THE ROLES OF SESs IN CHINA's DEVELOPMENT MODEL

Special economic spaces (SESs) are geographically delineated areas with a special legal regime to govern investment and business activities, and they have been widely adopted since the 1960s as part of a place-based development strategy by most developing and many developed economies. Although SESs are known by many different names, they often provide a regulatory regime for businesses and investors that differs from other areas in the same country. SESs are not unique to China, but their appearance in China is extraordinary in terms both of their number and their diversity. According to the World Investment Report 2019 (UNCTAD 2019), there were 2,543 SESs in China that year, accounting for 47.2 per cent of the world total. China's SESs have made crucial contributions to its economic success and social development since the 1980s (Wang 2013). The promotion of economic development and institutional reform through the establishment of various SESs is an important component of China's development model (Dunford & Liu 2015; Lim 2019).

SESs have played two critical roles in promoting China's development. First, they are often the testing labs for new policy experiments (Lim 2017; Bräutigam & Tang 2014; Heilmann 2008; Heilmann & Perry 2011). Unlike the “shock therapy” imposed in the former Soviet “socialist” bloc, China adopted a gradualist approach to socio-economic reforms, with the political objective of maintaining fundamental Marxist– Leninist principles. Because no predetermined playbook guided this process, reforms were often tested first in a defined territory. Thus, place-specific experimentation has been considered a part of “feeling for stones while crossing the river”. The strategic objectives of new experimental programmes and their testing regions tend to be chosen by the central government, however. For example, the four small areas in Guangdong and Fujian Provinces with strong linkages with overseas Chinese were selected in the late 1970s to test market-oriented policies and practices. Later many of their successful policies were then applied to 14 coastal cities, and only later to other parts of China. Moreover, entering the new millennium when facing new challenges, China initiated large-scale experiments.