Lec 70.2 Land reform SEZ_09.pptVIP

RD and Venture Capital in SEZs A large percentage firms in SEZs are in RD intensive industries, such as IT and biotech Most venture capital financed firms in China are related to SEZs The total venture capital investment in China is the 2nd largest in the world Zhongguancun Life Science Park, Beijing (below) Economic Development of ChinaLecture 7.2Land Reform and Special Economic Zones Chenggang Xu copyright@Chenggang Xu Special economic zone (SEZ) experiment Another most important experiment is the special economic zone (SEZ) development Started from virtually zero amount of foreign direct investment (FDI) in 1978, China became one of the largest FDI recipient countries in the world This rapid and sustained expansion in attracting FDI is largely driven by the SEZs In 1985 when China just opened up in attracting FDIs and in trading, 37% of the FDIs in the nation were located in SEZs, and 89% of the national exports were from the SEZs. In 2005, when China became the largest FDI recipient country in the world, 93% of FDIs were located in SEZs, and 93% of China’s exports were from the SEZs. Among all China’s reforms the SEZ has the greatest direct impacts to the global economy Risks in attracting FDI A reform to attract foreign direct investment into China faced tremendous political and economical difficulties and uncertainties at the beginning of the reform era There were strong political oppositions to the idea of FDI Renting land to foreign firms was regarded as selling the nation (selling sovereignty right) Favorite policies for FDI were regarded as capitalism or anti socialism Fundamental difficulties in attracting FDI When the constitution (including the Party’s constitution) did not protect private property rights how to convince foreign investors to come? When imports/exports were all controlled by government agents how to accommodate foreign and domestic firms to develop trade-intensive businesses? Reformers’ careers are in stake if they fail in the