
legislation was granted for creativity. -ne remarkable example of
which can be seen in research development in cooperation with
famous universities as a way of linking academic institutes to the
industrial sector.
:C< )overnment-s Un/averin, Support an Involvement
The Central 4overnment has reduced its existing controls to create
free, attractive good policy environments. Cn the meantime,
eBective regulations and procedures with good administrations,
infrastructure and means of communication have been provided. Cn
the 32(s at earlier phases, the governmentGs direct investment was
voluminous. 6or instance, in 199%, before the provincial 2T)3 were
permitted, the regional government started the capital, providing
necessary infrastructure and various services logistic, legal and
economic programmes, marketing, export$import aids, skills training
and managerial consultation were given to the entrepreneurs and
enterprises in the /one. Cn 3u/hon technological development /one,
the government provided ?nance, information, labs, inspection,
technical exchange and initiations the 32( admin boards conducted
the procedures smoothly and timely with the relevant policies. After
a certain amount of success, high$tech based exports were focused,
and negotiations were made for foreign direct investment in parallel
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with the local enterprises. Cn %##0, China established %"@ reduction
of taxes for local and foreign investors.
:D< *DI an &i,ratory Chinese /or+ers
6)C and migratory Chinese workers all over the world have played
and important part in the successful of 32(s. Cn the 190#s when
32(s came into existence in China, it coincided with the attempts to
promote the industrial sector organi/ations and change labour$
based 8obs to industriali/ation in other countries like =ong >ong,
'acao Taiwan and China itself. 32(s helped to attract migratory
Chinese workers to their homeland. 6lexible conditions of various
kinds were created such as tax exemption, special$price land leasing
and holidays.
1#A. Su,,estion1 China has made progress with full momentum
during the last three decades in its attempt at economic
development through special economic /ones. Cn %#1#, China
became the second biggest economic power, showing its
remarkable progress within A years from 191# to %##1. The unstable
nature of progress has been a challenge for long$term economic
development. Cn spite of increasing economic growth, balanced
development in all regions of China remains to be seen. 6rom %##.
onwards, the export amount has been declining in spite of its
alleged economic growth.
China-s E4port Rates per Annum
1#.. The economic disparity between the coastal regions and the
inner regions in north and west China has been growing at a
desperate rate. Kith the increasing number of social problems and
criminal cases doubled by economic and environmental
deterioration, observatory watching over continuous development
through macro$level policy related negotiation needs to be
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conducted so as to place modi?cations in accordance with the
worldGs economic and trade situations.
1#". The Chinese 4overnment should implement the following in
order to overcome new challenges and to maintain its in$hand
development strategy in the futureJ
aI 3mooth changing into the knowledge and techno$based
economic development pattern,
bI relying on the local market and consumption as a source of
economic development,
cI promoting the 32(s through technological innovations and
observations
dI consolidating protection of the existing weak intellectual
property rights
eI encouraging with pressure through right incentives
fI strengthening academic and industrial links
gI strengthening the ?nancial resources
!vervie/
1#:. 32(s in China were designed with foresight 3hen/hen 32(s
was placed on =ong >ong border, (uhai near 'acao, and ;iamen
opposite to Taiwan. The original narrow patterns were granted freer
implementation through special policies for pragmatic economic
transactions.
1#0. The main ?nancial resource for the establishment and
development of ChinaGs 32(s is foreign direct investment for which
either 8oint ventures and co$operative schemes or foreigner$owned
enterprises have been allowed. Cn spite of the 3tate$owned property
and the local private enterprises in the regions, the foreigner$owned
and 8oint venture businesses are mainly conducting export. The
exports are aimed at overseas regions, but with the concerned
authorities, they are allowed entry into the local market.
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1#1. The business transactions in 32(s are based on the market
under the governmentGs steering macro$plan ob8ective. The
importance of market mechanism distinguishes the economies
within the /one and outside. The managers have rights to decision$
making in relation with strategies and operation.
1#9. Cncentives are given to attract foreign direct investment.
-utsiders are entitled more privileges than local investors. The
administration sector provides necessary aids and allows exemption
customs and duty fees on the imported machinery and raw
materials. 7ut the import materials need to be declared on sale in
the region at due custom rates. 1"@ tax is payable for every
enterprise in the economic /one, the provincial tax is not payable.
11#. Comparative Stuy /ith &yanmar
The following facts are notedJ
aI China practices socialist economy while 'yanmar adopts
market$oriented economy. Kith basic economic diBerences,
most investors in ChinaGs coastal economic /ones are once
expatriate Chinese nationals. 'acao, =ong >ong and Taiwan
are close to 32(s, which means exporting and importing can
easily and abundantly done. 'yanmar lacks such an
advantage.
bI China, in spite of diBerences in foreign policy matters with the
&3, is regarded by the latter to be the most favoured nation,
due to its big territory, large population and abundant natural
resources. 'yanmar, on the other hand, is economically and
politically sanctioned by the &3 on the excuses of breaching
human rights and democratic movements.
cI 2mphasis should be placed on the establishment of suitable
32(s in 'yanmar. Kith the right choice of means and places,
the 32(s would bring the following eBects to the country.
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1. promoting economic growth
%. attracting 6)C
A. creating new 8ob opportunities
.. raising regional development
". improving and moderni/ing infrastructure while the
private sector investment is 9uicken economic growth.
dI 2ast Asia and 3outh 2ast Asia have showed their central role
in the worldGs economy. Cmpulses coming from opening the
door let in the enormous ow of 6)C as a mechanism for
economic growth. 3ince 1991, 'yanmar has been on this
trend, with its annual economic growth at 0@ between 199%
and 199", and expanding foreign trade. *roximity to
international economic organi/ations is necessary to speed up
into the worldGs economic currents. )elayed by A32AM,
'yanmar reached the ?nal agreement with Cndia in %##1 on
the implementation of these pro8ects.
Conclusion
111. China has made economic progress through establishment of
economic /ones. 'yanmar should take China as a good example
and learn from its experiences. The possible diEculties in
establishing 32(s should be studied in detail. 3ince increasing
exports should be the main factor in 'yanmarGs economic growth,
'yanmar needs to enhance production of goods to increase exports.
3o construction of 32(s is an inevitable process for the country to
go through.
11%. 2Bective use of natural resources as raw materials should be
considered in constructing 32(s. 'yanmar needs to show oB its
resourcefulness, cheap labour and land use to attract foreign
investment. Cncentives should be given for the entry of advanced
high$technology. 'yanmar nationals must be trained to be skilled
workers and exports. &nder the present circumstances, 'arket
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economy needs the governmentGs control in its transitional period at
least until it has been settled later, to be operated by the
governmentGs policies alone. The state needs to provide help for the
growth of private$sector and the emergence of new enterprises. Ct is
important that centralism be reduced by laying down sound policies
for this purpose.
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