Economic zones should be rationalized
By Cheng Zhangxi |
chinawatch.cn |
Updated: 2019-03-25 11:21
China first put forth the concept of “economic and trade cooperation zones” in the 1980s as an important means for pressing ahead with reform and opening-up. By attracting foreign investment, such zones played a critical role in boosting China’s economic growth and connecting China with the rest of the world.
As more Chinese businesses embarked on the journey of “going global” since the late 1990s, such zones have been promoted worldwide as a successful development model from China. Overseas economic and trade cooperation zones are set up to boost economic growth in host countries; business overseas to actively explore overseas markets, give full play to their industrial cluster and investment scale effect, and jointly fend off risks.
The Belt and Road Initiative (BRI), proposed by China in 2013, provides another opportunity for the rapid development of overseas economic and trade cooperation zones. In the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, the Chinese government said it would explore a new mode of investment cooperation, working with countries along the Belt and Road to build all forms of industrial parks such as overseas economic and trade cooperation zones and cross-border economic cooperation zones, and promote industrial cluster development.
According to the latest data from the Ministry of Commerce, 75 overseas economic and trade cooperation zones have been built in countries along the Belt and Road with a total investment of $25.5 billion, attracting 3,800 enterprises into the zones, paying taxes of $1.7 billion to the host countries and creating nearly 220,000 jobs locally.
Although some overseas economic and trade cooperation zones have quickly added development momentum to host countries and gradually became cooperative platforms for the BRI, the construction of such zones has faced some challenges, among which the biggest is a lack of detailed implementation plans. As some researchers note that in some cases, it seems that neither China nor countries along the Belt and Road have a clear understanding on how to participate in the construction. In the current stage, three problems stand in the way of overseas economic and trade cooperation zones becoming Belt and Road cooperation platforms: a lack of detailed implementation plans, the absence of a coordination mechanism and platform, and notably weak competitiveness of some zones.
To start with, there is not yet clear and feasible guidance on the construction of Belt and Road and overseas economic and trade cooperation zones. There has been a lack of specific focus when it comes to the general direction and content of Belt and Road construction. The concept becomes vague as the initiative is pushed forward in more continents. As the number of countries involved in the initiative increases, problems that occurred in some economic and trade cooperation zones have, to a certain extent, undermined the confidence of some countries that are participating in or about to participate in Belt and Road construction. The uncertainty in overall objectives has led to many complicated situations, especially when host countries put forth plans that are not in line with their development characteristics or the capability of those cooperation zones.
Second, the absence of a coordination mechanism and platform in some cases has undermined the long-term development of overseas economic and trade cooperation zones linked to the BRI. Due to a lack of an overall coordination mechanism and platform, the development of such zones depend mainly on their background and the host country’s demands. In some cases, due to increasing demand from the host country and the absence of a coordination mechanism, many similar cooperation zones within one region have been mired in vicious competition, some even in the same country.
Finally, some overseas economic and trade cooperation zones are not competitive. Over the past several years, some Chinese companies blindly entered into the field of the construction of overseas economic and trade cooperation zones that are supported by provincial governments, ending up with cooperation zones without adequate intellectual support or construction experience. Some zones have become cash-strapped; most cooperation zones didn’t have a clearing understanding of the host countries’ development situation before starting construction, ending up with financial, legal, cultural and religious problems that could have been easily foreseen or detected. In addition, the construction of some cooperation zones is a mere copycat of their domestic version, causing conflicts with host countries.
Given the three aforementioned problems, in my opinion, a top-level overall plan for Belt and Road construction can be formulated as soon as possible with specific construction priorities in each stage. Such a plan should also help China consolidate its efforts in current construction projects, especially in terms of financial and policy support.
Based on the overall plan and detailed implementation plan, a coordination mechanism and platform between host countries and overseas economic and trade cooperation zones should be established as soon as possible to form a unified, feasible and sustainable goal and agenda. Judging from the current situation, encouraging cooperation zones to voluntarily merge similar development areas and such mergers within a host country within one region will create bigger room and lay more solid foundation for the development of the Belt and Road.
Despite being included in the Belt and Road framework, striving to achieve self-reliance should be the top priority of overseas economic and trade cooperation zones. Given the speed of the construction, policy support and institutional building for the Belt and Road should be vigorously strengthened. Practical and systematic development policies should be prioritized along with the competitiveness of companies involved in the construction of such zones.
In a nutshell, the BRI is an economy-centric cooperation proposal aimed at pushing forward the next round of globalization. Its success depends not only on China’s efforts, but also on the fact that overseas ration zones and host countries put forth development targets that are in line with their strengths and make coordinated efforts based on cooperation. Although China proposed the initiative, it is concerted efforts from all countries involved that can make the new-stage Belt and Road successful.
Cheng Zhangxi is a senior researcher of the National Institute for Global Strategy of the Chinese Academy of Social Sciences.
The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
China first put forth the concept of “economic and trade cooperation zones” in the 1980s as an important means for pressing ahead with reform and opening-up. By attracting foreign investment, such zones played a critical role in boosting China’s economic growth and connecting China with the rest of the world.
As more Chinese businesses embarked on the journey of “going global” since the late 1990s, such zones have been promoted worldwide as a successful development model from China. Overseas economic and trade cooperation zones are set up to boost economic growth in host countries; business overseas to actively explore overseas markets, give full play to their industrial cluster and investment scale effect, and jointly fend off risks.
The Belt and Road Initiative (BRI), proposed by China in 2013, provides another opportunity for the rapid development of overseas economic and trade cooperation zones. In the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, the Chinese government said it would explore a new mode of investment cooperation, working with countries along the Belt and Road to build all forms of industrial parks such as overseas economic and trade cooperation zones and cross-border economic cooperation zones, and promote industrial cluster development.
According to the latest data from the Ministry of Commerce, 75 overseas economic and trade cooperation zones have been built in countries along the Belt and Road with a total investment of $25.5 billion, attracting 3,800 enterprises into the zones, paying taxes of $1.7 billion to the host countries and creating nearly 220,000 jobs locally.
Although some overseas economic and trade cooperation zones have quickly added development momentum to host countries and gradually became cooperative platforms for the BRI, the construction of such zones has faced some challenges, among which the biggest is a lack of detailed implementation plans. As some researchers note that in some cases, it seems that neither China nor countries along the Belt and Road have a clear understanding on how to participate in the construction. In the current stage, three problems stand in the way of overseas economic and trade cooperation zones becoming Belt and Road cooperation platforms: a lack of detailed implementation plans, the absence of a coordination mechanism and platform, and notably weak competitiveness of some zones.
To start with, there is not yet clear and feasible guidance on the construction of Belt and Road and overseas economic and trade cooperation zones. There has been a lack of specific focus when it comes to the general direction and content of Belt and Road construction. The concept becomes vague as the initiative is pushed forward in more continents. As the number of countries involved in the initiative increases, problems that occurred in some economic and trade cooperation zones have, to a certain extent, undermined the confidence of some countries that are participating in or about to participate in Belt and Road construction. The uncertainty in overall objectives has led to many complicated situations, especially when host countries put forth plans that are not in line with their development characteristics or the capability of those cooperation zones.
Second, the absence of a coordination mechanism and platform in some cases has undermined the long-term development of overseas economic and trade cooperation zones linked to the BRI. Due to a lack of an overall coordination mechanism and platform, the development of such zones depend mainly on their background and the host country’s demands. In some cases, due to increasing demand from the host country and the absence of a coordination mechanism, many similar cooperation zones within one region have been mired in vicious competition, some even in the same country.
Finally, some overseas economic and trade cooperation zones are not competitive. Over the past several years, some Chinese companies blindly entered into the field of the construction of overseas economic and trade cooperation zones that are supported by provincial governments, ending up with cooperation zones without adequate intellectual support or construction experience. Some zones have become cash-strapped; most cooperation zones didn’t have a clearing understanding of the host countries’ development situation before starting construction, ending up with financial, legal, cultural and religious problems that could have been easily foreseen or detected. In addition, the construction of some cooperation zones is a mere copycat of their domestic version, causing conflicts with host countries.
Given the three aforementioned problems, in my opinion, a top-level overall plan for Belt and Road construction can be formulated as soon as possible with specific construction priorities in each stage. Such a plan should also help China consolidate its efforts in current construction projects, especially in terms of financial and policy support.
Based on the overall plan and detailed implementation plan, a coordination mechanism and platform between host countries and overseas economic and trade cooperation zones should be established as soon as possible to form a unified, feasible and sustainable goal and agenda. Judging from the current situation, encouraging cooperation zones to voluntarily merge similar development areas and such mergers within a host country within one region will create bigger room and lay more solid foundation for the development of the Belt and Road.
Despite being included in the Belt and Road framework, striving to achieve self-reliance should be the top priority of overseas economic and trade cooperation zones. Given the speed of the construction, policy support and institutional building for the Belt and Road should be vigorously strengthened. Practical and systematic development policies should be prioritized along with the competitiveness of companies involved in the construction of such zones.
In a nutshell, the BRI is an economy-centric cooperation proposal aimed at pushing forward the next round of globalization. Its success depends not only on China’s efforts, but also on the fact that overseas ration zones and host countries put forth development targets that are in line with their strengths and make coordinated efforts based on cooperation. Although China proposed the initiative, it is concerted efforts from all countries involved that can make the new-stage Belt and Road successful.
Cheng Zhangxi is a senior researcher of the National Institute for Global Strategy of the Chinese Academy of Social Sciences.
The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
