The Chinese Special Economic Zones and Foreign Direct Investment in Portuguese-Speaking African Countries: Challenges and Opportunities

The Chinese Special Economic Zones and Foreign Direct Investment in Portuguese-Speaking African Countries: Challenges and Opportunities

Enrique Martinez-Galán, Fernanda Ilhéu, Hao Zhang
Copyright: © 2022 |Pages: 24
DOI: 10.4018/978-1-7998-7619-9.ch014
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Abstract

The Portuguese-speaking African countries (PSAC) have been at the forefront of the Chinese presence in Africa. These countries have been no exception in the Chinese strategy to use Special Economic Zones (SEZ) around the globe as an effective tool to promote international trade and foreign direct investment with mainland. However, the establishment of SEZ does not necessarily warrant success in boosting investment and trade. The performance of SEZ worldwide has so far been mixed and many have not performed well for reasons such as poor site locations, uncompetitive policies and lack of differentiation, poor development practices, and bulky processes and ill-designed administrative frameworks. The authors look at two case studies of Chinese SEZ in PSAC, namely in Angola (Bengo SEZ, Luanda) and Mozambique (Manga-Mungassa SEZ, Beira), to discuss their common characteristics. The authors draw lessons on how to make Chinese SEZ in Africa work bearing in mind country-specificities.
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The Origin And Role Of Special Economic Zones In China

As referred in the previous section, the creation, implementation and development of SEZs is contextual to the income-level and economic policies of each country. The aims, objectives, purposes and policies (both domestic and foreign) of Chinese SEZs are therefore contextual to China, as initially pointed out by Stoltenberg (1984) in the context of China’s Open-Door Policy.

The economic development model of China was implemented by Deng Xiaoping in 1979, learned from the economic development models practiced after the Second World War by Japan, Singapore and, later, South Korea. These models were based on the implementation of labor-intensive export-oriented light industries. These industries created jobs, prosperity, and significant foreign exchange surplus. However, to initially develop this model, Beijing needed to attract foreign investors that could bring capital, technology and access to foreign markets, so the Chinese government incorporated the SEZs as one of the main pillars of its economic development model. Table 1 lists the main objectives for the creation of SEZ for China.

Table 1.
Main objectives for the creation of SEZ in China
#Objective
1Receive foreign capital, advanced technology, and managerial skills
2Stimulating the modernization of the country at both regional and national levels, in terms of building infrastructure and other facilities
3Promote interregional competition and international trade
4Conduct experiments in structural economic reforms in support of the above objectives
5Create job opportunities

Source: authors.

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