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Special Economic Zones and China’s Road*
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As an outcome of special policies,the special economic zone is an epoch-making symbol carrying senses,fanaticism,thinking and blindness.It marks the beginning of transition of Chinese society from planned economy to market economy,and Chinese real opening after closing the country’s door for 30 years,and the coming of free mind and renewal of ideas,and also marks a great country whose economy almost go to collapse truly step onto the road of scientific development.So from the perspective of social and political background at the beginning of reform and opening up,undoubtedly the special economic zone is the only way for Chinese society’s transition from planned economy to market economy and the completion the whole social transition.From the perspective of explorating the road of modernization,special economy zone is the only way to get rid of conflicts between ideal and reality to be in the road of socialism with Chinese characteristics and achieve common prosperity.From the perspective of the Chinese institutional changes of road-choosing,the special economy zone is the only way to breaks the rigid traditional system and dogma of ideology in a traditional socialist state where traditional ideology plays a leading role,and makes top-down completion of social institutional changes.From the perspective of development strategy,special economy zone is the only way to abandon blind concept of development,such as “Man’s determination can conquer nature” and “Development for development”,in a nation which was controlled by left-leaning concept,and then step onto the road of scientific development.”

I.The hard but glorious process of special economy zones’ growth and development is composed of Chinese social institutional change which takes the establishment of market economy as main line.Chinese special economic zones,taking Shenzhen as a typical representative,have got tremendous achievements through frustrated process,which not only reveal the generation method and main features of the characteristic China’s road of modernization,but also promotes the sinicization and periodization of Marxism.

What I called “China’s road” means that China chooses special economy zone to complete institutional transition and achieve economy development.More specifically,a great country,where traditional ideology takes the dominant place,has 30 years history of planned economy,it would take the establishment of special economy zones as the breakthrough of institutional changes whose purpose is to break the traditional system to finish the transition from planned economy to market economy gradually over the country,which would make China achieve market economy completely in a period of time,and to be a socialist state with prosperous economy,fair legislation system and socialist market economy.

As to the problem of Chinese modernization,it gets common concern of scholars and several generations of politicians and ambitious people struggle for it for life.We had “learn from the advanced technologies in the West in order to resist the invasion of the Western powers” and “Surpassing Great Britain and catching up with the United States”,but those unrealistic expectations did not go with the right actions,which made poor Chinese people have to rethink the road they were walking on.Some scholars compare the features of modernization in main countries in the 19th and 20th century and point out that in the 19th century,the modernization of capitalism was shaped naturally with hundreds of years of combination of private property and market competition.Private ownership,market orientation,and gradual change were the basic features of this model.In the 20th century,some backward countries took the socialist road,went through the radical political revolution-led and top-down mandatory process of industrialization,and tried to achieve modernization rapidly through national plan and the Soviet model with radical reform on the basis of pure public ownership.This model met crisis after short success.1649606It’s generally agreed that China found the right road of modernization tested by practice in 1990s.That is socialist modernization with Chinese characteristics designed by Deng Xiaoping,including establishing special economy zones for the purpose of reform and opening up.1649607

To look back at history,30 yeas before,the reform and opening up started from China,at that time,china established an oasis of market economy in the sea of planned economy.Shenzhen,with very weak planned economy,firstly becomes the oasis because of its favorable location(Adjacent to Hong Kong and Macao,far away from planned economy center).As the chief designer of China’s reform and opening up,thinker of China’s institutional change and pioneer,when he came back at the third time,Deng Xiaoping faced the hardest challenge and test,that was how to make a great country achieve complete modernization when its social economy almost collapsed.Nearly a half century’s blind and crazy socialist practice and the economy of the time clearly indicated that all of the planned economy,blind catching-up and surpassing plan,and equalitarianism of small-scale peasant economy were not effective.This backward country was maintained by equalitarianism of planned economy and full of poverty,the only way to get rid of poverty was breaking the widespread poverty-led system and choosing a road of nonequilibrium development which was described as “only let some people and some regions get rich first” by Deng Xiaoping.

As mandatory institutional arrangements,establishing special economy region breaks common poverty-led general equilibrium state in traditional system,makes social change of no equilibrium development to be the best choice for Chinese social institutional change,also let China,a great country experienced planned economy for nearly an half century,walk out of the widespread poverty and reach “some people get rich first” in a shorter period.Establishing special economy zones,as a top-down formal institutional arrangement,not only reduces resistance of institutional changes,but also avoids higher risks the changes may bring,so the result of institutional change can come out soon in short time and set a good example for the whole country.

“China’s road” should be a road showing realization of modernization with Chinese characteristics.“Chinese characteristics” indicate the characteristics of country,nation,history and internationalism,not the denial of essence and connotation of modernization and intrinsic value judgment.So “Chinese characteristics” only put the Chinese features on the road and the choice of road instead of the purpose.“Chinese characteristics” is a recognition process of people’s universal values,not the denial of international customs.Shenzhen special economy zone,as a model of modernization for a nation instead of an ordinary city,is written into annals of China’s reform and opening up.

II.In a broader sense,especially for the traditional system and development pattern in the period of planned economy,establishing special economy zones is a key choice to the scientific development,which opens the door of scientific development for Chinese society.The process of Shenzhen special economy zone’s growth and development consists of adjusting development strategy in difficulties,optimizing industrial structure,transforming the mode of development,and searching the way to a welfare society with comprehensive development from a economic growth society.The idea of scientific development has already expanded “concept of development” from the change of growth method to social development,from economy field to other fields of social life.Shenzhen interprets the path and contents of China’s road with its own development process.

The change from planned economy to market economy is also the change of Chinese society from overtaking strategy to nonequilibrium development strategy.As opposed to “blind development concept” of planned economy,undoubtedly,establishing special economy zones makes a way to scientific development for Chinese society.While some people partially understand “Development is of overriding importance” and pursue economic growth at the sacrifice of environment and people’s welfare,the proposal of scientific development determines the development path of sustainable growth.Scientific development denies left-leaning concept of “Man can conquer nature” and corrects blind development concept of “develop at all cost” completely,what’s more important,it establishes “Development is of overriding importance” as a right development concept which shows the driving force and goals of people’s life.The nature of the scientific development concept is to develop rather than not develop;scientific development concept emphasizes social development’s method,pattern and the science and accuracy of road-choice instead of debate of no development.It can be said firmly that,only by establishing scientific development concept,the Chinese special economy zone can be created,billions of Chinese people can pursue common prosperity and Chinese economy can experience 30 years’ brilliant achievements

Look at the course of the development of Shenzhen special economic zone,it’s a process of adjusting development strategy in difficulties,optimizing industrial structure,transforming the mode of development,and searching the way to a welfare society with comprehensive development from an economic growth society.Shenzhen special economy zone started from “process raw materials on clients & apos,demands,assemble parts”.This kind of development pattern was determined by the situation at that time.In the beginning period of reform and opening up,Shenzhen was just an unknown fishing village with weak planned economy.Its relative advantages are cheap labor force and land,but it lacked capital,technique and management.At that time,Hong Kong’s economy was experiencing industrial upgrading and structural adjustment,labor-intensive industry in which processing industry takes center stage lands on Shenzhen in time as Shenzhen was badly in need of manufacturing industry,and along with the industry shift,capital,technique,management and modern enterprise system all came to the growing Shenzhen.Inheriting the industry update chain from the regions or countries with developed market economy,Shenzhen not only reduced the start-up cost of economy development,but also reduced the cost of learning from market economy and identified the features of export-oriented economy.In the mean time,the “imported” processing industry promotes the tertiary industry to come out and develop.By 1993,the net export of foreign-funded enterprises and levy revenue from “process raw materials on clients&apos,demands,assemble parts” accounted for 87% of Shenzhen’s foreign trade,while tertiary industry accounted for 46% of Shenzhen’s GDP and labor force accounted for 32.2% of all the workers in Shenzhen.1649608

When Shenzhen’s economy grew very rapidly,the shortage of natural resources appeared soon,which drew decision-makers’ great concern.Deficiencies of natural resources meant any pattern of growth at the cost of consuming natural resources would make people pay higher for the wealth creation and development under the law of scarcity,which let the expense of economy growth raise along with the increasing cost of the wealth creation.At the same time,as a boom city taking the lead to implement market economy,Shenzhen couldn’t repeat the develop pattern of traditional industry,besides,it had the responsibility to explore and try a new pattern of economy growth and wealth creation and set an good example for the whole nation.

From taking “process raw materials on clients&apos,demands,assemble parts” as main part to taking high technology industry as pillar industry,Shenzhen chose a road of sustainable development at a proper time,meanwhile,it also solved the shortage of capital caused by high input at the beginning period,reduced the pressure of risk-taking of high-tech enterprises by the leading force(the establishment of special funds and preferential policies) of government policies in institutional changes.Shenzhen,like a peculiar broad minded reformer,created an institutional environment for the high-tech enterprises to building,growing,developing and innovating,and also attracted many famous high-tech enterprises both at home and abroad to settle down in Shenzhen.Shenzhen,like a revolutionary with foresight and sagacity,supplied intelligence for high-tech enterprises’ follow-on development,for example,many celebrated universities and scientific and research institutes were founded here.By 2000,the output of magnetic head in Shenzhen ranked the third place in the world,the production of micro computer accounted for 25% of the whole country,SPC exchange 50% and interferon gene 60%,at the same time,Shenzhen was the biggest production base for printer,hard-disk drive and cordless telephone in China,it has a pillar industry of high technology consisting of electron information,biotechnologies,new materials,opto-mechatronics and lasers.1649609

It can be said that in a considerable long time,imitation is a main method for high-tech output growth.However,to a country,the real international competitiveness could not rely on quick success and instant benefit brought by long-term imitation.Industry’s own creativity,also called ability of original innovation,integrated innovation,the introduction,absorption and innovation capacity,is the foundation of enterprises’ permanent vitality and country’s sustainable competitiveness.So,independent innovation is raised as a strategy thinking fully showing sustainable development concept.

Theoretically,independent innovation is superior to imitation,it is an establishment of a new production function,or it can be called that put a new group consisting of production factors and production system into production process.It stresses that the invention’s application in economic activities and the benefit it brings.For that reason,independent innovation highlights the self-development of core technique and ownership,technique added value and patent added value in the value creation process.In this sense,independent innovation is a necessary requirement of transition of economy growth pattern and an important method of this transition,because no matter what kind of method independent innovation adopt,“neutral technical progress”(same proportion of input factors),“labor-saving technical progress”,or “capital-saving technical progress”,it has to raise the output under the premise of using same factors to improve the service efficiency.That means we cannot be satisfied with simple imitation of foreign high technique or stay on the extensive and low-level pattern mainly based on importing equipments at the beginning period of reform and opening up,we should rethink and determine economy growth pattern,export “soft technique”,and improve the contribution rate of independent innovation(core technique creation) to GDP.

From the formation of “process raw materials on clients&apos,demands,assemble parts” process industry with labor-intensive feature to the formation of high technology industry with capital and technique intensive feature,if this process is still in the economy field,then the proposal of scientific development concept expands “concept of development” from the change of growth method to social development,from economy field to other fields of social life.It can be said that,after going through glorious success and wealth accumulation,Shenzhen has to think and rethink how to use concept of scientific development and harmonious development to solve and correct the problem in the developing process to make this city move forward.

Today,30-year-old Shenzhen has already stepped into a mature period of steady growth.In the past years,Shenzhen’s economy always kept increment speed above 15%,economic aggregate increased from 169 million at the beginning to 820.123 billion in 2009,and GDP per capita increased from 606 RMB in 1979 to 93000 RMB in 2009.In a manner of speaking,Shenzhen brings wealth and richness to hard-working people along the path of fast development.We know that GDP is the material base of social development but not the ultimate goal of social development.Without the improvement of social welfare,the increase of GDP and GDP per capita is a simple material increase lack of soul and Humanistic Concern.

If we say the labor-intensive economy brings price superiority because of low cost,so Shenzhen has competitiveness to occupy market,then global financial crisis makes the problem of labor intensive economy’s immanent disadvantages clearer,those disadvantages originate from economy growth pattern,including low product capital and technique added value and lack of core competitiveness,meanwhile,global financial crisis also seriously proposes that changing the economic growth pattern is a necessary strategy to scientific development.

“Comparative Advantages” is an important principle for economic growth in different countries and regions.The so-called “Comparative Advantages” means comparative advantages of factor price which are determined by the relative scarcity of factors.If a country,without advantages of capital and technique,has rich labor force and low cost of labor force,it firstly use cheap labor force,which is the best and natural choice for low-cost development at the start-up period of economy.So this kind of comparative advantage was the main choice of economic development for Shenzhen and even the whole nation at the early period of reform and opening up.

Scarcity is the basic premise and the general principle of economics.Economics studies how does a society use scarcity to produce valued products and labor service and distribute them to different people.However,the problem most backward developing countries face is not shortage of natural resource but resource constraint in terms of factor structure which is also called “low factor endowment structure”,that means a country has rich labor force with lower education while lacks higher level factors such as capital,technique,education,management,legal system and so on.So the reason of low economic structure is not the structure itself but the result or actual performance of “low factor endowment structure”.If a country only has simple labor force,the labor-intensive economy would be its natural choice.No economy structure can be changed by people’s desire,because “The practical and logical premise of improving industry structure is change of factors’ quality and structure”1649610.Progress of human society needs not only diligence and passion,but also thinking and senses.

III.When people’s economic value increases,our society would get some new and better opportunities.The government cannot lead the social economy by its own desire,it should respect market rules,meanwhile,create institutional environment,complete the supply of public goods,and build social welfare system.Development is the result of reform and also the material premise of deepening reform,but development cannot replace reform.Economic system reform cannot get real success without a corresponding political system reform.On the special “China’s road” of modernization and in the process of building legal society,Shenzhen should undertake the hope of tomorrow as a leading city in development.

T.W.Schultz said,“It is hard to imagine any secular economic movement that would have more profound influence in altering institutions than would the movement of wages relative to that of rents.”1649611“The rise in the economic value of human agents makes new demands on institutions,that some political and legal institutions are especially subject to these demands.”1649612Social system is demanded to be indicated when human capital seeks its right to participation,so many systems are created as encouragement to economic growth.For example,in a market economy which is achieving growth,the demand for the convenience of money shifts to the right.As economic growth becomes increasingly dependent upon the advance in useful knowledge,the demand for institutions that produce and distribute such knowledge shifts to the right.As human lives become cheaper,the demand per worker for additional safeguards protecting workers from accidents shifts to the right,so does the demand per person for health services and for life insurance.The demand for additional legal protection of personal rights(for example,protection from invasion by police that impairs the privacy of persons) also shifts to the right,as does the demand more generally for civil rights.As a factor in production,human agents demand greater equality in obtaining jobs,especially so with respect to jobs that require high skills.Closely related is the increase in the demand for less discrimination in having access to schooling and higher education to acquire the higher skills.1649613

The immateriality of human capital decides that it needs institutional environment for its life and growth.It creates wealth for the society and requires institutional protection.It promotes the social economic growth and improves its own economic valve.The growth of human economic value,originating from economic development and institutional performance,motivates the formation of social institutional environment which is in favor of the creation of human capital.A good social institutional environment is not only propitious to the formation and re-creation of human capital,but also helps to improve the return on investment in human capital.At the same time,the institutional changes corresponding to the improvement of human economic valve ask for new economic pattern and growth method.In this sense,the real power of changes of economic growth method is not subjective wishes but the improvement of human economic valve forming internal mechanism and motivation of economic society.

Amarty Sen said in Development as Freedom,development can be seen as a process of expanding the real freedom that people enjoy.There’s a sharp contrast between the development concept focusing on human freedom and narrow development concept.The narrow development concept includes added value of GDP,increase in personal income,industrialization,technical progress,social modernization and so on… However,freedom also relies on other deciding factors such as social economic arrangement(e.g.education and health care facilities) and politics and civil rights(e.g.freedom of view in public discussion)… Development calls for the elimination of main factors limiting people’s freedom including poverty and tyranny,lack of economic opportunities and institutional social deprivation,neglect of public facilities and intolerance and excessive intervention under the oppressive regime.Amarty Sen,using his scholar’s conscience,morality and wisdom,gives the question of the goal of human society development an answer that the supreme goal and value standard of social development is freedom with human centered.People pursue wealth,income,technical progress,social modernization and so on,but those things are just tools supplying service for human development and welfare.

China’s social reform is based on the low GNI per capital,on one hand,a large middle class did not formed yet,on the other hand,the gap between poor and rich became significant and differentiation appeared.As a result,poverty in economic growth and low welfare in glorious economy become a social problem too early that needs solution from government’s institutional arrangement.It should be sure that the government has to take the establishment of social welfare system as guarantee of achieving common prosperity.

Market has an internal association with people’s basic freedom,it’s not comprehensive for people to praise the market system just because of efficiency.Maybe market failure will be the important proof for people to deny the market,but market failure is adherence to market system instead of denial,that is,market just does what it can do while the government should do what the market cannot do.In the mandatory institutional changes with a feature of top-down authorization,the effect of the government’s power is necessary.However,the government uses its power against the laws of market,it is not the reclamation of market failure but break of the law of market.The government cannot lead social economy by its own desire,it should obey the law of market and build institutional environment,supply public goods and establish social welfare system.

China’s social reform starts from economic reform,which undoubtedly is a best path.But at the same time,it makes some birth defects appear soon including the unsuitable social environment,lack of effective institutional environment and so on,which causes a bottleneck of the system of deepening reform.Similarly,economic institutional reform cannot succeed without a corresponding political institutional reform.Today,fundamentally speaking,many social problems and conflicts are the result of political institutional reform lags.

For a transformed society,the process of creating a new social operating mechanism is also a process of weakening,deprivation and even lost of government officials’ power and a process of formation of a service-oriented government,cultivating and growing up.In the system where the government has to use its power to reave power,the government’s civilization and foresight and sagacity is significant for the social system performance.

Without miracles,our society will not wither,but it will lose its continuing vitality.Special economy zones,as a special mark of miracles and creation of miracle ideas,not only give Chinese society infinite life,but also provide the nation infinite hope of creating miracles.

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