Section 4：Structural and spatial evolutionary models of FEZs

Numerous studies have provided a discussion of the structural and spatial evolution of FEZs and examined typologies of FEZs，such as McCalla（1990），Chen（1995）and Meng（2005a）. Meng（2005a）comprehensively discusses the typologies and generation of FEZs，and devises a structural and spatial evolution model for FEZs based on several previous studies（McCalla 1990，Liu 1994，Chen 1995 and so on）. In order to achieve the aim of this thesis，several evolutionary models that appear in Meng（2005a）will be reviewed.

4.1 FEZ’s objectives and roles in the world economy（evolutionary model of objectives and roles）

In the first paragraph of the Structural and Spatial Evolutionary Model of the FEZ sector by Meng（2005a），various statistics were quoted from Liu（1994）in order to demonstrate the increasingly vital role FEZs have been playing in the global，national，and regional economies since the 1500s when they were first established. Meng（2005a）discusses the objectives of FEZs，first generally describing the FEZs’ objectives as to be used as an instrument or tool to realise certain economic，and even social and political，goals. Secondly，a further classification is provided. “The objectives include micro and macro objectives，and common and special objectives，and they evolve step by step from the economic to the social and political levels”，Meng（2005a）. A figure（Figure 1）was devised as well. In the figure，the objectives evolved from the direct micro-economic objectives to the indirect macro-economic objectives or，in return，the micro- and macro-economic objectives evolved from the trade-based FEZs to the comprehensive ones and cross-border FEZs. According to Meng（2005a），from Trade-based Zones to more Comprehensive-based Zones，more micro and macro objectives are included. The micro objectives evolved from creating trade，exports，employment，foreign exchange and attracting foreign capital to absorbing advanced technology，investment and training personnel；however，the macro objectives evolved from promoting regional development to carrying out structural reform and regional cooperation. Finally，the FEZs and their objectives will evolve to “Regional Economic Integration” according to Meng’s study.（Figure 1）

Figure 1：Evolutionary model of FEZs’ objectives

Source：Meng Guangwen（2005a），“Evolutionary model of free economic zones-different generations and structural features” In：Chinese Geographical Science，Vol 15，No. 2，June 2005，simplified and edited by Dabu Sun.

4.2 The evolutionary model for FEZs’ preferential policy

In order to realize certain objectives，FEZs provide a stable and profitable investment environment，namely a well-developed infrastructure and a preferential policy，law or regulations（Meng 2005a）. As outlined above in Meng（2005a），the objectives are evolving. Therefore，in Meng’s study，preferential policies are evolving as well（Figure 2）. Follow the evolutionary model for objectives，Meng points out that the preferential policies are enriched and enlarged following the evolution of FEZs from the trade-based to the comprehensive and cross-border FEZs，as their objectives are different. Meng（2005a）also points out that the preferential policies expanded from the trade to service，production，administrative and social，even political fields. In addition，preferential policies will be expanded to the regions outside the FEZs.

Figure 2：Evolutionary model of preferential policies

Source：Meng Guangwen（2005a），“Evolutionary model of free economic zones-different generations and structural features” In：Chinese Geographical Science Vol. 15，No. 2，June 2005，p.108

4.3 FEZ’s governance structure

Meng（2005a）outlines a clear classification of FEZs’ administrative models. Most FEZs can be classified into four administrative levels（Meng 2005a）：

·A cross-national level institution，responsible for the cross-national economic，social and political cooperation of FEZs

·The national administrative system，responsible for the macro decision-making of FEZs，such as legislation and supervision

·The regional administrative system means that state and province govern and supervise the economic and social affairs of FEZs（Li 1996）

·The FEZs’ authority itself is responsible for its own economic and social activity. Meng（2005a）further adds that the FEZs’ authority includes the government and enterprise-oriented models，the mixed or separated models，the model of the administrative area and the cross-border administrative model.

Figure 3：Evolutionary model of FEZs’ administration

Source：Meng Guangwen（2005a），“Evolutionary model of free economic zones-different generations and structural features”，In：Chinese Geographical Science Vol. 15，No. 2，June 2005，p.108.

In Figure 3，the FEZs’ administrative model evolved from national to regional and to the FEZ level. Meng’s explanation is that FEZs’ establishment was initially the country’s concern，and then subsequently the concern of local government. Secondly，FEZs’ authority evolved from the government-oriented，the enterprise-oriented and the mixed model to the model of administrative area and further to the cross-border administrative model. Thirdly，Meng points out that the cross-border administrative model combines two or more countries’ FEZs. It has the characteristics of both FEZs and regional economic integration. Finally，the evolution of the national administrative system and the cross-border model led to the cross-national institutionalisation of world regional economic integration.

4.4 Conclusion

Meng（2005a）generally worked out the evolutionary model for FEZs’ objectives from a historical perspective，with the preferential policy and governance structure based on an evolutionary progress of FEZs of different types. From a general historical view，FEZs’ establishment and development is an evolutionary process which follows the evolutionary model of Meng. As time passes，FEZs evolved from a free port-“Leyghorn”，with limited micro objectives，to more comprehensive FEZs with more micro and macro objectives，more detailed preferential policies and a more progressed governance structure currently，on the way to regional economic integration. For each FEZ itself in China，the evolution of the objectives，preferential policies and governance structure follow Meng’s evolutionary model. Taking ETDZs as an example，when they were first established their objectives were simply to attract foreign capital，advanced technology，creating exports and various other micro objectives in Meng’s model. Nevertheless，currently their objectives are enriched，and there are additional objectives for ETDZs. Nowadays，ETDZs not only have the responsibility of attracting foreign capital，technology and creating exports，but also have the responsibility of creating linkages between the local economy and themselves. ETDZs are now even used as an instrument for economic and political reforms in order to help China to evolve its planned economy to a market-based economy，as well as to lead China to be a part of economic activities globally. Essentially，these models will help to understand what position and stage Chinese ETDZs（including YEDA）are in.

However，this model does not seem to be work for the development of Chinese FEZs as a whole.

From when the first 4 SEZs were established in 1978 until the present day，several kinds of FEZs have been established with clear and independent objectives，preferential policies and different governance structures. In China，different types of FEZs currently co-exist at the same time now，which suggests that，in China，FEZs do not follow an evolutionary process. According to section 3 of this chapter，up until the present day 8 kinds of FEZs have existed in China.

The different types of FEZs in China were not established by the evolutionary process described by Meng（2005a）. The two kinds of comprehensive based zones（SEZs and ETDZs）were established earlier than the trade-based（FTZs），science-based（HIDZs）and manufacture-based zones（EPZs）.

Therefore，regarding FEZs as a whole，the FEZs in one country do not necessarily have to follow the steps shown by the evolutionary model. A country can establish whatever kinds of FEZ that will fit the needs of the country. However，from the perspective of a single FEZ，it will follow some of the steps that the evolutionary model shows whenever the FEZ needs to adapt the in its development.

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[1] Definition of Free Economic Zones will also be given in the later part of the chapter.

[2] For discussion，please see：Grubel，Herbert G.（1984），“Free Economic Zones：Good or Bad？”，Aussenwirtschaft，39. 43-56，May 1984.

[3] SEZs-the first set of China’s FEZs which were established since 1978，based on which more kinds of FEZs were then established.

[4] Five SEZs-Shenzhen city，Zhuhai city，Shantou city，Xiamen city and Hainan province.

[5] Source from：Cadz.org.cn-Zhongguo KaiFaQu Wang（site of Chinese development zones）. “Major Economic performance of ETDZs in China 2010”，http：//www.cadz.org.cn/Content. jsp？ItemID=1570&ContentID=99808，last retrieved：25/06/2010.

[6] The Torch Programme is a guidance programme for developing new/high-tech industries in China-website of Ministry of Foreign Affairs of the PRC.

[7] The official website for Chinese development zones，www.cadz.org.cn.