A new industry policy paradigm is around the corner. This is the third in our series of cp.signals analysing major emerging trends: supply chain security, green development, advanced manufacturing, digitisation.

barely a year after being urged to ‘go global’, high-tech zones are on notice to hunker down, collaborate and form ‘complete’ industry chains

Beacons for foreign investment and knowhow, and catalysts for reform, industrial zones across the country are now being re-purposed to serve the rising paradigm of dual circulation.

Zones, suggests the 14th 5-year plan, are to focus less on attracting FDI and more on ensuring domestic supply chains are fail-safe. New criteria rate domestic zones by their deftness in competing less, and collaborating more.

attracting FDI falls as a priority

What dual circulation means in practice is being worked out in industrial zones: a crossroads of central and local government, foreign and domestic companies, factories and labs. FDI is still welcomed by zone management, especially in less developed parts of the country. But national policy seeks to shift priority away from favourable deals to attract international capital and expertise and towards the domestic market, making it more difficult for global firms to negotiate (or indeed extend) special arrangements with zone management that have been known to exceed national guidelines. Escalating pressure on local officials to strictly follow Beijing directives does not help.

China has many types of industrial development zones. The largest categories are high tech and econ zones. A 5-year plan for the former is forthcoming. It strives to align their international efforts with the BRI (Belt and Road Initiative), suggest work priorities for 2021 issued in June by MoST (Ministry of Science and Technology) Torch Centre, administrator of these zones.

State Council a year earlier (July 2020) was still urging high-tech zones to set up overseas innovation centres, incubators and joint zones and to help firms located within them to ‘go global’. As with FDI, individual parks, firms and research institutes appreciate international partnerships that help them stand out domestically. For Beijing, the point now is prioritising BRI in structural terms, to align with the prevailing view of it as part of the internal cycle.

high-quality zones to serve ‘patriotic imperatives’

As self-reliance continues to outflank older ‘going global’ priorities, zones are inevitably being pressed into its service. The July 2020 State Council policy had defined ‘high-quality’ development in terms of global competitiveness, tasking high-tech zones with, by 2035, catapulting industries into the mid- to high-end of global value chains. By contrast, MoST‘s Torch Centre gave itself the job of asserting domestic control over supply chains in 2021, following cues in the overarching 5-year plan. The 43 innovative industry clusters that Torch recognised in August are charged with concentrating resources, strengthening industrial chains and breaking tech bottlenecks, i.e. hunkering down.

In this context, coordinated development is urged on zones of the same type. But Collaboration across categories of zones is endemically hindered by the PRC’s bureaucratic silos. The two main zone types—high-tech (12 percent of national GDP) and econ (10 percent)—are the ‘jewels’ of different ministries (MoST and the Ministry of Commerce). Evaluation criteria for high-tech zones, updated in April 2021 push those with success stories to extend their radius of impact, explains Jia Jingdun 贾敬敦 MoST Torch Centre. Smaller zones will be asked to pool resources and catch up.

Collaboration between zones is deemed most urgent in sprawling megalopolises, which serve as a model for other regions: Jing-Jin-Ji (around Beijing), Yangtze River Delta (around Shanghai) and the Greater Bay Area (around Guangzhou) are seeking to complete industry chains by getting their industry zones to collaborate more. The layout of high-tech and econ zones should, suggests the 14th 5-year plan, link up with specified innovation hubs in these cities. Alliances like that on integrated circuits in the Yangtze River Delta (see profile) show how high-tech zones can further lead China’s industrial competition, comments Liu Huiwu 刘会武 Chinese Academy of Science and Development. Joint industry and R&D projects, framed as development catalysts within urban clusters, will help international stakeholders gain support from Chinese officials.

hungry hinterland still smiling on FDI

But the best prospects for international players are beyond the overcrowded coast. Relocating industry to the hinterland is the centrepiece of Beijing’s strategy to buck the perceived natural trend of outsourcing production to lower-income countries. FDI could take cues from the 14th 5-year plan, which aims to complete domestic industry chains and prevent sections of the chain from leaving the country. Encouraging industry to move away from the coast is also highlighted in the plan; it follows that central, western and northeastern regions will be keen to attract those relocating, and will need help (read: FDI). Explore cross-local incubators, the enclave economy and sister zones, suggest State Council ‘Opinions’ on high-tech zones.

This is reiterated in regional plans. Attract manufacturing that is looking to relocate, stipulates the central region masterplan issued 23 July 2021, and enable a free but orderly flow of international and domestic factors of production. Infrastructure is to be improved, and demo zones for industrial transfer expanded.

Low-end manufacturing remains a development trap, a decade after the launch of demo zones. Looming carbon neutrality targets and a rapidly ageing labour force make steering around it more urgent than ever. The hinterland suffers from lower education levels, less developed business environments and less official savvy or experience in attracting investors, and coastal provinces instructed to share best practice hate to lose high-earning industries. Cross-regional collaboration is covered in the forthcoming 5-year plan for high-tech zones, said the Torch Centre, aiming for a coherent national configuration for innovation. As dual circulation reshuffles national priorities, the role of FDI will be downgraded, but still significant.

high-quality industrial zones
Already converging, the differences between high-tech and econ zones will erode further in the coming five years, noted CCID, an MIIT (Ministry of Industry and IT) think tank when it issued a combined ranking in August 2021

  1. Zhongguancun high-tech zone (Beijing)
  2. Zhangjiang high-tech zone (Shanghai)
  3. Shenzhen high-tech zone (Guangdong)
  4. Suzhou industrial park (Jiangsu) recognised as a national econ zone in 1994
  5. Guangzhou econ zone (Guangdong)
  6. Wuhan Donghu econ zone (Hubei)
  7. Chengdu high-tech zone (Sichuan)
  8. Guangzhou high-tech zone (Guangdong)
  9. Beijing econ zone (Beijing)
  10. Xian high-tech zone (Shaanxi)

source: CCID


MoST Torch Centre 科技部火炬高技术产业开发中心

Set up in 1988, the Torch Centre promotes industrial application of new technology. Promoting market-oriented R&D has been a priority; most funding has come from enterprises and banks rather than government. The centre ranks all high-tech zones every February; evaluation criteria were updated in 2021, with quantifiable indicators gaining weight, from 80 to 89 percent. These include patents, successfully commercialising R&D, start-up quality, economic performance, firm competitiveness, energy-use per unit of growth and carbon emissions. Newly-registered companies, scitech SMEs, tech and other leading firms are counted in the index, measuring how much tech is effectively nurtured.

Yangtze River Delta IC High-tech Zone Alliance 长三角集成电路产业国家高新区创新发展联盟

Set up in April 2021 under Torch Centre supervision, the alliance represents the top six high-tech zones in the Yangtze River Delta: Wuxi, Zhangjiang (Shanghai), Nanjing, Hangzhou, Hefei and Suzhou. In 2020 the output value of the IC firms in these zones exceeded 350 bn (~UD$52.5 bn), or some 40 percent of the national total. By coordinating production strengths and R&D efforts, the alliance seeks to promote self-sufficiency and break foreign tech reliance in this vital sector.

Wanjiang urban belt industry relocation demo area 皖江城市带承接产业转移示范区

A stretch of the Yangtze River, the Wanjiang urban belt traverses Anhui province, from Maanshan in the northeast, through national-science-hub Hefei and southwest to the outskirts of Nanjing in neighbouring Jiangxi province. Wanjiang’s bid to become a national relocation industry base was approved by NDRC (National Reform and Development Commission) in 2010. Over the next decade 6.2 tn (~US$930 bn) was invested, reported an NDRC review in 2021. GDP grew 9.2 percent every year, 0.4 percentage points above the rest of the province. Large facilities built by BOE Technology (pictured) attracted suppliers. Emerging industries are the next focus: ten ‘supply chain chiefs’ have been appointed to boost them. Training of talent is another priority, leveraging Chinese Academy of Sciences-affiliated China University of Science and Technology in Hefei. Infrastructure investments in the demo area are in the abovementioned central region masterplan.

‘enclave incubator’ Nanning-Zhongguancun Shenzhen Collaborative Innovation Centre “飞地孵化器” 南宁市-中关村深圳协同创新中心

Nanning city launched an office in Shenzhen in December 2020, collaborating with Beijing Zhongguancun. The 2,300 m2 ‘enclave incubator’ will attract high-tech firms and investment to relatively underdeveloped Guangxi province, above all to its high-tech and econ zones. Support measures available in Nanning, e.g. tax rebates for R&D investment and packages for top talent, will be extended to the enclave. Fourteen firms had been incubated by August 2021, reports Xinhua, noting Guangxi programs to lure international talent and promote trade in goods and (digital) services in ASEAN. In the past three years, Zhongguancun, itself a leading high-tech zone, has helped Nanning set up local branches of national research institutes and innovation platforms.


20 Aug 2021: 43 ‘pilot innovative clusters’ announced by MoST, the majority in high-tech zones

23 Jul 2021: ‘Opinions on improving high-quality development of the central region in the New Era’ issued by CCP Central Committee and State Council

1 Jun 2021: MoST Torch Centre issues work priorities for 2021

22 Apr 2021: ‘Comprehensive evaluation index for national high-tech zones’ issued by MoST

2 Feb 2021: ‘Implementation plan for national high-tech zone green development campaign’ issued by MoST, setting targets for reducing emissions relative to output value

15 Dec 2020: ‘Liaoning industry relocation demo area’ approved by NDRC, the ninth such zone nationwide

17 Jul 2020: ‘Opinions on the high-quality development of high-tech zones’ issued by State Council

28 May 2019: ‘Opinions on urging further innovation and opening-up of national econ zones’ issued by State Council

26 Mar 2018: 12 national high-tech zones approved by MoST, raising the total to 169; no national high-tech zones have been approved since (as of 3 Sep 2021)

10 May 2017: ‘National high-tech zone development 13th 5-year plan’ issued by MoST, calling for 240 high-tech zones by 2020

in case you missed it…

cp.signals—domestic policy movement
nerves of steel: greening heavy industry
capitalising the countryside

cp.positions—audit of shifts across policy sectors
cp.position: macroeconomy, scitech, agriculture, energy and environment
cp.position: society, governance, trade policy

cp.observer—monthly roundup
august: equity is back as tech giants take a hit
july: ramping up regs and spooking markets