Breaking the Mould

The idea of industrial parks run by Chinese enterprises along the Belt and Road seeks to boost the industrialisation process of host countries. Their success lies in a mutual learning process, which means Chinese operators and policy makers cannot simply copy past experiences

By Li Jia

Belt and Road Forum

A Thai worker at the factory of Futong Group Communication Technology (Thailand) Co in the Thai-Chinese Rayong Industrial Zone

Photo by Xinhua

Trade in silk, porcelain and tea connected China and the rest of the world in ancient times along the silk roads. Returning to the global trading network in the late 20th century largely underwrote China’s economic take-off, and in turn China’s resurgence in world politics, in the 21st. Now the world’s largest trading nation in merchandise is setting her eyes back along the ancient trade routes, but beyond just trade.

According to China’s official data, Chinese companies invested more than US$50 billion between 2014 and 2016 in countries along the routes of the Belt and Road, a Chinese initiative proposed in September 2013 to link China, Europe and Africa via land and sea. Capital flow from China to the rest of the world is estimated to reach US$600 to US$800 billion in total for the five years from 2017 onward. “Much of it will go to the Belt and Road,” said Ning Jizhe, vice minister of the National Development and Reform Commission (NDRC), China’s leading economic planning agency, at a press conference in Beijing on May 12. At the Belt and Road Forum for International Cooperation in Beijing on May 14, Chinese President Xi Jinping announced the provision of more than US$55 billion in loans for financial, infrastructure and production capacity cooperation under the initiative.

The 56 industrial parks in operation, jointly built by China and 20 host countries along the Belt and Road, are one of the main destinations of China’s investment. According to China’s official data, they had absorbed more than US$18.5 billion of Chinese investment by the end of 2016. In China’s roadmap to realising the vision of the Belt and Road, overseas industrial parks are one of the main ways for international cooperation on production capacity, a priority area of the Belt and Road initiative.

Domestically, special economic zones, industrial parks or development parks have acted as the forerunner of China’s transition towards a market economy, and remained a powerhouse for China’s growth today. Promarket policies and reforms have been tried there first. In terms of leading overseas ventures, such parks are supposed to help Chinese companies learn how to take off in unfamiliar locations. In China’s recently issued explanatory official paper titled Jointly Build the Belt and Road: Ideas, Practices and Chinese Contributions, these parks are defined as “important channels for investment cooperation and transplanting and replicating China’s development experience.”

Like the Chinese enterprises which have gone abroad, operators of these parks have learned that their experience at home, no matter how successful and rich it has been, does not make it easier to succeed overseas. The key to their own success and the purpose of “transplanting and replicating China’s development experience” is probably not to copy all their practices at home, but to adapt some practices to local conditions.