Analytical Comparison of China's Newest Economic Regions: Special Economic Zones, Open Cities, & Open Coastal A   Term Paper ID:27307 Click to get this paper

Essay Subject: Tests the speculation that China may soon have the world's largest economy by comparing & contrasting the three geographical economic elements: Special Economic Zones, Open Cities, & Open Coastal Areas.... More...

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Paper Abstract: Tests the speculation that China may soon have the world's largest economy by comparing & contrasting the three geographical economic elements: Special Economic Zones, Open Cities, & Open Coastal Areas. Paper Introduction: Analytical Comparison of China's Newest Economic Regions: Special Economic Zones, Open Cities, and Open Coastal Areas Introduction In 1978, the People's Republic of China took the first steps on a long path that would switch the world's largest nation operating under a Communist system of government to the world's largest nation attempting to operate as a new economic concept -- a socialist marketing economy. Since then, China's economy has truly modernized and embraced many of the concepts of economic geography, including creating a societal infrastructure that accepts capitalism. The reform process has affected all sectors of the economy (Roberts & Clifford, 1997, 54). Looking back at the changes occurring over the last 17 years, Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. In 1995, Chinese Government for the first time made public animportant plan. These open border cities were chosen to exploit their advantage indeveloping economic and trade cooperation with neighboring countries.Today, they are accelerating infrastructural construction and developingborder bartering trade and economic cooperation with foreign countries.Under State Council regulations, these 13 border cities are empowered toset up their own border economic cooperation zones, and implementpreferential policies analogous to those found in the coastal economic andtechnological development zones (Clifford, Roberts, Barnathan, & Engardio,1997, 116). That's "Economics 1 1," says Citizens League President Lyle Wray, who toured Chinese special economic zones earlier this year. Lawrence, S.V. The "Window for Development Areas in China" Web site offersChinese and foreign investors information on China's investmentenvironment, policies and other relevant topics.The State Council's Office for Special Economic Zones and the ChinaInformation Association issued an announcement in April on plans to createthe site. (1996, December 3 ). (1997,September 29). Since 1992, the State Council decided to "open" a number of bordercities, and in addition, opened all the capital cities of inland provincesand autonomous regions. From the SEZs, Deng hoped, a tide of skills, technology and capital would eventually flow into the surrounding provinces (Spaeth, 1995, 81). (1992, August 3). However, there were exorbitant requirements far beyond China'scapacity to undertake at its present stage of development, insisted upon byone or two other signatories so that an agreement was not reached onsubstantive issues. Historically, the Chinese invented writing, and they seem to be usinganother kind of writing--HTML--to communicate with the world and share theexperience that is China. To date, 5,813enterprises have been approved for entry to the free trade zones, 3,4 4 ofwhich are foreign-invested enterprises. (1997, Aug, 25) Overhauling China inc?Business Week. A secondary goal, it isassumed, is that establishing a solid banking base will help ensure China'sacceptance into the group of world nations who are signatory states in theGeneral Agreement on Tariffs and Trade (GATT), which is a major requirementfor membership in the World Trade Organization (WTO). Available: http://www.chinesebusiness world.com/business/zone.html Roberts, D. In 1994 China's foreigntrade totaled $236.7 billion made up of $121 billion in exports and $115.7billion in imports, 11.5 times the volume in 1978, and an increase of 21percent over 1993 (The New Pudong Zone..., 1997). As aresult, a multi-level, multichannel, and omnidirectional pattern of openingintegrating coastal areas with coastal, riverside, border, and inland areashas been formed in China. These Web pages featureinformation on a select group of highly efficient and rapidly developingareas with favorable investment environments. Clifford, M.L., Roberts, D., Barnathan, J., & Engardio, P. Total investment value was US $8.8billion, of which US $3.4 billion was used (Opening to the outsideworld..., 1997). To help generate high-tech and computer industries, thegovernment also established 32 state-level economic and technologicaldevelopment zones (ETDZ), many of which overlapped with existing SEZ andOpen City regulations. That's because theSpecial Economic Zones and Technology Development Areas, which have beenpioneers of China's reform, now have their own information pages on theInternet. In 1985, based on the successes of the open coastal areacities concept, the government extended the "open" policy to the citiesalong the Yangtze River Delta, Pearl River Delta, Xiamen-Zhangzhou-QuanzhouTriangle in south Fujian, Shandong Peninsula, and Liaodong Peninsula,Hebei, and Guangxi. Why U.S. The fourth section willconsider the validity of the earlier assumption that China is headed towardthe goal of becoming the world's largest and powerful economy. There is nomore important foreign policy issue than getting the Chinese to choosewell, integrating it into the world economy (Roberts & Clifford, 1997, 54). Available:http://www.chinesebusinessworld.com/business/zone.html Jiang's gutsy gamble. The 5 Special Economic ZonesThe Goals of the SEZs In 198 , the Chinese Communist government took a radical step towardCapitalism when it established five major special economic zones(SEZ),slivers of land mostly in southeast China (Spaeth, 1995, 8 ). As Beal (1996) says: Developing countries such as China want the best technology, education, training and support systems available to build up their countries. This newconfiguration will create new companies in which stock will be sold toprivate investors. In this way, a chain of opencities extending up the Yangtze River valley, with Shanghai's Pudong as its"dragon head," has been formed (The Pudong New Zone..., 1997). Thus far, 13 Free Trade Zones have been established in Waigaoqiao,Shanghai, Tianjin Dalian, Shatoujiao, Futian, Guangzhou, Zhangjiagang,Haikou, Qingdao, Ningbo, Fuzhou, Xiangyu and Shantou. A national credit squeeze imposed in 1993 by Beijing has flattened the local stock exchange and wiped out many a new entrepreneur. In 1993, the government invested 9 million yuan($153.21 million) in the construction of these three R&D parks with the aimof increasing, among other technologies, the country's software developmenttechnologies (The Pudong New Zone..., 1997).The Success of the Open Cities and Open Coastal Areas These open cities have become hot spots for foreign investment. So big is China thatthe way it balances producer against consumer interests and protectionismagainst free trade will inevitably affect the entire world. Should they generate strong domestic demand as well, China could be aforce for global growth well into the 21st century. The investors were expected not just to create jobs but also to help build, from the ground up, entire, modern urban areas. The zoneswere designed as the backbone of China's new economic reform, beingdesignated regions in China which would operate under rules that providedspecial investment incentives, including duty free treatment for importsand special tax situations for manufacturing plants which reexport theirproducts. But less than 1 percent has moved past the coastal regions intothe inland provinces (Spaeth, 1995, 8 ). Pointing the way; from Mao to themarket, U.S. A 1997 report by theofficial People's Republic of China Economic Information Network Onlinepoints out that the five SEZs, with only .35% of the national land areaand .8% of the population, were responsible for $16.96 billion in exportslast year, 14% of the country's total. Paul Pioneer Press. | | | ||Dollars; | | | ||Industry in | | | ||198 -Based Yuan) | | | || | | | ||Year |GDP |Agriculture |Industry || | | | ||198 |159.6 |48.6 |78.3 || | | | ||1981 |166.7 |51.9 |79.8 || | | | ||1982 |181.2 |57.9 |84.1 || | | | ||1983 |199.9 |62.8 |92.9 || | | | ||1984 |229.1 |7 .8 |1 6.3 || | | | ||1985 |258.2 |72.1 |126.1 || | | | ||1986 |279.7 |74.5 |139 || | | | ||1987 |31 .5 |78 |158 || | | | ||1988 |344.6 |8 |181 || | | | ||1989 |358.2 |82.4 |187.8 || | | | ||199 |376.9 |88.6 |197.8 || | | | ||1991 |4 3.3 |91.3 |216.7 | A large part of that growth can be attributed to rather sophisticatedmarketing performed by the leaders of the SEZ's. In his September 12 speech opening the 15th Party Congress inBeijing's Great Hall of the People, President Jiang Zemin set programs inmotion that are likely to end the dictatorship of the Chinese CommunistParty (Jiang's gutsy gamble, 1997, 156). St. A primary element of this "Open City" policy isthe further establishment within many of the open cities Free Trade Zones. These Free Trade Zones are small, special districts with closed accessfacilities, analogous to free ports or free trade districts in othercountries. This problem was addressedby the Chinese government which, between 1984 and 1994 created 14 "opencoastal cities" that would have two main roles to play in the futureeconomic growth. Finally, China has recently developed severalR&D parks located in Beijing, Shanghai, and Zhuhai, all of which are in theGuangdon Province. Apparently, his desire is to create a capital infusion for China'sailing banking system which is almost insolvent. This plan demonstrates the magnificent prospects for China's economicconstruction as well as the nation's tremendous market potential in thecoming five years. The 48 areas appearing on the Web site include 32 state-level and 12provincial-level development areas.Currently, the pages offer information in both Chinese and English, withplans for the addition of Japanese soon. "More than 3 , foreign-fundedenterprises have been established in the five SEZs with actual overseasinvestment totalling $22.8 billion. The Pudong New Zone and Open Areas along the Yangtze River (1997). Wray argues that the best way for the Twin Cities to cope with that kind of economic competition is to push for those same best practices here rather than try to contain China (18). Analytical Comparison of China's Newest Economic Regions: Special Economic Zones, Open Cities, and Open Coastal AreasIntroduction In 1978, the People's Republic of China took the first steps on along path that would switch the world's largest nation operating under aCommunist system of government to the world's largest nation attempting tooperate as a new economic concept -- a socialist marketing economy. 5) Hainan Special EconomicZone, at 34, -square-kilometers is China's largest and encompasses theentire islandprovince located to the south of China's mainland (Opening to theOutside..., 1997). Chinese business world. 25) China: Zones of high anxiety after 15years. The new Internet pages are expected to help the areasfurther enhance their development prospects. As part of the organizational structure, these zones were slated toend in 1995. Sincethen, China's economy has truly modernized and embraced many of theconcepts of economic geography, including creating a societalinfrastructure that accepts capitalism. This created a geographical and economicinfrastructure which was, on the one hand, logical and on the other hand,quite confusing, since many of the Open Coastal Economic Zones (OCEZ)overlapped with the Special Economic Zones (SEZ). (3546) 116. (1997, January 2 ) China. In Shenzhen, speculative construction in the early 199 s has resulted in an oversupply of commercial space, and the main expressway is flanked by empty office and industrial buildings. These are customs service supervised areas combining exportprocessing and foreign trade, implementing special tariff policies andemploying special managerial methods. Time International, 8 . (1997). The question remains, however, as to whether that "trickle out" theorytruly developed. During eight yearsof negotiations, China made every effort to resolve any problems, offeringthe largest concession that a developing country such as China could affordto make at this stage of its development and signing the final documents ofthe Uruguay round trade negotiations and the World Trade Organizationagreement, fully demonstrating China's sincerity. Thecoastal areas centered on seven open coastal economic zones have become themost active place for foreign dollars to be placed (Roberts & Clifford,1997, 54). It is interesting to note that there are anumber of artistic and well-linked Web sites devoted to China's SpecialEconomic Zones, Open Cities, and Open Coastal Areas. If China's new capitalists merely add to Asia's torrentof exports, the world economy could easily tilt toward overcapacity,deflation, and eventual recession. 3) Zhuhai Special Economic Zone is located in the south of GuangdongProvince, west of the Pearl River, abuts Macao in the south and occupies121-square-kilometers. In addition, 52 new-and high-tech industrialdevelopment zones were established in large and medium-sized cities. Open Coastal Areas and Open CitiesGoals of the Open Coastal Areas and Open Cities The five SEZs have been very successful at what they were designed todo: generating outside investment. Each of these cities would beallowed to serve the two functions mentioned above, as well as offerspecial incentives for outside investors. (1997, September 29). Accordingly, China has accomplished the most importantprecondition for joining the World Trade Organization (Beal, 1996, 18). Second, these open cities would then "radiate" the economic growth intothe central regions of the country (Opening to the outside world..., 1997). But, as was seen above, the money wascoming in but stopping at the coastal cities. Can China reform its economy? The Window for Development Areas in China is offered through theChina Economic Information Net (CeiNet). All information will be updatedon a regular basis. In terms ofinternational trade volume, China ranks 11th in the world (Jiang's gutsygamble, 1997, 156). & Clifford, M.L. A couple of years ago, Shenzhen attempted to attract a better class of foreign investors, such as banks and brokerage houses by discontinuing some of the incentives that had lured manufacturers (81). It seems to be a satisfactoryway to visit first hand the Special Economic Zones and judge theirefficiency first-hand. In that year, Anthony Spaeth, an astute China Observerpointed out the economic scope of the five SEZs: Though China's SEZs resemble the free-trade or export-processing zones in other developing countries, they are much more. It covers 327.5 square-kilometers 2) Shantou Special Economic Zone is in the southeast corner ofGuangdong Province and is divided into two parts: Longhu (in the easternsuburbs of and Guang'ao Peninsula to the southeast of Shantou. By the end of this century, China's total accumulativeimport volume will reach US $1, billion equivalent to one seventh of thecurrent global annual trade volume (The New Pudong Zone..., 1997). In 199 the Chinese Government, in a desire to push yet moreinvestment capital inland along the riverways, established the Pudong NewZone in Shanghai to generate overseas investment, and opened a number ofadditional cities along the Yangtze River. 18. Since March 1992, China has opened the border cities of Hunchun (JilinProvince), Heihe and Suifenhe (Heilongjiang Province), Manzhouli andErenhot (Inner Mongolia Autonomous Region), Tacheng, Bole and Yining(Xinjiang Uygur Autonomous Region), Hekou, Wanding and Ruili (YunnanProvince), and Pingxiang and Dongxing (Guangxi Zhuang Autonomous Region).The state also further opened seven capitals of border and coastalprovinces and autonomous regions of Nanning, Kunming, Urumqi, Hobhot,Harbin, Changchun, and Shijiazhuang (Opening to the outside world...,1997). But instead of building fenced-in industrial parks near the docks or the airport, China made SEZs out of entire cities and, in the case of Hainan, an island larger than Belgium. China's request to be a member of the World Trade Organization arisesfrom its need to reform and open to the outside world. must improve relations withChina. In recent years, foreign investment in these areas hasaccounted for 8 percent of foreign investment. [On-line]. Many of these cities chose to do this marketing by severalmethods, including opening up outside information offices in certainEuropean cities. (1995, Dec. (3546)156. The five SEZ's general geographic locations and sizes are: 1) Shenzhen Special Economic Zone is located south of GuangdongProvince and borders Hong Kong's Kowloon. In addition, Spaeth notesthat the growth was not always positive: The boom times have been accompanied by some jarring potholes. China's othermajor trade partners are Hong Kong, the United States, the EuropeanEconomic Union, Taiwan, and the Republic of Korea. Business Week. Already possessing the world's largest population, most economicobservers suggest that by early in the next century, China may have theworld's largest economy. To test that speculation, this analysis willcompare and contrast the three geographical economic elements--The SpecialEconomic Zones, The Open Cities, and The Open Coastal Areas (The Pudong NewZone..., 1997). From these Special Economic Zones came a refined subset oforganizational structures which will be outlined in the second section.That outline serves as basis for third section, which discusses how eachof these three regions contributes to the Pacific Rim growth that is makingAsia one of the least-understood superpowers. The most prevalent choice for marketing appeared to be through themedia infrastructure, and each of these cities created a series ofnewsletters, magazines, investment brochures and so on which were widelydistributed. Business Week, (351 ) 46. the year of the whiteelephant. Spaeth, A. No matter whenChina ultimately joins the World Trade Organization, it will continue topromote reform, will continue its attitude of oneness to the outside world,and continue its drive for modernization (Jiang's gutsy gamble, 1997, 156). [On-line]. The reform process has affectedall sectors of the economy (Roberts & Clifford, 1997, 54). Pacific Rim Growth Interactions At present, Japan is China's biggest trade partner. Pudong, though with a short history offive years, has contracted $8.54 billion of overseas funds involving 3,372projects" (Opening to the outside world...,1997).The Failures of the SEZ Concept Although the SEZ structure did increase business and foreigninvestment in China, it did not achieve "trickle out" goals.Since 198 , more than $1 billion in foreign investment has poured intoChina. Opening to the outside world: Special economic zones and the opencoastal belt. (3541) 54. Beal, D. 4) Xiamen Special Economic Zone, which includes Xiamen Island andGulang Islet, is located in the city of Xiamen in China's Fujian Province,where it takes up 131-square-kilometers. First, these cities would serve as "open" windows to theoutside world, showing foreign investors how easy it is to invest in China. The original 14 open coastal cities were Dalian, Qinhuangdao, Tianjin,Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou,Guangzhou, Zhanjiang and Beihai. In tabular form, the initial record(Lawrence, 1992, 37) seems even more impressive.| | | | ||China's Economic | | | ||Growth Based on | | | ||SEZ, 198 -1991 | | | ||(GDP and | | | ||Agriculture in | | | ||billions of U.S. Today, in its bid to become a member of the WorldTrade Organization, it has established economic and trade relations with221 countries and regions throughout the world. Much of that growth is attributed to the success ofthe SEZ geographical construct. News & World Report, 36(3). References Barnathan, J. Looking back at the changes occurring over the last 17 years, itbecomes apparent that one key moment in that evolution from Communism toCapitalism happened in 1992, when the Party officially recognized that amarket system was compatible with the ideals of socialism (Lawrence, 1992,36). In addition, each open city wasgiven the right to "market" to the outside world, its special attractionsand benefits. Tomorrow's Eco-Power? The first section of the analysis will focus on thesezones within a three-part structure: their goals, their achievements andtheir failures. Business Week. Indeed, many classical and geographical economists suggest that Chinahad graduated from the age of SEZ-style economic experimentation, wheninvestors had to be lured with tax breaks and other giveaways, and wasmoving into a more localized concept known as "Openness." The concept ofopenness expresses itself in two organizational constructs created in theearly 199 s: Open Cities and Open Coastal Areas. Jiang's critical decision was toreevaluate the 3 , state-owned companies that employ 1 million peopleand to decide that they should be merged or reorganized. The data in the next section explores that question.The Achievements of the SEZ's China has been called the world's fastest-growing major economy, withannual growth rates that averaged more than 1 % from 198 (Roberts &Clifford, 1997, 54 ). In recent years, China has reformed its economic andtrade system, rendering it essentially compatible with international tradestandards. Longhuoccupies 22.6 square kilometers, and Guang'ao Peninsula takes up nearly 3 square kilometers. Like their counterparts elsewhere, the SEZS have offered incentives and low wages to manufacturers in search of affordable places to make labor- intensive products such as shoes and toys. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.