just imagine…
DESCRIPTION
Just Imagine…. You visit Hong Kong as a tourist in 2003, cross over to Shenzhen to get a glimpse of China, expecting to see this…. Just Imagine…. And you see this…. China’s Economic Growth and Special Economic Zones: A good thing?. Aaron D. Brooks NS 3041. 12 Mar 08. - PowerPoint PPT PresentationTRANSCRIPT
1
Just Imagine…
You visit Hong Kong as a tourist in 2003, cross over to Shenzhen to get a glimpse of China, expecting to
see this…
2
Just Imagine…
And you see this….
China’s Economic Growth and Special Economic Zones:
A good thing?
Aaron D. BrooksNS 3041
12 Mar 08
4
China’s Economic Reforms
• China’s economic reforms began in 1970s
• Cause: Failures of Cultural Revolution– Weakened CCP, inefficient SOEs, lagging economy
• Method: Gradual approach to reforms• Result:
– Ten-fold increase in China’s GDP since 1978– Second-largest economy in world (PPP basis)
• Case study:– Special Economic Zones
5
Special Economic Zones (SEZs)
“It doesn’t matter whether the cat is black or white,as long as it catches mice.”
-- Deng Xiaoping (1904-1997)
• Transition to “Socialist Market Economy with Chinese Characteristics”
• Goal: Encourage private ownership, foreign investment, tech transfer, while maintaining measure of control– “Window” to “Asian Tigers’” development
6
Special Economic Zones (SEZs)
• Established 4 SEZs in 1979– Trade comparative advantages– China shifted authority from central gov’t to zones– Expanded to 14 Open Coastal Cities (1984)
• “Development from scratch”– Industry moved to areas of new development to take
advantage of cheap labor– Unconstrained growth with new infrastructure– Geographically “insulated” + aids reunifications
• Impact? Shift of……China’s GDP to the coast (57%)…China’s FDI to the coast (86.4%)
7
Where is this Shenzhen Place?
8
Shenzhen SEZ
• Land area: 126.4 square miles (largest SEZ)• From: Fishing city of 300,000 (1979)
– GDP share <1%– 80% households in fishing/agriculture
• To: Metropolis of 7,000,000 (2007)– 30% annual employment growth (1980-93)
• Shifted development inward for comparative advantage (land/labor costs)… “ripple effect”
• By 1994, more FDI than target for 2000 ($5.35B)• B/t 1980-95, real growth 35.5% (China 10%)
9
State Investment in Shenzhen SEZ
QuickTime™ and a decompressor
are needed to see this picture.
“If you build it, [they] will come.” -- Field of Dreams
10
Shenzhen SEZ FDI
QuickTime™ and a decompressor
are needed to see this picture.
“Show me the money!”
11
Challenges in the SEZs
• Rising wages – Population movement control (hukou)
• Increased labor/societal divisions– Greater number of transitory/temporary workers– Cracking “iron rice bowl” safety net
• Negative for workers in SOEs– Newcomers vs. original hukou residents
• Labor mistreatment– Forced overtime– Minimum wage rates ignored– Unpaid wages– Health and safety problems
• Land acquisition
12
Challenges for China Proper
• Massive movement to economically successful SEZs (licit and illicit)
• With affluence comes demands for greater rights– Economic freedom political freedom?
• Socio-economic disparities (Gini Coefficient)– Increased from 0.30 (1981) to 0.40 (2005)– Divisions between employees and migrant workers
13
Conclusion
• SEZs right policy, right locations, at right time• Attracted large amounts of FDI
– Input comparative advantage– Foreign access to previously-closed domestic market– Attractive government incentives
• Incorporated market-oriented reforms• Tough to ignore successes, even for most
hardline Communists• Transition SEZs from manufacturing to tech• Common capitalist challenges to address
14
Conclusion
Questions?