A local employee works at a cement plant inside the Eastern Industry Zone in Ethiopia, which was funded and constructed by a Chinese private enterprise.

 

“The establishment of overseas industrial parks represents a significant alternative to small and medium-sized enterprises, who, unlike large companies, may otherwise encounter some problems in the process of going global that they cannot solve on their own,” said Zuo Xiaolei, a research fellow of the Counsellors’ Office of the State Council, at the Forum on Industrial Park Economy and Globalization hosted by the School of Social Sciences at Tsinghua University on Dec. 18.

Zuo said overseas industrial parks are crucial for Chinese enterprises to go global, and for the Chinese economy to integrate into the global market. Academics should summarize the experiences in constructing these parks, explore a feasible, effective and innovative model, and put forward Chinese theories in this respect, she suggested.

 

Background
Scholars present at the meeting attributed China’s economic success after the reform and opening up to its promotion of rapid technical innovation and industrial upgrading by leveraging late-mover advantages in comparison with those high-tech industries of developed countries. They said that in the 1980s, low labor costs in China were an advantage for industries that were labor intensive. However, poor infrastructure at that time led to high transport costs, which increased the total cost and weakened the international competitiveness of Chinese industries. They added that reducing transaction costs would require improvements to infrastructure construction, which, however, cannot be completed in a short time, and the most effective approach is to concentrate limited resources on establishing economic parks.

Economic parks have introduced capital, technology, talent and managerial experience urgently needed by countries and areas, said Deng Wei, deputy secretary of the Party committee of Tsinghua University, adding that the parks have also provided trading passages and business networks across the world. By injecting vitality into economic development as well as the reform and opening up in China, these parks have made indispensible contributions to the Chinese miracle, he said.

 

International platform
As one of the success stories amid the reform and opening up, Chinese economic parks are beginning to make their presence felt overseas. The wave of enterprises going global has resulted in the formulation of related policies. Since 2006, China has approved setting up overseas economic and trade cooperation parks at the national level.

“For the past decade, cooperation parks have continued to expand in number, cover more places and become more influential,” said Chen Zhong, head of the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce. Practice shows that the establishment of cooperation parks is a necessity for China to innovate, foster foreign cooperation and upgrade foreign investment, and meet the needs of host countries to attract capital and develop the economy. Chen said some cooperation parks have come into service and have already functioned as significant platforms for promoting the construction of the “Belt and Road” and international industrial cooperation.

Scholars said that at present, China needs to shift many industries that are labor intensive overseas due to a rapid increase in wages, which is the same as the situation in Japan in the 1960s and the Four Asian Tigers in the 1980s. Unlike the two previous cases, the industrial transfer of China is on a larger scale. Countries that can seize the opportunity of industrial transfer will maintain high growth and become emerging industrial powers with rapid development like China, they said. Chinese economic parks have set an example for other developing countries in this regard, they added.

 

China-Africa cooperation
With investment and construction by a private enterprise in Jiangsu Province, the Eastern Industry Zone was the first of its kind in Ethiopia. “I saw a dozen containers scattered on the open ground. Some of them were used for storage and some transformed into temporary offices. It was a wretched scene,” said Tang Xiaoyang, an associate professor from the Department of International Relations at Tsinghua University after he visited the park in 2009. He revisited the place two years later, and said, “I can see a large gate made of steel in the far distance. There are paved roads and various plants in the park. The cement, plasterboard and packaging plants have been put into production.”  Chinese enterprises in the park have created thousands of jobs for local people, he added.
 

The Eastern Industry Zone is the highest achievement of China and Africa in their joint efforts to construct economic parks. Chinese economic parks can be found in many African countries including Mauritius, Nigeria and Zambia. “This shows that the enthusiasm for modernization and industrialization is sweeping across the continent of Africa,”  Tang said.

 

 

Mao Li is a reporter at the Chinese Social Sciences Today.