What is the difference between a state-level new area, a special economic zone, a development zone, a high-tech zone, and a free trade zone?
We know this can be confusing, but China is awash in neighborhoods, districts, cities and provinces calling themselves something special, and you need to know the difference between them in case you ever have to pass an exam about them or put one of them on an application form.
Seriously, though, these special places do have different characteristics. In the Greater Bay Area, for instance, Qianhai, Nansha and Hengqin are about as close to semi-autonomous as they can be without having their own mini-constitutions and currencies, like Hong Kong and Macau have. They are not to be confused with the various hi-tech parks dotted around the province, because these three have different tax policies and are able to offer a variety of incentives to investors that cannot be matched anywhere else.
But before you rest too easy in this knowledge, know that sometimes these places can be many things to many people: Nansha is both a New Area and an Economic & Technological Development Zone. Or once they were one thing and now they are another: Hengqin was once a special zone and now it’s a New Area. Anyway, it’s always best to ask an expert when you are ready to go from wondering what all the fuss is about in the Greater Bay Area to wanting to know where to put your money. What we have here, in the meantime, is a rough explanation of what’s what and who’s who.
State-level New Area 国家级新区
This is an urban area that has been given an “administrative readjustment” by the central government. They exist at a provincial (Guangdong) and prefectural (Dongguan) level as well. They get preferential policies and privileges granted directly by the State Council. A New Area is geographically smaller, usually a designated district in a city. Through the establishment of a New Area, the central government is signaling that it wants to drive the economic development of that particular area, alter its development trend and ultimately create a rippling economic impact.
China currently has 19 state-level New Areas. In the Greater Bay Area, Guangzhou’s Nansha and Zhuhai’s Hengqin are New Areas. (Shenzhen’s Qianhai is different, which will be explained.) Others around the country include Shanghai’s Pudong New Area. Xiong’an in Hebei province is the newest, established in 2017.
Special Economic Zone 经济特区
This is the name given to the original experimental jurisdictions. Shenzhen and Zhuhai were two of the earliest, because they were opposite the two SARs. Now they are all over the country. Besides these, there are also Pilot Zones for Comprehensive Reforms综合改革试验区. They are similar, but more focused on particular issues, such as coordinated development between urban and rural, or how to strike a balance between environmental protection and economic development.
Economic & technological development zone 经济技术开发区
These are zones that are set up to follow particular industrial development trends in the context of regional development. They became favored in the late 1980s and the early 1990s, when the government tried to group companies into industrial clusters. Enterprises in the development zones are granted preferential policies for land usage or tax deductions.
China has a total of 219 state-level economic and technological development zones. Jiangsu province leads with 26, followed by 21 in Zhejiang and 15 in Shandong.
Guangdong has six, located in Zhanjiang, Guangzhou, Nansha, Daya Bay (Huizhou), Zengcheng (Guangzhou) and Zhuhai.
Hi-tech Zone 高新区
The hi-tech industry has always had plenty of government support. The Ministry of Science and Technology is highly involved in the development of these zones. It often provides detailed guidelines on which hi-tech zone should focus on which sector.
Each of the nine mainland GBA cities has a state-level Hi-Tech Zone. The one in Shenzhen’s Nanshan district is ranked second only to Beijing’s Zhongguancun among China’s 157 state-level Hi-Tech Zones. Shenzhen’s is supposed to be focused on four industries, namely electronic information, bioengineering, new materials and opto-mechatronics. As you can guess, that first category is quite wide-ranging. Isn’t it, Tencent?
Guangzhou is no slouch, either. Its Hi-Tech Zone in east of the city was established in 1991, and currently ranks ninth nationally. It consists of Guangzhou Science City, Guangzhou Tianhe Software Park, Huanghuagang Technology Park, Non-Governmental High-tech Park and Nansha IT Technology Park.
Dongguan’s Songshan Lake Hi-Tech Zone is seen as an up-and-coming star. It focuses on high-end electronic information, biopharmaceuticals, robotics, new energy and modern service industries. Foshan’s Hi-Tech Zone specializes in automobile vehicle and component manufacturing, high-end equipment manufacturing, new materials, smart home appliances, life sciences and optoelectronic technology.
Free Trade Zone 自贸区
These are much larger. Guangdong is a Free Trade Zone, for instance. It’s not what one might think its name means, however. Regulations related to tariffs, approvals and management are flexible – not free.
Currently 12 of China’s provinces are designated Free Trade Zones, including Shanghai, Guangdong, Tianjin, Fujian, Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, Shanxi, and Hainan.
However, it’s not the whole province that implements this flexibility. Guangdong’s zone actually only includes three districts. Can you guess what they are? That’s right: Guangzhou’s Nansha, Shenzhen’s Qianhai, and Zhuhai’s Hengqin.