Yunnan proposes cross-border special zone with Laos

July 21, 2012

According to Yunnan Ribao 云南日报, Yunnan Province has proposed to Laos’ Luang Namtha Province to set up a Mohan-Boten cross-border special economic zone (SEZ) based on the “two countries, one zone; separate administrations, joint planning” 两国一区、分别管理、统筹协调 model. According to the proposal, this would require an agreement between the two national governments.

Earlier this year, the prefect of Sipsongpanna, Dao Linyin 刀林荫, announced that a Chinese-Lao cross-border nature reserve established in 2009 would be expanded to 1.5 million mu (100 thousand ha), in part to promote tourism. A previous report by Xinhua claimed that the initiative encompassed 550 thousand ha in Sipsongpanna Prefecture and Laos’ Phongsaly Province, and that talks were underway with Burma’s Shan State Special Region 4 to create a similar zone.

Currently, the Golden Boten City Special Economic Zone in Laos is the private concession of a Chinese company, which recently acquired it from its earlier, Hong Kong-registered concessonaire. While the latter had sometimes conflicted relations with the Yunnan officialdom — and was eventually forced by the Chinese government to roll up its gambling business — the new owner is said to be a high official from Sipsongpanna Prefecture in Yunnan, and may be better positioned to broker between the two governments. Although Golden Boten City has often been described by Western observers as essentially an extension of China, I argue in a recent article that its private investors used the paraphernalia of the Chinese state to enhance their own developmental clout. But if the new plan is implemented, the special zone will become more closely intertwined with Chinese bureaucracy, and questions about sovereignty may have to be asked anew.


“Instant city” plans in Georgia are said to follow Chinese model

April 23, 2012

Ellen Barry writes in The New York Times that plans to build an “instant city” in Georgia (the country), hatched by President Mikheil Saakashvili four months ago, seem to be inspired by China’s experience. Saakashvili wants the new city, Lazika, to be the country’s second largest in ten years.

Deputy Minister of Justice Giorgi Vashadze said he found the idea of a “charter city” on the Internet and envisioned the new city as one of these, built by foreign investors and with “distinct regulatory and judicial systems” in which all who come to the city to invest or work enjoy the same rights. It is not clear whether Vashadze envisages such a regime for the new city.

The term “charter city” is currently being championed in poor countries by the libertarian US economist Paul Romer, who defines them as “city-scale special administrative zones.” This is very similar to the declared plans in the new Chinese concessions in northern Laos, and broadly to the special zones advocated by China in Africa. Most recently, the Albanian prime minister proposed a Chinese-invested free zone. According to the NYT article, Georgia is hoping to attract both Western and Chinese investors to Lazika.

Albanian premier proposes Chinese free trade zone

April 12, 2012

During Chinese Communist Party Politburo member Liu Qi’s visit to Tirana on 18 March, Albanian Prime Minister Sali Berisha

expressed readiness “to support the creation of a free zone for Chinese investments, which can use this favourable position [in Albania] for further penetration in the European markets,” reports. The article also mentions that both Albania and Serbia are introducing the teaching of Chinese in primary and secondary schools.

This is the first time that the special-zone model of Chinese investment, which China has officially promoted in Africa with UNDP’s endorsement and which has also spread to Indochina, has been mentioned in the European context.

World Bank and UNDP endorse Chinese special economic zones as model for African poverty alleviation

January 15, 2012

The International Poverty Reduction Centre of China (IPRCC) and the UN Development Programme (UNDP) co-organised a seminar called “China’s SEZs and Poverty Reduction” in  Shenzhen on 9 January. In his speech at the seminar (link forwarded by Yoon Jung Park to the China-Africa mailing list), Christophe Bahuet, UNDP’s China Country Director, said that “China’s Special Economic Zones … offer many valuable experiences and lessons for other developing countries” and expressed his confidence that “this seminar will lead to a useful exchange on good practices, opportunities and challenges for Special Economic Zones in developing countries.”

This endorsement comes after one by Justin Lin, the World Bank’s senior vice president and chief economist, in the prestigious annual UNU-WIDER lecture to the United Nations University in May last year. Lin, who previously was a professor at Peking University, a member of the National People’s Congress and holder of other offices in China, includid setting up special economic zones among his six recommendations for “developing countries” that he called a “road map” to economic growth. (In the same speech, he likened China to a “leading dragon,” rather than a mere “leading goose” as in the expression “flying geese,” that will be the source of structural transformation in these countries.)

In the past, the United Nations Industrial Development Programme (UNIDO) has endorsed special economic zones in Laos and Cambodia and in Nepal (the latter was specifically related to a Chinese project and later retracted by higher-ups in the organisation). But UNDP has tended to be more “pro-poor” and less sanguine about the growth model these zones represent.

Chinese minister of commerce reaffirms focus on agriculture in Africa

October 2, 2011

Chen Deming 陈德铭, the minister of agriculture, told 21st Century Economic Herald 21世纪经济导报 that he spends his vacation in Africa every year. In line with earlier government statements, but adding some new elements, he said China will prioritize investment in agriculture, manufacturing, finance, trade and environmental protection in Africa. He also said it will accelerate the construction of “economic cooperation zones” and concentrate financing in large-scale infrastructure projects. Agriculture will be the focus of aid, through the establishment of demonstration centres, in particular in the four cotton-producing countries in Northwest Africa where the centres will build up manufacturing chains from cotton to garment. Chen explicitly recommended African governments to learn from China’s example in establishing special economic zones.

The article notes that this is in line with World Bank President Robert Zoellick’s plea that China shift some of its low-value-added manufacturing to Africa.

Chen further offered China’s help in drawing up master plans for regional integration in Africa, including the linking of electricity and transport grids.(Several Chinese commentaries recently have suggested that China focus on exporting infrastructure built to its own specifications, as this will strengthen its economic and political position in the future.)

More private Chinese investment in African manufacturing

September 23, 2011

Local media in Wenzhou — reputed as China’s capital of private entrepreneurship — report of growing interest in private  investment in African mining as the government has clamped down on small-scale mines in China. The article quotes a lawyer, however, as saying that only 1% of these investments actually succeed. (According to another article, though, 90% of  mines in Katanga Province of Congo-Kinshasa are small Chinese-owned mines with proprietors who sailed in on the tailwinds of state mining companies, each with only some tens of local workers.)

A third article from Wenzhou reports on the expansion of investment in manufacturing in a series of both state-supported and private special manufacturing  zones in Africa, a practice Wenzhounese businessmen are also engaging in in Central America. This practice has grown out of trading: Wang Jianping, for example, started importing shoes to Nigeria in 2001, set up a shoe factory there in 2005 (claimed to be the largest such factory in West Africa, with 600 local workers), and is now setting up a ceramics factory in the industrial zone he established. Nigeria has two more such Wenzhounese zones. Another businessman set up a factory in Egypt, commenting that wages there, at about 1,000 yuan a month, are much lower than in China, and there are export opportunities to the Arab Gulf and Europe.

The article says that the Wenzhou city government assists the expansion of businesses to Africa by organising special trainings and promotions of various African industrial zones. By 2010, city data show an investment of $50 million in Africa.

Lake Victoria East Africa Free Trade Zone vanishes

September 14, 2011

The Lake Victoria East Africa Free Trade Zone, also known as the Ssesamirembe Eco-City, has for a while looked like one of the largest Chinese concessions in Africa and one with the most intriguing portfolio of agricultural, industrial, residential, touristic, you-name-it development on 518 hectares and plans to attract 500,000 Chinese settlers. We even offered a PhD scholarship to do research on it. Although no news of its development ever transpired, the concession seemed real enough, with photos of its signing by senior Ugandan officials in Peking. It was also linked to that Phantom of Africa, Liu Jianjun.

Now our new student, Josh Maiyo, is ready to start his research. But in the meantime, references to the Chinese project, and to the free trade zone, have disappeared from Ugandan media. According to a May report on Ugandan radio, local residents were planning to reoccupy the area after development plans failed to materialize. Intriguingly, the report makes no reference to the Chinese role in the plans except that “residents have lost hope for Ssesamirembe after they discovered that China wanted to grab their land and use it to settle some of her people there under the guise of establishing a free trade zone.”

But Liu Jianjun himself refuses to go away. In August, the magazine 中国商界 (Chinese Business Circles) published a long, adulatory portrait of him, entitled “Liu Jianjun’s African legend” and enumerating his photos with Chinese leaders, his honorary African titles and his visionary ideas with even more fervour than the earlier reports. The only reference to the extensive questioning, also in Chinese media, of Liu’s credibility is a mention of a court case in which Liu supposedly won a libel suit against a newspaper. Point taken.

I can’t resist quoting some of the more extravagant Liuisms. All he wants to do, Liu says, is “to take China’s excess of peasants, standard technologies, machinery, products, and money to Africa, which has an excess of land, assembly labour, raw materials, market demand and natural resources.” Liu at his neoclassical best: straight out of Ravenstein’s Laws of Migration, A.D. 1889. Except that he adds that “the Chinese race’s stress on righteousness and neglect of profit” (中华民族重义轻利) guarantees the benevolent nature of the enterprise.

Liu also relates a meeting with Hu Deping, a deputy director of the Chinese Communist Party’s Únited Front Department six years ago, in the course of which Hu told him that “only by expanding the influence of Chinese culture in Africa can Africans’ [presumably negative] attitudes be fundamentally changed, because the industrious, honest, charitable, and enthusiastic character of the Chinese race is a great spiritual wealth.” It is this injunction, Liu claims, that prompted him to draw up the “Rules of Establishing Baoding Villages” 保定村组织颁发, the “Baoding Villagers’ Compact” 保定村民公约, and the “Charter of Temporary [Communist] Party Branches in Baoding Villages” 保定村零食党支部条例 and to commission a composer to write a Baoding Village Song, all of which used to be available on the Baoding Villages website, since closed down.

Liu is further claimed to have established a martial arts school in Kampala; to have brought youth from 42 African countries for training to Baoding, to have arranged for youth from Rakai to study Chinese and for young Tanzanians to study at a vocational school in Weifang, Shandong Province. Perhaps the most outlandish of all is his launching of the brand “Chieftain” (酋长), which covers products from motorcycles to wine and whose logo is adorned with Liu’s own head. (One of Liu’s favourite boasts is that he has been given the honorary title of chief in an African country.) An unnamed “former senior leader at the foreign ministry” is said to have encouraged Liu to expand the range of Chieftain products to one hundred, because “only when cultures come together is there sustainable partnership.”

Liu is obviously quite undeterred by criticism, ridicule, and official embarrassment. He just won’t tone himself down. What makes him happiest, he says, is “seeing Chinese people have 99-year concessions on thousands, tens of thousands of mu … ; seeing queues of dozens of metres in front of Chinese hospitals; seeing young people speak fluent Chinese … ; seeing Wuhan Steel’s brigades put up the frame of the 80-thousand-square-metre Chinese wholesale market; seeing Tanzanian gems, manganese ore, and agate packed into containers leaving for Tianjin; seeing Chinese planters, construction workers, the sounds of merriment and laughter at entertainment centres.”

That, at least, is a clear vision of development.

So once again, is it worth taking Liu seriously? It is hard to do so, and yet it is also hard to believe that he would dare to repeatedly make such outrageous boasts and take the name of senior officials in vain if there were nothing behind him.