The Strategic Role of Special Economic Zones in Economic Development: A Special Case of Shanghai Free Trade Zone

Abstract

This study is dealing with the strategic changes in the Chinese Economy in the light of launch of China (Shanghai) Pilot Free Trade Zone. In this process, it has used secondary data from the government sources for analysis the state of economy as well the development efforts in the last one year of the launch of CSPFTZ. The thrust of the study was to assess the reform processes on administrative and financial sectors. This study also deals with the mechanisms of transition of China from the mixed economy to the market economy. However, it is assumed that China has not become a complete market economy and still in the mid of major transition. The models political economy for the transition economy are assessed with the help of existing theories. From the study it was found that in the initial stage of establishment of China (Shanghai) Pilot Free Trade Zone, there were several change were brought in to administrative and financial sector level. These developments are also compared with other existing free trade zone. Despite being the second largest economy in the world China maintains very strategic and rigorous control over its capital. After three decades of economic liberalization the monetary control of China is still persisting. This China (Shanghai) Pilot Free Trade Zone was also an attempt to taste its limits in terms of these two key monetary aspects of Chinese Economy; floating exchange rate and currency convertibility. It is really important to assess that what are the outcomes of this pilot project but this was one of the vital features of launching Shanghai Free Trade Zone.