The Political and Economic Implication of Guangdong s Promotion of a Local Guangdong-Taiwan Experimental Economic Cooperation Zone

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1 The Political and Economic Implication of Guangdong s Promotion of a Local Guangdong-Taiwan Experimental Economic Cooperation Zone Ai Wei Graduate Institute of East Asian Studies National Chengchi University The CPC established a series of national strategic economic zones this year (2009) as a focus for China s regional development. Meanwhile, the Guangdong Provincial Government also launched a local Guangdong-Taiwan Experimental Economic Cooperation Zone. What was the policy history behind the establishment of these regional economic zones? What political and economic significance do they have to cross-strait economic relations and China s economic development? These questions are worth considering. 1. The Background and Development Direction of the Experimental Economic Cooperation Zone In order to enhance regional economic development in China, the PRC government approved the establishment of seven major economic zones this year (2009) in Tianshui-Guangzhong, central China, west side of the Taiwan Strait, Hengqin Island (Guangdong Province), Jiangsu coast, Liaoning s coastal economic belt and Tumen River Regional Cooperation Zone. These economic zones, which have been planned as national strategic regional economies, will be the focus of regional 1

2 economic development in China. While all these regions are eager to promote their local economies, the planning and development of the Economic Zone on the West Side of Taiwan Strait has attracted the most attention due to its strategic location and advantages that make it ideal to serve as a pioneer experimental area for cross-strait economy and trade. In addition, the Chinese government will strive to balance the nation s regional economic development and distribution. Compared with those flowering developments of economic zones which have been included in national strategy plans for the regions, the economy of the Pearl River Delta in Guangdong Province is experiencing dramatic changes due to the investment environment and thus is eager to carry out industrial and economic transformation. Therefore, Guangdong Provincial Government has proposed and implemented plans to upgrade and transform industries, using an out with the old, in with the new plan (literally getting rid of old birds to make space in the cage for new birds ) to revitalize Guangdong s economy. In light of this, the Guangdong Government has been very active in taking advantage of its geographical location to drive its economic development. With the implementation of The Pearl River Delta Reform and Development Plan followed by the Central People s Government Opinions on Supporting Fujian Province to Accelerate the Economic Zone on the West Side of Taiwan Strait, leaders of Guangdong Province are placing a great deal of emphasis on the important connection between the Pearl River Delta and Yangtze River Delta, as well as Shantao City (the Shantou Special Economic Zone which is part of the Economic Zone on the West Side of Taiwan Strait) in the hope that through proper 2

3 planning, these arrangements can inject new energy into Guangdong s economy. In March this year (2009), the Guangdong Government proposed the establishment of the Guangdong-Taiwan Experimental Economic Cooperation Zone in East Guangdong. According to the plan, the Guangdong-Taiwan Experimental Economic Cooperation Zone encompasses four cities: Shantou, Jieyang, Chaozhou, and Meizou. Specifically, the Taiwan Industry Park in Shantou is expected to become the core base of Guangdong-Taiwan Experimental Economic Cooperation Zone. Guangdong Province s purpose in establishing such an experimental economic cooperation zone is to integrate resources in East Guangdong and to facilitate industry transfer for Hong Kong, Macao and Taiwan businesses in the Pearl River Delta. It aims to take advantage of the three direct links and connect to the Economic Zone on the West Side of Taiwan Strait by strengthening its economic and trade relations with Taiwan. In terms of the direction of development, the Three Active Integrations underscore initiatives to integrate the following three aspects into the Guangdong-Taiwan Experimental Economic Cooperation Zone in Shantou City: the reform and development of the Pearl River Delta, close cooperation between Guangdong, Hong Kong, and Macau, and the development of the Economic Zone on the West Side of Taiwan Strait. This is to promote interaction and development in addition to enhancing overall capabilities and competitiveness. In order to achieve these aims, the Shantou City proposed A Working Plan to Integrate the Development of the Economic Zone on the West Side of Taiwan Strait 3

4 and set up a special leading team for this purpose. Based on these requirements to establish the Guangdong-Taiwan Experimental Economic Cooperation Zone, Shantou City will build a bridgehead for exchange and cooperation with Taiwan, so as to accelerate the implementation of the aforementioned Three Active Integrations. 2. Concrete Development Plans and Industrial Policies In terms of concrete industrial policies, Shantou City will further deepen cooperation with the Economic Zone on the West Side of the Taiwan Strait, facilitate the extension and promote the connection of major regional infrastructures. Furthermore, it will expand industrial adjustment, accelerate links with photo-electronic, biological and technological industries in Taiwan and create a cluster effect for Taiwanese businesses in Shantou City. Shantou City will also take advantage of its strength in traditional trade and business to develop a modern logistics industry, speed up the constructions of Taiwan Farmers Park in Chaonan (Shantou) and Taiwan Agriculture Products Center in Shantou, and further deepen tourism and cultural exchange and cooperation between Shantou and Taiwan. Guangdong-Taiwan Experimental Economic Cooperation Zone is a larger projext based on Taiwan Industry Park in Shantou. Details of the planned and developed measures for the economic cooperation zone are: 1. Taiwan Industry Park in Shantou is 11 square kilometers in area and consists of Taiwan Investment Zone in Haojiang District in Shantou, Nanshan Industrial Area and Hepu Industrial Zone. The park was established to attract Taiwanese investments in the electronic information industry, equipment manufacturing 4

5 industry and petrochemical industry. 2. In order to build a successful Guangdong-Taiwan Experimental Economic Cooperation Zone, Shantou City will strive to expand direct flights between Shantou and Taiwan and to make Shantou one of the cross-strait economic and trade centers. 3. Shantou City will work with Taiwanese businesses to develop service and commerce industries, introduce Taiwan s financial industry, commence low value trade to Taiwan, and complete the small trade market to Taiwan in Nanao County (Shantou). According to the Shantou City Government s statistics, up to April this year (2009), Taiwanese businesses in Shantou numbered 625 companies, with a total investment of around US$1.6 bn. Currently, the Shantou Government is devoted to the construction of highways between Shantou and Meizhou, Shantou and Jieyang, Chaozhou and Jieyang, Chaozhou and Huizhou in addition to the Xiamen-Shenzhen coastal railway. This development will be part of initiatives to establish the one-hour economic living circle in East Guangdong and a three-hour economic living circle that also includes the Pearl River Delta, Xiamen, Zhangzhou, and Quanzhou. The goal is to promote a regional development structure of benign interaction between the Pearl River Delta and the Economic Zone on the West Side of Taiwan Strait, boosting overall competitiveness in the region. 3. The Political and Economic Implications of the Experimental Economic Cooperation Zone The Guangdong-Taiwan Experimental Economic Cooperation 5

6 Zone actively promoted by Guangdong Province has the following political and economic implications. 1. The establishment of the Guangdong-Taiwan Experimental Economic Cooperation Zone is within the local Guangdong government s authority. With the two sides of the Taiwan Strait actively promoting the normalization of economic and trade relations, Beijing is happy to see such development. As a matter of fact, China has been trying to attract investment from Taiwanese agricultural businesses by building farmers parks and cross-strait experimental agricultural cooperation zones in China. In addition, the recently established Taiwan Biotechnology Industrial Park in Hunan Province is also one of the principle tasks of China s effort for economic and trade relations with Taiwan. 2. China launched a series of national strategic economic zones in Among them, the development of the Economic Zone on the West Side of the Taiwan Strait has become the focus of the regional economic strategy. In addition, Fujian proposed the idea of working with Taiwan to establish the Pingtan Integrated Experimental Area, which will become a forward area for cross-strait economic and trade development. Such a development will serve as a significant stimulus to Guangdong Province which has been troubled by drastic upheaval in the investment environment and declining foreign investment (especially from Taiwanese businesses) in recent years. In light of this, the Guangdong Government is attempting to take advantage of the development in Shantou City to make it become the 6

7 connection between the Pearl River Delta and the Economic Zone on the West Side of the Taiwan Strait, providing a driving force for a new round of economic growth in Guangdong. 3. Guangdong s purpose is establishing the Guangdong-Taiwan Experimental Economic Cooperation Zone to boost its regional economy. This is an inevitable result of comparison and competition between different regions on economic performance. As a matter of fact, Guangdong also proposed recently to build a Shenzhen-Hong Kong Economic Cooperation Zone in an attempt to accelerate the development of economic cooperation between Shenzhen and Hong Kong. These locally oriented economic development measures are likely to bring more mutual competition and repetitive investment in the local economy. 4. The purpose of the establishment of the Guangdong-Taiwan Experimental Economic Cooperation Zone is to take advantage of the potential of the Economic Zone on the West Side of the Taiwan Strait, strengthen economic and trade relations with Taiwan and attract Taiwanese investments. However, it serves as only another choice for Taiwanese investments and will only have only a small effect on the overall situation of cross-strait economic and trade relations. 7