The Evolution Of China's Sezs

Special economic zones were key to the development of many emerging markets, but how relevant are they in today’s China?

In recent years, SEZ (special economic zone) has become a buzzword in many developing countries and even in international and regional development agencies. In China, it has always been a focal point given the important role it has been playing in the country’s policy reform and economic development. The announcement of another mega-SEZ near Beijing earlier this year – the Xiongan New Area again stirred fresh debates both in China and overseas. Does the SEZ still have much relevance to China’s development? Haven’t they, to some extent, completed their task of introducing reform and boosting investment and growth? Given China’s development level today, there is no surprise for people to wonder about it.

Looking back to China’s development history, SEZs have played a very important role in China’s industrialization and structural transformation, and, to a large extent, they are the key to interpret China’s economic miracle. Throughout the globe, so far China might be the most successful country in terms of leveraging SEZs to achieve far-reaching economic transformations. It started with four zones at the initial stage to experiment with market-oriented economic reforms that involves laws, regulations, taxation, land, labor, finance, customs, immigration, etc. After the initial successes, the zone program and relevant reforms were gradually rolled out throughout the nation. Together with the numerous industrial clusters, the SEZs have contributed significantly to national GDP, employment, exports, and attraction of foreign investment. The SEZs have also played important roles in bringing new technologies to China and in adopting modern management practices.