ABSTRACT
Special economic zones (SEZs) have an opportunity to play an important role in improving environmental management practices and conditions in China. Due to their well educated, affluent populations and ties to international firms and markets, SEZs are well positioned to become leaders in environmental fields such as the development of pollution control technologies, green product design, environmental finance and other environmental services. A focus on environmental management offers a double benefit for SEZs, helping to improve the local environment while also supporting economic development plans. The market for environmental services and products is growing rapidly in China and around the world, and a focus on environmental management and services supports the efforts of SEZs to build their knowledge and service base and move away from a reliance on manufacturing. SEZs can support the development of the environmental service industry by setting high local environmental standards, exploring innovative policy approaches, and supporting research and education efforts. China created SEZs in the 1980s to attract foreign direct investment (FDI)
and experiment with new regulatory, legal and institutional structures. The zones were highly successful in attracting investment and promoting economic growth. However, the rapid development of the SEZs created a number of challenges, in particular severe environmental pollution problems in and around the SEZs. The SEZs have taken actions to address pollution and have been cited as leaders in environmental management; however, the scale and complexity of the pollution challenges facing both the SEZs and China have increased with the country’s rapid development (Luan et al. 2007; Ministry of Environmental Protection, China, n.d.). China has pledged to improve environmental conditions in the country, including a commitment to reduce carbon emissions per unit of economic output by 40-45 per cent by 2020 from 2005 levels (Jing 2009). New technologies and approaches will be necessary to allow China to achieve its dual goals of economic growth and stronger environmental protection. Since the original designation of four coastal cities in China as SEZs in the
early 1980s, the term ‘special economic zone’ has been used in a variety of
ways to refer to specially designated economic development areas. SEZs have been defined as, ‘geographically or juridically bounded areas designated by governments for foreign investment and export-oriented industrialization, to which are conceded favourable investment and trade conditions, and reduced red tape’ (Richardson 2004: 4). The definition of an SEZ can be stretched to potentially include thousands of areas across the country; however, this paper focuses its attention on the four original SEZ cities, Shenzhen, Shantou, Zhuhai, and Xiamen, plus Hainan Island, which was named an SEZ in 1984. In its references to these locations, the paper considers the entire city, and not just the actual SEZ, which is a special trade zone within the larger boundaries of the city. The trade zone contains the concentration of industry and foreign investment, but the larger city includes residential and commercial areas that are inevitably linked to the industries within the zone. Efforts are also now underway to expand the trade zones to encompass the entire city boundaries, which would unite the two entities and expand the geographic area where special tax and other incentives are offered (Xinhua 2009a). The original SEZs, in particular Shenzhen and Xiamen, remain among the largest and most developed SEZs in the country, and are often looked to by leaders at the national and local levels for new ideas and innovations. They have also served as models for newer SEZs such as those in Suzhou and Tianjin and several ‘green development zones’ that have been proposed or developed (RightSite Team 2009). SEZs have a number of key characteristics that make them good candidates
to serve as leading players in developing and demonstrating environmental management improvements. For example, SEZs have strong ties to international companies and countries that have advanced environmental management practices, creating networks that will facilitate the import of technology and know-how. SEZs can become a testing and development ground for new environmental technologies and services, a business field that is expanding rapidly in China and around the world. Internally, there is strong pressure from the residents of SEZs to improve the local environment. The increasingly mobile, educated population of China will seek to locate in cities that have a high quality of life. Environmental conditions are one of the most important issues that people consider when deciding where to live. Knowledge industries, which are not tied to specific geographic locations, often locate in areas with a high concentration of well educated workers. The quality of life in SEZs will play an important role in whether knowledge workers and companies locate in SEZs, as they will help attract knowledge workers and industries, and assist in the development of new market opportunities. China’s central government has emphasized the importance of improving
environmental protection for the well-being of its citizens and for the ability to continue to develop rapidly in the future (State Council of China 2006). The Chinese government has stressed that economic growth should not come at the expense of the environment (Hanson and Martin 2006: 3).
However, environmental management in China is largely the responsibility of local and provincial governments, whose primary focus has been on economic growth (Economy 2005: 22; Palmer 2007: 16). Environmental protection bureaus at all levels of government suffer from a lack of resources and authority. For example, China’s Ministry of Environmental Protection has substantially fewer personnel and resources than the US EPA, but must oversee more enterprises and a far larger population (Palmer 2007: 211). The primary policy approach in China has been one of command and control, but enforcement of regulations is often lax and penalties for violations are low (Palmer 2007: 232). Despite repeated calls for environmental improvements from the public, government and international observers, pollution levels for many pollutants in China continue to rise and the environment has been severely degraded (Economy 2005: 102; Palmer 2007: 205).
