South Africa‟s Special Economic Zones – Inspiration from China?

Abstract

Special Economic Zones (SEZ) have become investment- and industrial hubs for developing countries seeking economic growth and development since China successfully established its first economic zones in its southern region, mainly in Shenzhen, Xiamen, Shantou and Zhuhai in the 1980s. The „model‟ is sought after for application across Africa. Recently, South Africa, through its Department of Trade and Industry (DTI) has issued a draft bill which considers creating SEZs. What is the experience with SEZs in China and Africa and what are lessons from other such zones for South Africa? Special Economic Zones are designated geographic areas with specifically designated liberal commercial and economic policies aiming at attracting more foreign investments. China for many African countries is seen as an economic growth model; the „middle kingdom‟ ranks as the world‟s second largest economy. The increasing density of Sino-African relationships over the last decade has boosted investments and trade in Africa, and it has contributed to China‟s modernisation and its rise on the international scene. For example Shenzhen, which was a small village, has rapidly become a modern city right next to Hong Kong. With its Special Economic Zones, China has attracted outward Foreign Direct Investment which has enhanced the creation of employment, generated investments and technology transfer. Such success was achieved through economic reforms following the “open door” policy in the late 1970s, namely trade liberalisation and market openness, as well as extremely liberal labour regulations.