Section 3：An introduction to different types of FEZs in China

Until the present day，the development zones in China have taken the form of 9 types，classified by their different functions in use. They are now located all over China，from east to west and from north to south. They are：

3.1 Special Economic Zones（SEZs）

First agreed to be established in 1978 under Deng Xiaoping’s economic reform after the Third Plenum of the 11th Central Committee（Fairbank，1988；Phillips，1996；Saich，2001），the five SEZs^[4] were officially established by the 5th Session of the National People’s Congress，which took the relevant decision in August 1980（Stefani，1983）. All of the SEZs border upon or are close to territories which China considered as being occupied by other countries（Stefani，1983）. Different from ETDZs，SEZs are cities that can enjoy FEZs’ privileges. Shenzhen is on the border of Hong Kong，Zhuhai is on the border of Macao and Xiamen and Shantou are not far away from Taiwan. They were set up as SEZs in order to help China find a new way of developing. They were used as experiments in opening up to the outside capitalist world market，and in adopting policies and practices that would have been anathema during the Maoist era（Smart，2000）. SEZs literature will be analysed more in detail in Chapter 4，and that chapter will provide a fuller understanding of the YEDA case study of this research.

3.2 National Economic and Technological Development Zone（ETDZ）

The ETDZs constitute part of China’s policy of opening up to the outside world（Liu，2005），and were established based on the successful experience of SEZs. As mentioned previously，SEZs are cities. However，ETDZs were established by carving up a relatively small piece of land in the open city and building perfect infrastructures in order to create good investment surroundings of an international standard（Liu 2005）. By way of attracting and taking advantage of foreign capital，the modernized industrial configurations with new and hi-technology are expected to take shape and help their mother city and surrounding areas to develop fast. According to “document 〈2009〉no. 267 of Ministry of Commerce of the PRC”，the number of ETDZs had reached 54 by 2009. By 4th of May，2010，the state council had newly approved 23 provincial-level development zones to be upgraded to state-level ETDZs in 2010. By the end of 2010，more provincial level ETDZs had been promoted to the national level，and there were 116 national level ETDZs in total in China. YEDA as a model of the study is one of these ETDZs^[5].

3.3 National Free Trade Zones（FTZs）

According to Wikipedia，FTZs are defined as special areas of a country where some normal trade barriers，such as tariffs and quotas，are eliminated and bureaucratic requirements are lowered in the hope of attracting new business and foreign investment. In China，FTZs are approved by the state council of the PRC，and similar to the other FTZs in the world，China’s FTZs are specialised areas for international trade and bonded operations within the area；activities of foreign investment，international trade，bonded warehouses and processing for re-export are allowed（Liu，2005）. According to information from cdz.cn，presently all 13 FTZs in China are in operation. They are the new junctures welding the Chinese economy to the world’s economy（Liu，2005）.

3.4 National Hi-Tech Industrial Development Zones（HIDZs）

The establishment and development of new/high tech industrial development zones（HIDZ）are an important component of the Torch Programme^[6] and are an inevitable outcome of reforms，opening to the outside world and the social development of the socialist market economy（Liu 2005）. According to the official website for Chinese development zones^[7]，the HIDZs are based on intensive intelligence and an open environment，and they mainly depend on China’s own scientific，technological and economic strength. Furthermore，there are 78 of them across China. HIDZs are concentrated zones established for the purposes of transforming achievements of science and technology into practical productive forces to the maximum extent，through the local optimization of soft and hard environments，orienting to both domestic and overseas markets and developing China’s new/high tech industries（Liu，2005）.

3.5 National Border and Economic Cooperation Zones（BECZs）

According to Liu（2005），the BECZ is an area to develop frontier trade and carry out processing for re-export for border cities. They play positive roles in stimulating the economy of the national minority areas. 14 BECZs have been approved by the State Council since 1992.

3.6 National Export Processing Zones（EPZs）

15 EPZs were firstly established in 2000 after investigating the practice of developed countries in the management of processing trade. The EPZs are intended to be special enclosed areas supervised by Customs. Liu（2005）regards the establishment of EPZs as one of the major steps taken by China to extend its involvement in the international market，and to further open its market to the outside world. “It is most helpful in the promotion of exports，improvement in the management of processing trade，utilisation of foreign capital in a more active，practical，and effective way，and development of the local economy”（Liu，2005）. Within the EPZs，resources are imported from abroad and supervised by local Customs（no duty required）in a special enclosed area. Within this special area，resources can be manufactured and re-exported to foreign countries.

3.7 National Tourist and Holiday Resorts（THRs）

In order to further open its market to the outside world，and to exploit rich tourist resources and speed up the tourist industry，the State Council decided to choose regions with ripe conditions as National Holiday and Tourist resorts，where enterprises and the tourist equipment and projects invested in by foreign businessmen are encouraged（Liu，2005）.

3.8 Taiwan Investment Zones（TIZs）

All of the TIZs were based in Fujian province，which is just a strait away from Taiwan. They were established to further develop economic and trade relations between the two sides of the strait. There are four TIZs thus far in Fujian.

3.9 National Agricultural Hi-Tech Industrial Demonstration Zones（AHIDZs）

Until now，there has been only one national grade AHIDZ located in Xi’an，according to the information from the Ministry of Commerce of China. The establishment of the AHIDZ is aimed at developing the agriculture of arid land in the west part of China，and to help achieve China’s Western Development strategy.

3.10 Conclusion

So far there have been 9 types of Free Economic Zones（FEZs）in China. They have all been established with their own clear objectives，and have been located in different areas of China. Although there have different objectives which emphasise different aspects of trade with the outside world and different customer segmentation（different types of foreign investment or industries），they have a common target，which is to attract foreign investment and finally improve Chinese economic conditions，and to improve living standards. These FEZs can be classified into 4 general types by examining their express objectives and customers：

FEZs with comprehensive objectives，no particular customers-SEZs and ETDZs

FEZs with relatively emphasised objectives，particular customers-HIDZs，BECZs

FEZs with specific objectives，particular customers-FTZs，EPZs，THR，TIZs

FEZs with specific objectives，no particular customers-AHIDZ

Within these FEZs，SEZs are the most well-known ones and have been investigated the most by both Chinese and foreign researchers. As there is little academic literature which focuses solely on ETDZs，the author will review the literature of SEZs instead in a subsequent chapter to help study ETDZs，as SEZs are similar to ETDZs in terms of their characteristics，functions，objectives，contributions，investitive administrative rights in economic activities and in facing no particular customers. In addition，ETDZs were established based on the experience of SEZs. Therefore，ETDZs can be regarded as small-sized SEZs in some ways.