China: three new zones with special status

The Communist Party of China’s political office has decided that the country needs to transition toward capitalism more quickly. It’s only the latest—frequently apparent, and sometimes real—contradiction that China has demonstrated to the West. In fact, it has decided to launch 3 new special economic zones (SEZ). They will arise in Tianjin, Fuzhou, and in proximity to Guangzhou. 18 months after the inauguration of Shanghai’s Special Economic Zone, China is connecting the dots of its interventions, initiated with its economic capital and the flourishing economies that gravitate to it. Tianjin is a megacity whose value goes beyond its role as Beijing’s port. The economic area it serves is in fact the vast and populous Yellow River delta. The Fuzhou SEZ will find synergy with Taiwan across the strait, to whom its been tied by historic constraints. Economic rapport between Beijing and Taipei have never been so florid and with such strong reciprocal advantages. Guangzhou’s SEZ is at the epicenter of the world’s factory, China’s southern shipyard where goods are produced for customers all over the world. The new SEZ are a development born from those of the past, who revealed themselves to be the biggest magnet for foreign investment. They assured multinationals favorable conditions, reduced tax rates, and an inexhaustible and disciplined workforce. Now, China is more mature and therefore proposes more advanced solutions. They’re based on a double password: economic integration and regulated benefits for the movement of capital. In fact, China is progressively changing its title of international factory to move toward more sophisticated levels. It is possible because it’s now inherent in the global value chain. It’s not only valuable for low cost goods, but it’s irreplaceable as a result of the mix it can offer: a growing internal market, excellent infrastructure, and angenerally more modern society. It will become easier and cheaper to politely insert oneself in the dynamics of the most developed Asian economies. Policy areas will be amplified but, more importantly, controls over the flow of capital will be relaxed, at least in principle. It will be an exception to Beijing’s iron control and will hopefully lead to a progressive internationalization of the renminbi. If these promises are undeniable, their feasibility remains to be seen. China could be its own worst enemy. It’s adventuring into unknown territory where its size could be insufficient to protect it from global phenomena that it can’t control. The country proceeds with caution and attempts. Xi Jin Ping has launched this latest experiment in advanced zones already exposed to competition. Shanghai’s SEZ hasn’t produced substantial news. Now, almost by inertia, they’re trying with three new experiments. Competency will need to be demonstrated, while pragmatism, and the safety of small steps prevail. And yet, the control of the past is almost a memory and China is discovering that it needs to take risks if it wants to move toward modernity.