OPINION – Transformative SEZ: China’s changing paradigm along the “Belt and Road” and in the “Greater Bay Area”

Institute for Research on Portuguese Speaking Countries, City University of Macau 

Francisco José Leandro 

Assistant Dean, Institute for Research on Portuguese Speaking Countries

City University of Macau 

Yichao Li 

PhD Candidate, Institute for Research on Portuguese Speaking Countries 

City University of Macau 

Since the beginning of the implementation of China’s reform and opening-up policy in 1979, economic development in China has been steadily improving, and it appears that the establishment of Special Economic Zones (SEZ) had played an important contributing role. With the deepening of reforms, SEZ have been gradually established in China in different forms and diverse locations. Ever since the 1990s, SEZ have also been growing rapidly around the globe. In fact, according to the World Investment Report (2019), in 1995 there were a total of 500 SEZ in 73 economies. However, in 2018, this number had expanded to nearly 5,400 SEZ, distributed in 147 economies. Globally, China is currently operating 2,543 SEZ, accounting for almost half of the total. 

In recent times, the process of China’s reform and opening up has entered a new period. Since the Belt and Road Initiative (BRI) was put forward in 2013, and after the 2019 structural plan for the Greater Bay Area was unveiled, SEZ are transforming themselves into “specially designed gateways” of a larger network of linkages between trade and economic agents. In this process, China is also gradually integrating these different types of SEZ with replicated functions, in order to make full use of them in deepening internal reforms and strengthening external relations. At the same time, with the continuous development of society, SEZ are being perceived as an instrument of economic policy, reform and innovation, advancing corresponding adjustments, and promoting economic transformation, sustainability, and prosperity for all society sectors. 

Furthermore, it is worth mentioning two types of SEZ in China, namely China Overseas Economic and Trade Cooperation Zones (COCZ) and China Pilot Free Trade Zones (CPFTZ). The former are more dependent on China’s accumulated experience in developing various types of domestic SEZ in the past. For Chinese enterprises, the enterprises themselves needed to expand overseas business. Meanwhile, this is also an opportunity for China to share its experience in building SEZ with other countries and promote economic and trade exchanges, as well as BRI countries. One of the latter is China (Guangdong) Pilot Free Trade Zone (GDFTZ), which had been set up in 2015 in three different locations: Nansha (Guangzhou), Qianhai & Shekou (Shenzhen), and Hengqin (Zhuhai). In 2018, the State Council put forward new requirements for deepening the development of GDFTZ, and explicitly integrated BRI into the development process of GDFTZ. The GDFTZ needs to work together with Hong Kong and Macau, cooperating with the countries and regions along BRI. Indeed, one of the lessons learned from the establishment of the GDFTZ is the fact that local economic and local social development must be balanced and built together. The infrastructure built to protect the people’s basic life meet the development needs of physical capital, while the construction of more humanized facilities and service has continuously improved the quality of human capital, which can have a positive impact on social capital. 

If we regard BRI as a sort of “vehicle” leading the Chinese development policies, then SEZ are to be considered the “vehicle differentials” for internal adjustment and external connectivity. Undeniably, SEZ are connecting the country inside and outside, and contributing to the development of BRI. SEZ are playing specific roles in economic transformation, policy innovation, and social environment sustainability. Overall, the contribution of the SEZ to the BRI can be seen from three major perspectives: (1) they provide flexibility and connectivity along the geographic space, as well as between different domestic regions; (2) they are clusters of leading localized innovation and experimentation, combining economics, social, and environmental policies; (3) they operate as catalytic enzymes to promote domestic transformation and international cooperation for mutual benefit. As such, SEZ are likewise vital instruments of de-bordering and structural advancement in China, in the GBA, and along the BRI.  

An extended version of this article was published by Transnational Dispute Management (TDM) 5 (2020).