Subsequently, in 1992, the State Council created another 35 ETDZs. In doing so, they sought (a) to extend the ETDZs from the coastline to inland regions and (b) to focus less on fundamental industries and more on technology-intensive industries. By the end of 2008, there were 54 state-level ETDZs. By March 2013, there are 191 national level ETDZs in China. ETDZs are typically located in the suburban regions of a major city. Within the ETDZ, an administrative committee, commonly selected by the local government, oversees the economic and social management of the zone on behalf of the local administration (China Knowledge Online 2009).

In addition to the special economic zones mentioned above, there are many other types of SEZs in China at various levels, which include high-tech industrial development zones (HIDZs), free trade zones (FTZs), export-processing zones (EPZs), and others. Each has a different focus.

The SEZs have made crucial contributions to China’s success. Most of all, they—especially the first ones—successfully tested the market economy and new institutions and established role models for the rest of the country to follow. By 1992, the concept of openness had been extended to the entire coastal region and to all capital cities of provinces and autonomous regions in the interior, and various types of SEZs had begun to spring up throughout the country. Thus, when Deng Xiaoping made his famous southern tour that year, the mission that had started with the creation of the first five SEZs had in many respects been accomplished: the “special” economic zones by that time were no longer so special (Yeung, Lee, and Kee 2009).

Economically, SEZs have contributed significantly to national GDP, employment, exports, and attraction of foreign investment and new technologies, as well as adoption of modern management practices, among others. It was estimated those in recent years, SEZs (including all types of industrial parks and zones) at national levels accounted for about 22% of national GDP, about 46% of FDI, and about 60% of exports and generated in excess of 30 million jobs (Zeng 2010). An analysis of panel data of 270 cities at the prefecture level over 23 years shows that the introduction of a major zone in a city led to an increase in the GDP level of 12% on average in the post-reform years, and the effect is depending on the type of zone. The long-term (cumulative) effect of a SEZ could be an increase of about 20% in the GDP level (Alder, S., et al., 2013). Another analysis (Wang 2013) of 321 prefecture-level cities between 1978 & 2008 shows: a) on average, a SEZ program increases the level of per capita FDI by 21.7% and the growth rate of FDI by 6.9 percentage points; b) the SEZ program generates significant agglomeration economies - it increases the technological progress of the earlier treated municipalities by 1.6 percentage points compared to the later ones; and c) the average wage of workers in the treatment group increases by 8% more than in the control group while there is a 5% rise in the cost of living.

The success of state-level SEZs spurred the speedy development of new ones by different levels of governments. By 2004, there were nearly 7,000 industrial parks in China. To curb the blind expansion of industrial parks, China stepped up its efforts to clean up unqualified industrial parks. By the end of 2006, the number of industrial parks had been reduced to 1,568, among which 222 are state-level zones. The total planned area had been reduced from 38,600 square kilometers to 9,900 square kilometers (74.4 percent less) (China Knowledge Online 2009).

# **II.2   Major Factors for Success and Lessons Learned**

Many factors contributed to the success of China’s SEZs, and in every case, the situations and factors might be different. However, their success draws on some common key elements and points to some common lessons.

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