China is important in this context for two reasons: 

1. The transformative effects of SEZs in China: 

China established SEZs from the early 1980s, after it launched its reform and opening policy to exit from a period of international isolation. SEZs contributed significantly to China’s remarkable economic transformation and growth since then, massively boosting exports and employment and advancing processes of urbanisation and nationwide industrial transformation. A World Bank estimate suggests that SEZs contributed 22% of China’s GDP, 45% of FDI, and 60% of exports (World Bank, 2015).

SEZs offered preferential treatment for foreign investors, new possibilities for the establishment of companies and an experimental contract labour system. Internal migration from the countryside to the cities for work in SEZs formed an important part of China’s economic development model. Many multinational enterprises set up manufacturing bases in SEZs, establishing export processing industries and employing millions of rural workers from China’s interior. 

The flagship SEZ was Shenzhen across from Hong Kong. It is an example of great success – it has become a leading trade hub and manufacturing centre, its trade balance reaching US$ 1.64 billion by 19941, and it has expanded to a 500km2 megacity with a population of around 20 million people (Goodburn & Knoerich, 2022). Since Shenzhen and three other initial SEZs were established on China’s coast in the early 1980s, China expanded zone development considerably, and it now has a variety of economic zones across the country of different shapes, sizes and nomenclatures, such as Economic and Technological Development Zones and Free Trade Zones. These zones have evolved significantly from the initial SEZs of the 1980s in terms of governance structures and closer economic integration with the rest of the economy. 

Its success with SEZs makes China an important reference point for inspiration on how to use SEZs as a catalyst for economic growth and transformation, and many countries have been looking at and consulting China on issues of SEZ establishment and operation. However, China grasped a historical opportunity that presented itself in the 1980s when global value chains were undergoing re-organisation and Hong Kong and Taiwan found in China a proximate low-cost location that was convenient to expand manufacturing. Today’s SEZs face very different circumstances, and realistic expectations should be set for them. Given the large number of SEZs in existence today and the competition between them, it is unlikely that an SEZ will be able to repeat the transformative story that China experienced many decades ago. It is therefore important that attempts at replicating China’s approach to SEZs are “smart”, factoring in the local and global contexts that present themselves today (Knoerich, Mouan & Goodburn, 2021). The toolbox can be a useful aid in conceptualising such a “smart” approach towards SEZ planning, establishment, management and operation. 

1. International expansion of China-associated SEZs:

Based on its own positive experience with SEZs, in the 2000s China began to promote the establishment of similar zones elsewhere in the world with a focus on Asia and Africa. Initiatives, such as the Forum on China–Africa Cooperation (FOCAC), China’s Belt and Road Initiative (BRI) and a tailored initiative by China’s Ministry of Commerce (MOFCOM) supporting the establishment of specific “Overseas Economic and Trade Cooperation Zones” (OETCZs), were used to promote the development of zones with various nomenclatures, including SEZs, industrial parks, free zones and free trade zones. Some zones incorporated ports. Many governments welcomed and supported the establishment of such zones and the associated Chinese investments and assistance, hoping to establish paths to development similar to China’s. 

China actively engages in the development of SEZs in other countries through partial or full involvement in financing, construction, operation, ownership and/or significant foreign direct investment by Chinese companies. Chinese experiences of setting up and operating zones were also shared with interested countries. Such China-associated SEZs have expanded massively across Asia and Africa over the past 20 years. The exact number is unknown but can be estimated to be considerably above 100. In Africa alone, more than 50 China-associated SEZs have been established in more than 30 countries (Goodburn, Knoerich, Mishra & Calabrese, 2024). The following Figure illustrates how these SEZs have expanded into Africa since 2006. 

Expansion of China-associated SEZs in Africa 

n=45
Source: China-associated SEZs database, Adarga  

Supportive narratives present such SEZs as a ‘win-win’ for both China and the host country. However, in line with the mixed record of SEZs (see Economic Benefits and Side Effects of SEZs), China-associated SEZs have an unclear record in terms of meeting their ambitions and targets, and it is far from certain whether such zones can be seen as a case of successful export of an aspect of China’s ‘development model’ to other countries. 

Given China’s positive experience with SEZ development and its active engagement in SEZs elsewhere, the Chinese case is considered in all sections of the ZSR toolkit, to offer insights on the feasibility of looking at China for inspiration on SEZ development, reflect on the opportunities and challenges posed by Chinese contemporary involvement in SEZs elsewhere in the world, and consider the implications for employing ZSR in today’s SEZs. 

1 Shenzhen Statistics Bureau. 2008. Shenzhen statistical yearbook. China Statistics Press.