Setting Up of Special Economic Zones in China

Abstract

Establishment of Special Economic Zones (SEZs) in China has been a focus of study for many developing countries. It was initiated with a notion of experiment that foreign capital is an important instrument to put the country on a growth path of economic development and modernization while simultaneously integrating the inner regions with the main economic activity and development of the country. The Chinese experience of SEZs turned out to be a success in some sense as it could fulfil the desired goal of the Government. The paper makes an attempt to understand the concept behind this initiative; what political reforms were taken to set up SEZ; how it contributed to the growth of the Chinese economy; how FDI played a role in promoting exports and lastly, more importantly, what policy recommendations it suggests for future establishment of SEZs in China and in rest of the world.