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MASTER THESIS

CHINA’S SPECIAL ECONOMIC ZONES AND

LESSONS FOR VIETNAM

PHAM HOANG NGOC HUYEN

Ha Noi - 2023

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MASTER THESIS

CHINA’S SPECIAL ECONOMIC ZONES AND

LESSONS FOR VIETNAM

MAJOR: INTERNATIONAL ECONOMICS

Code: 8310106

PHAM HOANG NGOC HUYEN Supervisor: Dr Dinh Thi Thanh Binh

Ha Noi - 2023

ACKNOWLEDGEMENTS

First of all, I would like to sincerely thank the attentive care and enthusiasm

of the Board of Directors and teachers of Foreign Trade University, as well as some guest lecturers and especially the guidance of my dedicated instructor – Dr Dinh Thi Thanh Binh She gave me useful and neccessary advices to help me complete this thesis well All of them have created favorable conditions for me to complete my duties well during my time studying at the school

Secondly, I would also like to thank all the teachers, friends, and library who have helped and shared experiences with each other during the past time Everyone

is eager to help Through this thesis, I have not only gained a lot of experience but also have a research purpose to serve my work in the future

However, because of my limited professional knowledge and my lack of practical experience, the content of the thesis cannot avoid shortcomings

Once again, I would like to send my sincere and best thanks to teachers and friends!

Thank you so much for your great support!

DECLARATION

I hereby declare that the thesis "China’s Special Economic Zones and lessons for Vietnam" is my own work and based on the research learned theory, practice survey and guidance from Dr Dinh Thi Thanh Binh

The research results stated in the thesis are honest and have never been published in any research work All documents and references from previous studies are fully cited in accordance with regulations

I take full responsibility for the truthfulness of the thesis

Author

Pham Hoang Ngoc Huyen

TABLE OF CONTENTS

LIST OF FIGURES AND TABLES i

FIGURES i

TABLES i

INTRODUCTION 1

CHAPTER 1: OVERVIEW ON THE SPECIAL ECONOMIC ZONE IN THE WORLD 7

1.1 Overview of the Special Economic Zone 7

1.1.1 History of special economic zones in the world 7

1.1.2 Concept of Special Economic Zone 9

1.1.3 Characteristics of the Special Economic Zone 10

1.2 The role of the Special Economic Zone 12

1.2.1 The role of the Special Economic Zone in the national economy 12

1.2.2 The role of the Special Economic Zone in import and export activities 14 1.3 Classification of the Special Economic Zone 16

1.3.1 Free port and free trade zone 16

1.3.2 Tax-free zone 16

1.3.3 Export processing zone 17

1.3.4 Technology industrial zone 17

1.3.5 Free border zone and transit zone 18

CHAPTER 2: THE SPECIAL ECONOMIC ZONE MODEL OF CHINA 20

2.1 Overview of China's Special Economic Zone 20

2.1.1 Formation context of the Special Economic Zone 20

2.1.2 Development of the Special Economic Zone in China 27

2.1.3 State management in the Special Economic Zone 45

2.1.4 Preferential policies in the Special Economic Zone 49

2.2 Activities in the Special Economic zone in China 59

2.2.1 Investment activities in the Special Economic Zones 60

2.2.2 Import and export activities in the Special Economic Zones 62

2.2.3 Industrial activities in the Special Economic Zones 64

2.2.4 Service activities in the Special Economic Zones 66

2.3 Evaluation on the Special Economic Zone in China 75

2.3.1 Success of Special Economic Zones 75

2.3.2 Remaining problems 78

CHAPTER 3 PRECONDITIONS AND REALITY OF CONSTRUCTION AND DEVELOPMENT SPECIAL ECONOMIC ZONE IN VIETNAM 80

3.1 Preconditions for the formation and development of economic zone models 80

3.1.2 For economic zones 80

3.1.3 For border economic zones 81

3.1.4 For the high-tech park 81

3.2 Current status of development of economic zone models in Vietnam 81

3.2.1 Achievements in the development of industrial parks and export processing zones 81

3.2.2 Achievements in economic zone development 83

3.2.3 Achievements in the development of border gate economic zones 83

3.2.4 Achievements in the development of high-tech zones 84

3.3 Assess the development of economic models over time 84

CHAPTER 4: RECOMMENDATIONS TO DEVELOP A SPECIALECONOMIC ZONE IN VIETNAM BASED ON EXPERIENCE OF CHINA 87

4.1 Lessons from building the Special Economic Zones of China 87

4.2 Some recommendations for Vietnam 92

4.2.1 Strategy and vision for the development of the Special Economic Zone in Vietnam 92

4.2.2 Recommendations at the State level 94

4.2.3 Recommendation at the Enterprise level 97

CONCLUSION 100

LIST OF REFERENCES 101

LIST OF FIGURES AND TABLES

INTRODUCTION

1 The rationale of the study

Special Economic Zones (SEZs) have been effectively used by China to develop its economy Before reforms were broadly implemented, SEZs were initially used to test market-oriented economic reforms and gain experience Today, a variety of SEZs have been created to benefit from regional characteristics In addition to others at the national and regional levels, these include big, national zones (whose goal is to promote broad-based, comprehensive economic growth), high tech industrial development zones, free trade zones, and export processing zones There is no one blueprint for successful Chinese SEZs, but all of them are supported by favorable government promises and policies

SEZs have significantly aided China's economic development They are thought

to have contributed 22% of the nation's GDP, 46% of FDI, 60% of exports, and more over 30 million jobs in recent years Industrial parks may be responsible for 80–90%

of GDP growth in some areas Farmers' incomes clearly benefit from national industrial parks, particularly agro-tech parks and agricultural demonstration zones The average agricultural income in these parks is more than 30% more than the average income in the nearby villages

Vietnam is also in the process of integrating into the regional and world economy In order to achieve the economic goals as set out to basically turn our country into a modern industrial country by 2030, we must continue to innovate in all fields, strengthen international cooperation and accelerate the process of industrialization and modernization towards export However, the industrialization and modernization in our country currently requires a very large amount of investment capital, while Vietnam's ability to be proactive in capital is limited All these factors require us to find appropriate forms to attract investment in capital, technology, and management experience from abroad, in order to develop the country's economy

China is a country with many similarities with Vietnam in terms of economic, political and social regimes Through studying the development strategy of China's special economic zone, we will partly draw the necessary lessons for the reform, opening-up, and industrialization - modernization in Vietnam today

From the above meaning, the topic: "China special economic zones and lessons for Vietnam" aims at the following objectives: Firstly, learning the history of formation and development of the special economic zone in the world; secondly, studying on China's special economic zones, thereby drawing lessons from successful construction of Special Economic Zones in China; thirdly, making some recommendations with practical value for building a model of special economic zone

in Vietnam in the future

2 Literature review

In the history of world economic development, Special Economic Zones (SEZs) have been formed since ancient times, originating from ancient free trade zones that existed 2500 years ago in a number of prosperous countries such as: Rome, Greece, China… These areas are often located in the border areas or the busiest trading centers

in the world

The success of the SEZ model quickly developed, popular and applied in many countries With the support of the World Bank (WB), a series of SEZs have been established in Southeast Asia, Asia-Pacific, Central and South America Looking at

an overview of the development of SEZs in the world, it can be seen that the number

of SEZs is increasing, the growth rate is rapid, from Western Europe, it has spread all over the world At first, the function of SEZs was only commercial, then developed into a combination of industry and commerce The business sector also moved from barter to commodity production, and then to commodity research and manufacturing The production structure was also adjusted from labor-intensive industries to capital-intensive, technical and knowledge-intensive industries The general trend is from the primary form to develop to the advanced form

Up to now, there are many different concepts and interpretations of SEZ In a broad sense, all certain geographical areas established within its scope by a country

or a region and where special economic policies are implemented can be called SEZs However, in a narrow sense, the SEZ is a separate geographical area to attract foreign investment, advanced technology, and management techniques for economic development with a full industry structure of the national economy, including: industry, agriculture, finance, healthcare, tourism, services , in which the priority is given to export-oriented industrial development, but also not ignoring the domestic market the purpose is to make the economy of that area and surrounding areas become prosperous, increase income and increase foreign currency revenue Therefore, building SEZ is an important policy of a country when implementing the policy of opening up to the outside and encouraging export expansion

The highly organized nature of the SEZ is also reflected in the model of "area within a zone", that is, the SEZ includes a combination of different types of free economic zones such as Free Trade Zone, Free Port, Industrial park, Export processing zone, Duty free storage area With such an organization, the complete association between these types has created a unified overall picture, promoting the development of the SEZ

The main purpose when building the SEZ is to expand exports, develop the economy, improve technical skills and increase foreign currency revenue To achieve this goal, countries pay special attention to develop the export processing industry, attract foreign investment and advanced technical equipment Thereby developing the regional and neighboring economies, improving high technical level of domestic production In addition, in order to synchronously develop a multi-sector economic structure, the SEZ also encourages foreign investment inflows into other fields such

as industry, agriculture, and services…

With SEZ model, after more than 40 years of construction and development, China has obtained unexpected achievements in attracting foreign investment, economic development and industrialization of the country According to the evaluation of the United Nations Agency for Trade and Development (UNCTAD):

"Compared to other export processing zones in the world, China's SEZ has been built relatively successfully" Indeed, China built the SEZ model quite late compared to many other countries, but with the advantage of the latecomers, thanks to its experience, high determination and boldness, China has achieved many successes, great results in turning the special zones from fishing villages or small remote towns into modern cities with developed economies, rich lives, and locomotives for the country's economic development The SEZs of China became famous because they brought the most things: the fastest economic growth, the most concentrated use of foreign capital, the densest joint venture enterprises, the ability to export and earn foreign currency quickly, the widest range of domestic economic contacts, the largest degree of market regulation

According to Chinese economic experts, the success of SEZs is not only that they are pioneers in the process of reform, opening up and implementing new government policies, but they are also the driving force for other economic regions

to open up and develop With those successes, we can summarize the experience in building and developing the SEZ model of this country during the past 40 years The experience of the SEZ model in China has left some valuable lessons learned from practice More than 40 years of application in a country transitioning from a centralized planning mechanism to implementing the economic management according to the socialist market mechanism, has provided us with favorable conditions for the next generation to study, apply this economic model into the current Vietnamese economy

In the context of diverse economic development and fierce competition today, cooperation and integration with the international environment is the trend of the times Therefore, economic development is not only limited to the centralized industrial park model, but our conditions also allow the establishment of a number of new economic models with higher purposes and requirements, comprehensive development in certain regions, in order to promote the diversity and freedom of competition in production and trade with foreign countries, that is the SEZ

In order to effectively apply China's SEZ model to Vietnam, we need to study the successes and limitations of this model when developing in our country, then apply it selectively to the specific situation of our country The SEZ model in Vietnam may be different from China in terms of method and scale, but the main features of the SEZ remain unchanged China is a country with an area and population many times larger than ours The construction of 5 SEZs with a scale of over 35,000 km2 accounts for only a small percentage of the national area Vietnam's land is narrow, the population is many times smaller than China's, and the socio-economic situation

of Vietnam is not the same as China If we set up a few Shenzhen, the country will shrink before the expansion of this kind of long-term concession Therefore, it is necessary to learn from their experience, but how to make this model suitable for our country's current and future conditions is something to think about, requiring great efforts of the relevant ministries and branches also require close coordination at macro and micro levels, from central to local, from local to individual enterprises

3 Objective of the study

The objective of the research is to study the formation and development of China’s Special Economic Zone Thence, we propose some practical recommendations for building a Special Economic Zone in Vietnam

To accomplish this objective, the thesis needs to perform the following tasks:

- Learning the history of formation and development of the Special Economic Zone in the world

- Researching on China's Special Economic Zones, thereby drawing lessons from successful construction of Special Economic Zones in China

- Providing some practical recommendations for building a Special Economic Zone in Vietnam in the future

4 Research scope

- Spatial scope: China special economic zones From researching on all about aspects of China’s Special Economic Zones (including history, development period,

success and remaining problems), we will get some recommendations for Vietnam in developing Special Economic Zones

- Time range: 1980-2020

- Scope of content: Through the study of Special Economic Zones in China, thence proposing suggestions for building Special Economic Zones in Vienam

5 Methodology and data

Our core research question lies on the study of international and China’s Special Economic Zones Thence, proposing suggestions for building Special Economic Zones in Vienam Therefore, we apply qualitative method for this research by collecting data by official corpus on internet

6 The thesis’s structure

The thesis includes 3 chapters as following

- Chapter 1: Overview on the Special Economic Zone in the world

- Chapter 2: The Special Economic Zone model of China

- Chapter 3: Recommendations to develop a Special Economic Zone in Vietnam base on experience of China

CHAPTER 1: OVERVIEW ON THE SPECIAL ECONOMIC ZONE IN THE

WORLD

1.1 Overview of the Special Economic Zone

1.1.1 History of special economic zones in the world

Despite the fact that citywide free zones along major trade routes have existed for centuries, modern zones, and in particular EPZs, can be dated to the late 1950s and the creation of the Shannon Free Zone in Shannon, Ireland, which combined the characteristics of an FTZ and an industrial park Initially, EPZs based on the Shannon model were largely formed in Western European industrialized nations, but starting

in the middle of the 1960s, developing nations in East and Southeast Asia, Latin America, and Sub-Saharan Africa (SSA) started to create their own EPZ programs (FIAS 2008, p.23)

Developing nations like Brazil, India, and Malaysia adopted economic protection zones (EPZs) in the 1960s and 1970s as a strategy to address the underperformance of their internally focused and heavily protected domestic economies (Baissac 2011, p.41) In these nations, EPZs evolved into export-focused enclaves that offered a method to absorb surplus labor without having to change the structure of a local capital base geared toward domestic production However, a number of nations in East and Southeast Asia have implemented EPZ programs to assist their export-oriented growth goals and transition from conventional to non-traditional exports

Even though the political economy of the world underwent major change, the pace of zone growth accelerated in the 1980s In addition, the use of zones expanded

to new areas like South Asia, Eastern and Central Europe, and North Africa By the middle of the 1980s, EPZ programs had been created over the whole world The start

of a noteworthy trend in zone development was also seen in the 1980s From the 1980s onward, private-sector engagement in the establishment, ownership, and operation of SEZs became increasingly frequent Previously, the vast majority of

zones had been built, owned, and administered by the public sector According to a

2008 study, 62% of zones in developing and transitioning economies are created and run by the private sector, up from less than 25% in the 1980s In the 1990s, formal public-private partnerships also became a well-liked choice Realizing that zones may make money for their operators was a major driver of this movement (FIAS 2008, p.2)

The range of facilities and services offered within zones has undergone significant changes as a result of the increased involvement of private-sector actors

in zone development and operation, as well as a "expansion and liberalization of the core set of policies and privileges" associated with the conventional EPZ model The creation of "next generation zones," which offer specialized facilities tailored to the needs of higher value-added sectors and give a larger range of support services to businesses operating in the zone, is becoming more and more popular Additionally, the country as a whole is progressively allowing the development of zones rather than just certain, often distant, places or regions

Over the past 35 years, SEZs have become increasingly popular as a means of luring FDI, fostering export-oriented growth, and creating jobs There were 79 documented zones functioning in 25 different countries in 1975 3,500 zones were operating in 130 countries in 2006, according to a database maintained by the International Labor Organization (ILO) According to a 2008 report, there are 119 developing and transitional nations with an estimated 2,300 zones functioning in total, with the majority of these located in Asia and the Pacific and Latin America In recent decades, direct employment in SEZs has also grown dramatically SEZs collectively directly employ 63–68 million people While Chinese zones employ about 40 million people worldwide, SEZ employment in other emerging nations has increased significantly since the mid-1990s (Baissac, 2011)

Despite these staggering figures, many zones around the world struggle to draw

in businesses and, in many cases, overly subsidize those that they do Additionally, while zone programs in nations like China, Malaysia, Costa Rica, Morocco, and Mauritius have significantly contributed to export development and structural reform,

many more have fallen short of such lofty goals (Farole, 2011)

1.1.2 Concept of Special Economic Zone

The term "special economic zones (SEZs)" has a wide range The term "SEZ" used in this context refers to a wide variety of zones, including free trade zones, export processing zones, industrial parks, high-tech zones, free ports (Zeng 2010) The fundamental idea behind special economic zones (SEZs) includes a number

of distinct characteristics, including the following: (a) it is a geographically delimited area that is typically physically secured; (b) it has a single management or administration; (c) it offers benefits to investors who physically are inside the zone; and (d) it has a separate customs area (duty free benefits) and streamlined procedures (World Bank 2008; Farole 2011) Additionally, a SEZ often functions under more lenient economic restrictions than those that are generally in effect throughout the nation There are two main categories of benefits that the SEZs typically provide:

"static" economic benefits like job creation, export growth, government revenues, and foreign exchange earnings; and more "dynamic" economic benefits like skill development, technology transfer and innovation, economic diversification, local firm productivity improvement, etc (Zeng 2010)

From China's point of view, the SEZ is a geographical area separated from the outside by two management barriers: the first fence is to manage the relationship between the SEZ and the world market, the second barrier is to separate the SEZ from the domestic market through the strict control of the customs force

In the Law on Special Economic Zones of the Philippines, SEZs are defined:

“Special Economic Zones in this law shall be referred to as economic zones, which are selected territories, which have been or likely to become centers of industry, agriculture, tourism, entertainment, commerce, banking, investment and finance An economic zone may include one or more of the following elements: an industrial park,

an export processing zone, a free trade zone, a tourist center, and an amusement park” From the above definitions and through the actual operation of the SEZs, we can draw the following general conclusions about the SEZ: “The SEZ is a special

national territory with definite geographical boundaries There are people living there, special policies are applied, suitable for free economic development according to the market mechanism with an integrated economic structure among industries, agriculture, commerce, finance, banking, tourism, in order to achieve certain objectives of the country of establishment” (Zeng 2010)

1.1.3 Characteristics of the Special Economic Zone

SEZs are built in areas with relatively favorable geographical locations and natural environment, convenient transportation, abundant and easy-to-exploit natural resources, mild climate, and beautiful scenery It is the advantages of natural conditions that will create a solid premise for the operation of the SEZ In fact, the countries that apply the SEZ model in the world have chosen to build special zones

in key areas of the country, with favorable natural conditions and at the same time have potential for economic development For example, the Clack SEZ of the Philippines, this special zone is built in a very important strategic location which previously used by the US as a military base (Subic military zone) The Philippine government has taken advantage of the geographical location of this port to establish the SEZ Or like China's Shenzhen SEZ, built in the southern land with a temperate climate and located opposite the "Asian dragon" - Hong Kong is developing very fast,

so this special zone has soon achieved much success right after its establishment (Farole, 2011)

The SEZ was established in countries with economies in transition, it is the buffer between the protection economy and the free economy, where national and international factors are harmoniously combined for the economic development and common development goals Therefore, the SEZ has a dual task of "external" (bringing in foreign investment) and "internal" (establishing relationships with domestic enterprises), which means advanced technologies and management experience imported from abroad, through digestion, absorption and transmission, will be transferred to the inland to develop the domestic economy according to the outward-oriented model In other words, the SEZ is a "window" to the world, a

"bridge" between the national market and the international market (Farole, 2011)

The main purpose when building the SEZ is to expand exports, develop the economy, improve technical skills and increase foreign currency revenue To achieve this goal, countries pay special attention to develop the export processing industry, attract foreign investment and advanced technical equipment Thereby developing the regional and neighboring economies, improving high technical level of domestic production In addition, in order to synchronously develop a multi-sector economic structure, the SEZ also encourages foreign investment inflows into other fields such

as industry, agriculture, and services…

SEZ has an open investment environment Herein, the State applies preferential policies and special support measures for foreign investors and traders, simplifies administrative procedures, and creates optimal conditions for all production and business activities in the special zone is favorable Therefore, SEZ is always the place where most investment capital is concentrated in the country (Farole, 2011)

Table 1 Potential benefits delivered from Special Economics Zones

Direct benefits Indirect benefits Foreign exchange earnings x

Foreign direct investment x

Source: World Bank

The SEZ has relatively complete and modern physical and technical facilities, including: electricity, water, bridges, culverts, roads, factories, warehouses, hospitals, schools, telecommunications and other social cultural works These infrastructures

may be available before the establishment of the SEZ, or may be built after the establishment of the SEZ

1.2 The role of the Special Economic Zone

1.2.1 The role of the Special Economic Zone in the national economy

SEZs play an important role in the national economy They were established to solve the immediate and long-term economic tasks of the country

1.2.1.1 Promoting accelerate the accumulation of capital and technology, contributing to the industrialization and modernization of the country's economy The presence of the SEZ has a great effect in obtaining capital, technology and management experience from foreign investors to expand production, improve the country's export capacity and increase foreign income For many countries, the main reason leading to the application of the SEZ model is the goal of increasing exports and foreign exchange earnings, improving the balance of payments on the basis of solving the shortage of production resources through into foreign investment The large number and high capital concentration of foreign-invested exporting countries

in the SEZs, combined with the open opening of the SEZs to the outside world, makes

it easier for domestic businesses to easy access to modern technology and advanced management skills of the world The SEZs are the bridge between the domestic market and the foreign market, the buffer between a protected market and a free market (Zeng 2010)

1.2.1.2 Contributing to enhance economic activities for foreign country

With an integrated multi-sector economic structure like a miniature society, the SEZ is a place to test and develop new economic policies, especially foreign economic policies All commercial transactions of the special zone with outsiders are thus facilitated Therefore, the external economic activities of the SEZ were also enhanced Not only that, with the role of a "pathfinder" for the national economy, the open policies on external economy implemented in the SEZ also show the trend of external relations representing the entire economy (Zeng 2010)

1.2.1.3 Playing the role in enhancing the economic development of other regions and the whole country

The SEZ is pervasive in all directions, so it acts as a locomotive for the development of the economy, promote the development of other economic regions in the country, and create a driving force for the economic growth The SEZ was built with the purpose of testing a new breakthrough economic model, in which the high economic development rate stands out Therefore, the importance of the SEZ is mainly not in total output or per capita income, but in the rate of economic growth High economic growth in the SEZ will affect other economic regions in the form of

an oil slick, first spreading to neighboring areas and then to all parts of the country, creating momentum for the development of the whole country (Zeng 2010)

1.2.1.4 Enhancing the ability to interact with the world

As a bridge between the domestic market and the foreign market, the SEZ has

a positive effect in expanding the understanding of domestic and international way information This is made easy by the implementation of open policies in the special zone (Zeng 2010)

two-1.2.1.5 Playing an active role in solving social issues

The SEZ contributes to reduce the unemployment rate by creating jobs for workers Every year, in each country, the labor force is replenished by the numbers

up to thousands, millions, and along with that, the need for jobs is even more urgent The development of SEZs is an important measure to address this growing surplus of workers SEZ with a multi-sector and large-scale economic structure will create a lot

of jobs for domestic workers

In addition to solve unemployment, SEZs also play an important role in reducing environmental risks Because the concentration of industries in an area is not as large as the SEZ, it has created favorable conditions for the Management Board

of the special zone in managing and regularly monitoring the activities of businesses, preventing and promptly handling when certain industries release toxic substances into the environment In addition, some SEZs also take advantage of waste from

factories to recycle and develop the industrial waste processing industry, thus limiting negative impacts on the environment (Zeng 2010)

The general role of the SEZ in the development of the national economy is through the above roles to accelerate the process of participating in the international division of labor, integrating into the regional and world economy

Thus, the SEZ has the following major roles for the national economy:

- Domestic: The SEZ is a place to test new economic policies before being applied to other regions of the country SEZ is the locomotive of economic growth and a breakthrough in the modern and open economic policy

- External: The SEZ is a window to the world, a bridge to acquire capital, advanced science, technology, management experience, promote the process of participating in the international division of labor

1.2.2 The role of the Special Economic Zone in import and export activities

In addition to the above positive effects on the entire national economy, the

SEZ also has a very important meaning for the import and export activities of a country in particular

1.2.2.1 Raising capital for enhancing the quality of export products

Any country that wants to develop the country's economy needs capital, but

the capital extracted from the State budget has always become too meager in the face

of a huge demand that is constantly increasing For the SEZ, the need for capital for the development of economic sectors in the SEZ also becomes an issue that needs to

be seriously studied when establishing the SEZ However, with the policy of wide opening to receive investment capital from outside, the SEZ has well solved the problem of capital sources, creating favorable conditions for domestic enterprises to import capital from foreign investors Abundant capital has helped products and services to be invested more in depth, thereby improving the quality of goods bearing the SEZ mark, export activities have also become easier Exported products are more competitive in the world market (Farole, 2011)

1.2.2.2 Playing an active role in enhancing export production experience

Simultaneously with the import of foreign investment capital, the SEZ also

becomes a window to attract advanced techniques and technologies from developed countries The SEZ is a "laboratory" for new production techniques and new industries, so in the SEZ, the production of export goods is carried out according to the world's advanced methods through modern technology lines (Farole, 2011) This has helped domestic enterprises to be exposed to new technologies, thereby improving their ability and experience in producing export products

1.2.2.3 Increasing competitiveness for export by reducing export costs

Goods produced in the SEZ are mainly for export to foreign markets, so it has

to face stiff competition from many competitors in the market Measures for healthy competition for products can be by quality or price Products manufactured in SEZ use competitive measures in both quality and price That is thanks to the preferential policies on input import and output export At inputs, capital and technology are easily imported to facilitate production As a result, product quality is significantly improved, not inferior to competitors As for the output, the product is entitled to export tax incentives In addition, export procedures are also very quick and convenient, without wasting time and missing out on business seasonality Therefore,

it has reduced export costs and increased the competitiveness of products in the world market (Farole, 2011)

1.2.2.4 Helping export products improve the competitiveness penetrating into international market

SEZs play a very important role in shortening the time and cost to penetrate

the world market, especially markets with large capacity The main reason is due to the system of special economic incentives applied in the SEZ These policies create favorable conditions for foreign investors when pouring capital into the special zone, while also creating a clear environment for goods from the special zone to go abroad The goods of the special zone are encouraged to be exported by not having to pay export taxes, or if so, only very low taxes Besides, the cost of hiring low labor, the

cost of raw materials on the spot is cheap (Farole, 2011) All these advantages have helped SEZ's exports to lower production and export costs, reduce costs and selling prices of goods, create high competitiveness, and thus easily penetrate the world market

1.3 Classification of the Special Economic Zone

1.3.1 Free port and free trade zone

1.3.1.1 Free port

The most prevalent SEZ are freeports They can contain or overlap political and administrative units, comprising both rural and urban areas, as well as entire economic regions and populations They frequently include substantial transportation infrastructure, such ports and airports Additionally, freeports allow for on-site habitation and accommodate all forms of economic activities, such as tourism and retail sales They typically offer a wide range of rewards and incentives (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.1.2 Free trade zone

The oldest and most popular type of SEZ are free trade zones (FTZs), commonly referred to as free zones or commercial free zones In addition to providing trade-related services including warehousing, storage, distribution, sales, re-export, and exhibitions, they are often situated at or close to most ports of entry across the world They also frequently do light processing tasks like packaging, labeling, quality checking, and sorting FTZs are relatively small regions that are typically physically separated from the main part of the port where they are located since they are outside the host country's customs territory and permit the importation of some products duty- and tax-free (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.2 Tax-free zone

A duty-free zone, also known as a duty-free warehouse, is a special area and warehouse established by the customs or authorized by the customs Goods from abroad can be exported and imported into duty-free zones without paying tax In

addition, traders can also carry out storage, repair, classification, exhibition, processing and fabrication of their goods right in the area However, when goods enter the domestic market from the duty-free zone, they must also go through customs procedures and pay import tax In capitalist countries such as Japan and the Netherlands, duty-free zones play a similar role to free ports and free trade zones, except that their geographical scope is relatively small (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.3 Export processing zone

Export processing zones (EPZs) first developed as a strategy to advance industrialization in developing nations in the late 1950s and early 1960s They are sizable, fenced-in industrial parks that, like FTZs, are outside the customs territory of the host nation Industrial facilities are available in EPZs, along with additional incentives including duty-free imports and streamlined administrative processes for manufacturing and related operations In the past, manufacturing for export markets was the only activity permitted in EPZs and foreign capital was the only type of investment allowed However, since the 1990s, EPZs have changed dramatically, and many of them are now open to a far larger range of businesses and have loosened their investment and export criteria somewhat (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.4 Technology industrial zone

The Science Industrial Park is also known as the Scientific Industrial Park, the Scientific Research Industrial Park or the Hi-Tech Park The purpose of the establishment of this SEZ model is to accelerate the research of new technology and its application results, serving the cause of industrial modernization in the region or the country, and at the same time serving services for the purpose of exploiting and expanding the international market Some high-tech parks with great influence in the world are Cambridge Technology Park in the UK, Hsinchu Industrial Park in Taiwan The main feature of the hi-tech park is that it has adequate educational and technical facilities, its factories have advanced facilities, strong capital, use of many

high technologies, and preferential policies, encourage foreign traders to exploit and expand industries with high technical content, attract and foster talents, research and develop key technologies and products Unlike the export processing zone, which tends to expand the production and manufacture of products for export, the technical industrial park only aims to expand the export of technical and technological products and support for the country's science and technology development (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.5 Free border zone and transit zone

1.3.5.1 Free border zone

The Free border zone, also known as the free trade area, is built on an area of land belonging to a certain city or province Based on the preferential measures of the free trade zone and the export processing zone, in the free border zone also has tax reduction or exemption for machinery, equipment, raw materials and consumables used in the area to attract investment from both domestic and foreign Unlike export processing zones, foreign goods after being processed and manufactured can be used right in the free border zone, only a small amount is exported Therefore, the purpose

of building a free border zone is to attract investment in economic development of the border area However, there are a number of countries that have set a period of preferential treatment or gradually withdraw such incentives, even abolishing the free border zone after the production capacity in the border areas has developed It is the reason that the form of a free border zone is rarely applied in other countries (Farole (2011); FIAS (2008); and UNIDO (2009))

1.3.5.2 Transit zone

A transit zone, also known as a transshipment trade zone, is a number of seaports, river ports or border cities built by a number of coastal countries on the basis of bilateral agreements to serve as a free transit place for goods in transit In order to create favorable conditions for the transport of import and export goods with preferential regimes such as: simplifying customs procedures in transit, tax exemption or only collecting a transit fee very small A very clear difference between

a transit zone and a free port is that: goods in a transit zone can be stored there for a short time or repackaged but not processed Normally, in transit zones, there is a system of tax-exempt treasures In the world, there are a number of transit zones that operate mainly as transshipment trade such as Calcutta in India, Buenot - Airet in Argentina (Farole (2011); FIAS (2008); and UNIDO (2009))

CHAPTER 2: THE SPECIAL ECONOMIC ZONE MODEL OF CHINA

2.1 Overview of China's Special Economic Zone

2.1.1 Formation context of the Special Economic Zone

2.1.1.1 Domestic context

China was in desperate need of structural reform in the late 1970s, following the decade-long disaster that was the Cultural Revolution, which left the economy stagnant and the populace exhausted physically and mentally Deng Xiaoping, the principal designer of China's Open Door policy, initiated economic reform in 1978

as a radical response to this urgent request In November 1978, farmers in Xiaogang,

a small hamlet in Anhui Province, invented the "contract responsibility system", which was later acknowledged as the starting motivation for extensive and eventually successful rural reforms in China (South China Morning Post 2008) The Open Door policy was accepted by the central government the following month, and in July 1979

it was agreed that the provinces of Guangdong and Fujian should lead the way in implementing "special policies and flexible measures" to open up to the outside world (Yeung, Lee, and Kee 2009)

Shenzhen, Zhuhai, and Shantou in Guangdong Province had special economic zone designations by August 1980, and Xiamen in Fujian Province had one by October

1980 The four Special Economic Zones (SEZs) were relatively similar in that they all covered sizable territories with the goal of facilitating broad-based, comprehensive economic development They had exclusive trade, investment, and financial advantages To reduce both potential threats and political meddling, they were purposefully placed outside of Beijing's political epicenter They were urged to promote sensible, open economic policies that would test novel ideas and, if successful,

be adopted more widely throughout the nation The four SEZs were situated close to Hong Kong, Macao, and Taiwan, China, in coastal regions of Guangdong and Fujian with a long history of communication with the outside world

Shenzhen was chosen because of its location across a small river from Hong Kong, which was the main region from which China could learn about capitalism's

ways of economic growth and contemporary managerial techniques (Yeung, Lee, and Kee 2009)

The impact of the SEZs was almost rapid because China had just recently resumed accepting foreign commerce and investment Shenzhen received the majority of foreign direct investment (50.6%) in China in 1981, accounting for 59.8 percent of the country's total FDI The four SEZs continued to represent 26% of China's total FDI three years later By the end of 1985,FDI in the four zones reached US$1.17 billion, or about 20% of the total for the country (Wong 1987) China experienced growth rates never seen before thanks to a winning combination of favorable regulations and the ideal blend of production elements in the SEZs Shenzhen experienced a fantastic 58% yearly growth rate between 1980 and 1984, outpacing the national average annual GDP growth of around 10% Shenzhen was followed by Zhuhai (32%), Xiamen (13%), and Shantou (9%) Shenzhen has already created basic markets for capital, labor, land, technology, communication, and other industrial inputs by 1986 (Yeung, Lee, and Kee 2009)

After the initial phase of opening up to commerce and investment was successful, China decided to further economic opening The central government established a type

of SEZ in 1984 called economic and technology development zones, also referred to

as China's national industrial parks The comprehensive SEZs and the ETDZs differ from one another in terms of magnitude A comprehensive SEZ typically encompasses

a significantly bigger region (sometimes an entire city or province) 14 ETDZs were constructed in additional coastal cities between 1984 and 19883, and in the years that followed, in cities located in the Pearl River Delta, the Yangtze River Delta, and the Min Delta in Fujian Hainan as a whole was named the fifth comprehensive SEZ in

1988, and Tianjin Binhai New Area and Shanghai Pudong New Area received respectively the same designation in 1989 and 2006

The State Council then added 35 ETDZs in 1992 They did this in an effort to expand the ETDZs from coastal to inland areas and place less emphasis on traditional sectors and more on tech-heavy ones There were 54 ETDZs at the state level by the end of 2008 By the end of April 2010, there were 69 of them, with 18 of them located

in the Yangtze River Delta, 10 in the Pearl River Delta, 15 in the central region, 11

in the Bohai Bay region, 2 in the northeast region, and 13 in the western region ETDZs are often found in a big city's suburban areas An administrative committee, often chosen by the local government, is in charge of managing the economic and social aspects of the ETDZ on behalf of the local government (China Knowledge Online, 2009)

2.1.1.2 International context

Since World War II (1945), especially from the 60s to the 70s of the twentieth century, the world situation has changed significantly International relations have turned to a new situation, from confrontation to dialogue The competition between socialist countries and capitalist countries has no prospect of continuing, moreover, the socialist revolution on a worldwide scale cannot be won in the near future This is the time when the practice of building socialism in the world has clearly shown success and failure The economy of the socialist countries, with the basic feature of highly centralized planning following the Soviet model, began to show many weaknesses in the 1960s, and the prestige of the ruling parties declined seriously Therefore, some countries have reconsidered their views and carried out reforms and opening up to transform their economies from centrally planned to market economies Although these reforms of the Soviet Union and Eastern European countries have only been carried out in some sporadic and limited aspects, it is not a comprehensive and synchronous economic reform, in-depth and fully prepared theoretically, but it has shown a change

in the thinking of the block of socialist countries

Also in the 70s of the last century, the strong development of the scientific and technological revolution and along with it the sudden change in production power brought capitalist countries achievements in the field of economy Labor productivity increased rapidly The structure of occupations has also changed markedly, the proportion of agricultural, industrial and mining sectors has decreased while the proportion of industries requiring high technical and intellectual content such as biotechnology, electronics, informatics…increased rapidly Simultaneously with the process of economic restructuring in capitalist countries is an increasingly extensive

international division of labor, in order to take full advantage of the great achievements that this revolution has brought Faced with the objective necessity to strengthen mutual cooperation to keep pace with changes in the world economy, many developing countries have re-evaluated their foreign policies and consider participating in the common process of the world is an important national policy that should be prioritized

The scientific and technical revolution with the consequent rapid development

of high-tech industries and the emergence of new productive forces has created an increasingly widespread wave of globalization and regionalization History has gradually proved that it is time to step into a new era - an era of peace, stability, coexistence, cooperation and development Not only developed countries have caught

up with this trend, but some developing countries in the Asia-Pacific region - countries with similar socio-economic conditions to China - also have sensitive policies to promptly adapt And as a result, a series of newly industrialized countries were born in the 1970s such as Singapore, Korea, and Taiwan These countries have overcome the mindset of "fear" of dependence on other countries, soon opened their doors to attract foreign investment, got out of the closed state and quickly integrated into the new world trend

Facing a very difficult domestic economic problem and an irresistible new international trend, China has no choice but to carry out reforms and open up its economy But the question is, where should China's economic reform begin? A series

of urgent problems have been raised First of all, the problem of restoring and developing the economy that is decades behind, and improving the technology that is far behind the world Reviving China and shortening China's distance from the world have become the top and pressing task of this country of more than 1 billion people after twenty years of chaos and poverty

To answer these questions, the Communist Party of China held many meetings to research and find the optimal reform model suitable to the country's situation The mission and historical role of China's leaders is to set the right, shortest and most effective direction for the prosperous development of the nation With the return to politics of the

talented politician Deng Xiaoping in 1978, China has made breakthrough changes in the way of economic development He said: “Enhancing our science and technology level,

of course, must rely on our own efforts, it is necessary to develop our own creativity, it

is necessary to persevere the motto: independence, self-reliance, self-reliance But, independence and self-reliance is not self-determination, self-reliance is not blind rejection We need to actively conduct academic exchanges with the world, strengthen friendly exchanges and scientific cooperation with scientific circles of countries around the world” Stemming from this point of view, the 3rd Plenum of the 11th Central Committee (December 13, 1978) of the Communist Party of China decided to shift the focus of the country's work to economic construction with the slogan: "Open foreign affairs, domestic economic development"

China's policy of opening up the economy can be considered wise and opportunistic, because at the end of the 1970s, capitalist countries were in a state of excess capital and technology, while the Third world countries are not yet ready to receive that capital flow China's opening up has made the most of this opportunity

to attract foreign investment in a market with cheap labor and abundant natural resources However, with a large country with the third largest area in the world (about 9.6 million square kilometers of land), the massive opening is very dangerous, because there are different economic development between regions, it is not possible

to apply open-door policies in a uniform way, but it is necessary to select and test on

a narrow scale in some regions with specific natural and economic conditions, taking that as the basis to promote the development of other regions

At the same time, the successes of a series of free economic zones in the world

- economic zones established in the 1960s and 70s of the twentieth century - greatly influenced the idea of opening the door of China's leaders Special economic zones are identified as an important part of the country's foreign policy of opening up In April 1979, the Central Committee of the Communist Party of China decided to establish special trade zones under experimental conditions - that is the Special Economic Zones

Special economic zones are regions that have their economies built according

to a special policy system based on the region's advantages, position and role Opening the special zone and receiving foreign investment is the right policy, consisting with objective reality and satisfying the people's hearts That is proven and confirmed gradually through the process of "experiment", boldly implement and learn step by step in the SEZ This is not a land invested by foreign capital It is the result

of research, survey and decision of the Central Committee of the Party and the Chinese government

In July 1979, China decided to establish a pilot: Shenzhen Free Trade Zone

On August 26, 1980, the 5th National People's Congress of China ratified and announced the implementation of the "Regulation on the Construction of the Special Economic Zone of Guangdong Province" including Shenzhen, Zhuhai, and Shantou

In October 1980, the State Council of China approved the decision to build the Xiamen Special Economic Zone (Fujian Province) according to the provisions of the above charter

Initially, these zones were designed as export processing zones However, the type of export special zone is limited to the function of processing export goods With the new policy, in May 1980, the Chinese government officially named these areas

as "Special Economic Zones"

The reason why China chose the above four areas as a pilot for the special economic zone model is because the four cities of Shenzhen, Zhuhai, Shantou, and Xiamen have superior geographical advantages over other regions It is located adjacent to Hong Kong of Shenzhen, close to Macau of Zhuhai, close to Hong Kong, Macau, Taiwan of Shantou and Xiamen This location gives the four cities the following two advantages:

Firstly, Hong Kong, Macau, and Taiwan are all lands with powerful economic potential in Chinese territory Therefore, the capital, technology, management experience, information network, consumption channel of these regions will play a decisive role in the success of the opening process of the special zone in particular and

the country in general Initially, there will be no more favorable place with a stronger effect than these three regions (It is worth noting that two of the four "Asian dragons" are Taiwan and Hong Kong) Another advantage that needs to be mentioned is that in the beginning and in the future, Hong Kong and Taiwan will be an important and convenient focal point for China's re-export form Foreign goods, techniques and capital will be brought into Hong Kong, Taiwan or vice versa through China's temporary import for re-export At the same time, China can also receive foreign investment through Hong Kong and Taiwan

Secondly, due to geographical factors and historical characteristics, people in Hong Kong, Macau, and Taiwan areas have close blood relations or long-standing friendships with the people of the Mainland This is the bridge connecting the SEZs

of China and these rich and powerful economic regions Entrepreneurs in Hong Kong, Macau and Taiwan will therefore be willing to invest and help the mainland economy develop

SEZs must be built and developed in the spirit of "the whole country helps special zones and special zones serve the whole country" From the above task, China has determined that the goal of building the SEZ is to gradually develop the economy according to the outward economic model, develop the integrated development of industries, agriculture, commerce and tourism services, that takes industry as the main industry

After 8 years of building and developing the SEZ, China has learned many lessons in reform and opening up In October 1988, the Central Committee of the Communist Party of China and the State Council of China decided to establish the Hainan SEZ Different from the above 4 SEZs, Hainan special zone is built throughout Hainan island province with the development strategy of building Hainan into the largest SEZ, which in the long run will turn this special zone into a "window"

of the whole country

Thus, up to this point, China has 5 SEZs This is the solid foundation in terms

of facilities as well as the basic direction for China's next opening up in the 1990s and in the following decades

2.1.2 Development of the Special Economic Zone in China

2.1.2.1 Construction stages of Special Economic Zone

The SEZs were created largely to draw FDI, increase China's exports, and hasten the introduction of new technologies The four SEZs created in 1980 shared a lot in common with one another because they all included sizable areas where broad-based, all-encompassing growth was intended to be facilitated They were encouraged

to follow sensible and open economic policies, acting as a test-bed for novel ideas that,

if successful, would be adopted more broadly throughout the nation They were established with a strong focus on both backward and forward connections with various regions of China and the rest of the world, particularly through the liberalization of trade and foreign investment contacts with capitalist countries

The SEZs were purposefully placed outside of Beijing's political epicenter to reduce risks in the event that any issues or political fallout resulted from their operation More specifically, the original four zones were located close to Hong Kong, Macao, and Taiwan as well as in coastal regions of Guangdong and Fujian with a long history of contact with the outside world due to outmigration (Figure 1) Shenzhen was selected for its strategic location across a small river from Hong Kong,

a critical region from which China wanted to learn modern techniques for managing

a busy metropolis and capitalist forms of economic growth Shenzhen was also a little fishing village with 30,000 residents at the time of its classification as a SEZ, consisting of no more than 3 km2 of run-down structures, and missing even a traffic signal (CCPR, 1987; Xu and Chen, 2008) Thus, Shenzhen was effectively a blank slate that could be used to create a new setting for urban and economic development Shenzhen was actually the most "special" of the four SEZs, having the most flexibility

to experiment with innovations

Figure 1 Regional setting of the five Special Economics Zones

Source Yue, Joanna & Gordan, 2009

The SEZs had a very immediate effect because China had just recently resumed accepting foreign commerce and investment Shenzhen received the lion's share of FDI

in China in 1981 (50.6 percent), followed by the other three zones with about 3 percent apiece The four zones accounted for 59.8 percent of all FDI in China Three years later, 26% of China's total FDI was still concentrated in the four SEZs Realized FDI in the four zones reached US$1.17 billion by the end of 1985, or roughly 20% of the total for

the country (Wong, 1987) Early on, authorities were worried that the percentage of

industrial goods produced in the zones intended for export tended to be low and was accompanied by a negative balance of foreign exchange More than half of all equity joint venture ventures launched in China during the SEZs' early years were hosted by them, with the majority of the investment coming from Hong Kong and Macao Despite the focus on FDI, domestic capital investment greatly outpaced the FDI attracted to the zones, particularly when it came to infrastructure provision and locally affiliated businesses

Starting off, the SEZs had tremendous rates of economic growth that were unheard of in China due to a combination of favorable policies and the ideal balance

of production elements The circumstances were especially favorable for Shenzhen, whose leaders pioneered novel policies and initiatives that aided in a prolonged period

of remarkable prosperity With an almost endless supply of inexpensive labor from rural China and a relentless desire to scale up production through technical innovation, there was no scarcity of money, either domestically or internationally In contrast to the national average annual GDP growth rate of around 10% every year between 1980 and 1984, Shenzhen experienced an extraordinary yearly growth rate of 58%, followed by Zhuhai (32%), Shantou (9%), and Xiamen (13%) Shenzhen's economy grew six times during that time, compared to 1.5 times for China as a whole; 3 times for Zhuhai; 1.4 times for Shantou and 1.6 times for Xiamen (Xu and Chen, 2008, p 18) Shenzhen had already established basic markets for capital, labor, land, technology, communication, and other production-related aspects by 1986

When the SEZs' early success was confirmed in 1984, China decided to further open its economy by extending similar beneficial policies to 14 "coastal open cities" (Yeung and Hu, 1992) The following year, cities in the Pearl River Delta, the Yangtze River Delta, and the Min Delta in Fujian were added to the list of cities Additionally, as was already mentioned, a fifth special economic zone – Hainan - was created in 1988 Following the Tiananmen crackdown in 1989, Shanghai's Pudong New District was created in 1990, significantly facilitating trade and investment in Yangtze River region By 1992, the concept of openness was extended further to a few cities in China’s border areas and to all capitals of provinces and autonomous regions in the interior Thus, by the latter year, when Deng Xiaoping undertook his

historic and crucial southern tour reaffirming China’s open policy, the mission that

had started with the creation of the SEZs had in many respects been accomplished:

the “special” economic zones (and related areas) by that time were no longer so

special

In addition to the broad objectives and justifications for creating the SEZs discussed above, each of the five zones was given a specific task that it has carried out

with varying degrees of success Shenzhen deserves excellent points for maintaining its rate of expansion, innovation-loving nature, and ability to take use of its location near Hong Kong In contrast, Zhuhai's infrastructure has been overbuilt beyond what

is necessary to meet demand, and the symbiotic relationship with Macao has not developed Average economic growth has been achieved in Shantou and Xiamen, however at various points it has been slowed down by scandals involving corruption, customs issues, and tax refunds Furthermore, the two cities have been unable to implement in any meaningful sense the unique regional tasks that have been envisioned for their discharge since 1980 due to the political impasse that has existed across the Taiwan Strait for the past three decades Last but not least, the Hainan SEZ has likewise had an erratic development course After experiencing an initial growth spurt after its establishment, corruption and a real estate bubble have hampered Hainan's performance Table 2 lists the SEZs' unique responsibilities as well as the developments that have been connected to them

Table 2 Special Roles and Innovation in the Special Economics Zones

Source Yue, Joanna & Gordan, 2009

By 1994, the nation had started to implement statewide reforms in tax exemption, foreign exchange management, and foreign trade regulation after the

unique policies pioneered in the SEZs had been extended to several regions of China Localizing the distribution of property rights, which helped to better coordinate the actions of local governments and local economic actors, was one of the reasons that helped China experience rapid economic growth Experimentation, propagation, and harmonization are the stages of the process of innovation diffusion from SEZs to China more generally The latter stage refers to the coalescence of national and SEZ growth rates over time, a narrowing that has been empirically validated by a comparison of such rates over different time periods between 1980 and 2004 (Xu and Chen, 2008, p.24)

2.1.2.2 Development stages of Special Economic Zone

The whole special zone is divided into 3 regions: Eastern, Central and Western Each region is assigned certain functions and tasks in accordance with the specific conditions of each region The East mainly develops constructions such as industrial

enterprises, commercial, tourist centers, and houses Central region is the center of scientific research and agriculture The West is a place to develop industry, ports, conduct transactions and develop tourism

Shenzhen, one of China's most significant innovation development bases, continues to make steady growth in 2018 on its original foundation, expanding investment in innovation and development while simultaneously advancing the ecological architecture of innovation and development

The output of the high-tech sector's contribution The regional GDP reached 2422.198 billion yuan in 2018 (preliminary accounting, same below), up 7.6% from the previous year Of this, industrial businesses with added values over the authorized size contributed 910.954 billion yuan, up 13.5% from the year before The added value of high-tech manufacturing and advanced manufacturing in contemporary industries was 656.483 billion yuan and 613.12 billion yuan, respectively, up 12.0% and 13.3% over the previous year In comparison to the other three pillar industries—financial (306.721 billion yuan, 3.6%); logistics (254.158 billion yuan, 9.4%); and cultural and related industries (156.052 billion yuan above the designated size, 6.3%)

- the added value of the high-tech industry was 829.663 billion yuan, an increase of 12.7%

Statistics for Shenzhen show that strategic developing industries contributed 915.518 billion yuan—an increase of 9.1%—or 37.8% of the local GDP—in total in

2018 These include the new generation of the information technology industry (477.202 billion yuan, 10.9%), the digital economy industry (124.073 billion yuan, 3.8%), the high-end equipment manufacturing industry (106.582 billion yuan, 10.7%), and the green and low-carbon industry (99.073 billion yuan) In addition, the added value of the marine economy industry has decreased (42.169 billion yuan, 11.3%) Shenzhen had 140,202 authorized domestic patents in 2018, an increase of 48.76% Among these, there were 21,309 invention patents, a rise of 12.59% There were 180.81 million PCT worldwide patent applications, a decline of 11.6% Per 10,000 persons, there were 91.25 patents for inventions The National Science and