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What Can Liberia Learn From China’s Trade Zones; The Case of Kunshan Economic & Technological Development Zone

By Fredrick P. W. Gaye

The blossoming flowers and friendly weather in this part of China are just a symbol of how Kunshan serves as one of the fulcrums of China’s economic growth and development. Some Liberians may say that the country is not in the position now like China to establish special economic zones (SEZs) due to the lack of revenue backing.

However, what Liberians need is to be able to receive and make use of the technology and knowledge transfers with a clear and implementable vision. There are prospects for the country based on its natural resources. Furthermore, Liberia and China friendship has strengthened in recent years with serious growth in trade volume.

It is good to start somewhere. And for me, and others may agree, it is optimistic that the country will move on par with other developing countries if both governors and governed are willing to learn from countries the like China, that had experienced similar situations some years ago.

With the most-touted publicity in strengthening the private sector, fundamental activities such as establishing special economic zones, guided by special policies could serve as a foundation for making this sector vibrant.

Special economic zones are geographically designated trade areas that are used to attract foreign investors and boost industrialization. They generally have trade laws that differ from the rest of the country and companies are offered tax incentives to set up operations.

The People’s Republic of China (PRC), under its “Belt and Road” Initiative, is partnering with African countries to scale up industrialization on the continent in addition to China’s infrastructure development projects – the “Three Major Networks” of railway, road and regional aviation. I believe that China’s own experience in industrial development through the special economic zones offers valuable lessons.

Chinese former Ambassador to Liberia and Zambia, Zhou Yuxiao, in his article published in the CHINAFRICAN Magazine, urged African countries to be ready to receive the technology and knowledge transfers. “Africa can do what China has done; China’s today can be Africa’s tomorrow,” Amb. Zhou stated.

In 2016, during our (22 African journalists) tour to Jiangsu Province in Eastern China, we visited several economic zones and other institutions.

But the flourishing features of the Kunshan Economic & Technological Development Zone  (KETD), opening economic opportunities for foreigners, coupled with the historical periods of its reforms explained by authorities, made it a great lesson for the Forum on China-Africa Cooperation (FOCAC) in general, and Liberia in specific.

Though it is in Jiangsu Province, Kunshan is situated in the Shanghai Economic Zone, with the metropolitan city Shanghai to the east and the renowned ancient city Suzhou to the west. .

Leading our tour in the different areas of the zone, official said KETD zone has a number of well-developed national-level functional zones, including a free trade zone, an opto-electronics industry park and an incubation park for Chinese overseas students. A number of other industry parks are also under development, including parks respectively dedicated to robotics, finance, creativity, advanced technology commercialization and food processing. These functional zones and industry parks are shaping a geographical distribution of economic activities characterized by “two axes, two belts, two cores and multiple parks”, which are increasingly facilitating city-industry integration.

By end of 2015, KETD had attracted 2,170 investment projects, with a total value of US$ 36.3 billion and registered capital of US$19.4 billion, from 47 countries and regions, including Europe, America, Japan, Korea, Hong Kong, Macau and Taiwan.

It hosts more than 10,000 domestic companies, with more than RMB 50 billion in registered capital, which concentrate in five pillar industries: electronics and information, optoelectronic display, precision machinery, equipment manufacturing and light industry. KETD has been successively honored as a national model in intellectual property-driven development and business incubation for overseas talent. It is also selected by the provincial government as a model in innovation and IT-industry integration and scores the highest in institutional innovation among national-level EDZs in China. For consecutive years, KETD has been ranked among the top four national-level EDZs by the Ministry of Commerce for its overall competitiveness.

The efforts of the Kunshan government is to ensure a stable and healthy economic and social development, and to consequently transform the city into what some traders called one of the best places to work, live and do business in China. As an open industrial and commercial metropolis, Kunshan has remained at the forefront of the nation’s reform and opening-up policy in the past decades.

Moreover, Kunshan has adopted a series of proactive policies in an strategic plan to develop a modern service industry as part of a drive to upgrade its industrial structure.

For example, the government has streamlined examination and approval procedures to better serve investors. All the applications are required to be examined within a time limit.

This new reform is in line with a circular issued by the General Office of the Communist Party of China (CPC) Central Committee and the General Office of the State Council, saying that China will ease the permanent resident permit application process for foreigners. “Qualification for residence should be flexible and pragmatic,” the circular noted.

Accordingly, KETD was first established in 1984. It was approved as a provincial-level economic development zone (EDZ) in 1991 and as a national-level EDZ in August 1992. Covering an area of 115 sq km, KETD is home to a population of 635,000. Since its birth, KETD has been liberalizing its ways and deepening reforms, taking the lead among its peers in economic diversification, functional innovation and EDZ urbanization.

China introduced special economic zones in the 1970s as part of its policy to open up to international trade. Deng Xiaoping’s economic reforms became the turning point towards a market-oriented economy. A series of experiments, including the establishment of special economic zones, became the driving force for growth.

This inspired African countries and became the rationale to establish Chinese led-SEZs (special economic zones) in Egypt, Mauritius, Nigeria, Zambia and Ethiopia in the mid-2000s. More African countries are planning to establish special economic zones. In South Africa, the Special Economic Zones Act has been passed and ten selected.

About the author

Fredrick P. W. Gaye is IN PROFILE DAILY’s Editor for News & Editorial Services. Gaye is also a fellow of the China-Africa Press Center (CAPC) Annual Media and Cultural Exchange Fellowship 2016. He can be reached at: fgaye.inprofile@gmail.com

 

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