Since the year 2000, China has increasingly sought to expand its influence abroad through ambitious infrastructure and investment programs like the Belt and Road Initiative (BRI). One integral component of China's BRI strategy is the establishment of overseas Special Economic Zones (SEZs), geographically distinct areas of special economic and legal incentives.¹ Often, these take the form state-supported joint ventures between Chinese companies and a host local or national government. While these overseas SEZs are intended to provide both China and the host nation with a variety of economic benefits, studies suggest that China's overseas SEZ model has a mixed track record.² Despite this, China has continued to promote overseas SEZs, and it is likely that the zone model will remain a core component of China's external economic engagement.

Though the economic and political impacts of China's overseas SEZs have drawn much interest, other important impacts from zone development remain under-analyzed. Few studies have attempted to assess the sustainability practices of China's overseas SEZs, despite China's claims that the BRI emphasizes sustainability as a primary goal.³ As such, it is imperative to understand whether China's developments abroad align with its public rhetoric promoting social development and environmental protection, or whether China's overseas SEZs simply serve as an avenue for China to export environmentally harmful industry and social practices abroad.

Why SEZs?

Beginning in the 1980s, SEZs provided an important starting point for China's rapid domestic growth. These zones permitted radical experimentation with more efficient, market-oriented rules before a national commitment to economic reform was feasible. Designating specific zones allowed economic planners to concentrate capital and infrastructure in the hope of achieving new levels of economic efficiency. In the 2000s, including through the launch of the BRI in 2013, China sought to popularize its domestic SEZ development model and deploy it to other nations.⁴ However, a primary focus on growth in China's development model has also manifested social and environmental sustainability concerns. As China attempts to solve these domestic challenges, this begs the question: is China incorporating the lessons it has learned from building SEZs domestically as it replicates them in far-flung corners of the globe?

Scoring and Metrics

In this three-part series, we analyze the environmental, economic, and social sustainability features of China's overseas SEZs. We generate a series of preliminary indicators, that can be verified through open-source research and imagery analysis, to analyze the impact of 10 selected zones on local sustainability conditions. We focused on zones that receive the a "state-level" designation from China's Ministry of Commerce.⁵ If China's national government decides to highlight these zones, we expect a higher level of social and environmental accountability. Readers can download the excelStructured Data of SEZ Scoring and Metricsscoring and metrics data and view kmlGlobal SEZ Facility AnnotationsSEZ facility annotations and satellite data.

Environmental sustainability

As hubs of economic activity, China's overseas SEZs have the potential to generate large impacts on the surrounding environment. How well these SEZs manage and mitigate these impacts present an opportunity for China to establish itself as a global environmental leader. Inspired by China's domestic standards for SEZs, we generated metrics for land use, water quality, air quality, and waste management.⁶ These metrics provide an initial means to evaluate whether China's overseas SEZs minimize environmental degradation and ensure the sustainable use of natural resources.

Social sustainability

Social sustainability is the ability to maintain a good standard of living within a community without having to lower that standard for future generations, and is an integral component of sustainable development.⁷

In assessing social sustainability, we analyze the following: health, education, quality of life, and labor relations. These indicators provide a good cross-section of development practices to evaluate whether China's overseas SEZs promote the well-being of the zones and surrounding communities, as well as the zone's capacity to support future generation's ability to maintain healthy and vibrant communities.

Economic sustainability

An SEZ's core purpose is to promote economic activity, trade, and development. Although host countries may seek to promote the growth of local industries, SEZs most often host foreign companies who manufacture and produce products for domestic consumption or export. Infrastructure to deliver inputs and distribute or export finished products is critical; without it, zones are likely to be unsuccessful. We thus evaluate the proximity and quality of roads, ports, airports, and rail links as a preliminary metric for an SEZ's long-term economic potential.

How the Rubric is Applied: Pengsheng Industrial Park

The Pengsheng Industrial Park is located near Syrdarya, Uzbekistan, and is one of China's attempts to foster goodwill and economic ties to Central Asia.

Environmental sustainability

We can observe that Pengsheng maintains and operates its own water treatment facility, identified often by the unique combination of round and rectangular water tanks in close proximity. This on-site treatment facility earns Pengsheng points in our scoring rubric for environmental sustainability.

Social sustainability

Pengsheng also provides worker apartments next to greenspace used as a park. This worker housing is an important visual indicator for social sustainability, but must be balanced with research on both the quality of the housing, and whether the apartments are for local workers or simply imported Chinese employees.

Economic development and sustainability

Pengsheng is located along a major highway that connects directly with Uzbekistan's capital of Tashkent and its major international airport. Pengsheng is also near a capable rail yard that can also be used for distributing goods from the zone either directly to neighboring cities or to the international airport for export.

The rest of this series will explore Pengsheng and nine other Chinese overseas SEZs. Some Chinese-sponsored SEZs show much promise, while others appear to lag environmental and social best-practice.

References

1. Bost, Franois. "Special Economic Zones: Methodological Issues and Definition." Transnational Corporations 26, no. 2 (2019): 141-56.https://unctad.org/en/PublicationChapters/diaeia2019d2a7_en.pdf
2. https://africanbusinessmagazine.com/sectors/infrastructure/rise-and-stall-chinas-stepping-stone-to-nowhere/
3. "Xi's Report to 19th CPC National Congress."Xinhua News Agency, 2018.http://www.xinhuanet.com/english/download/Xi_Jinping's_report_at_19th_CPC_National_Congress.pdf
4. Brutigam, Deborah, and Xiaoyang Tang. "Going Global in Groups: Structural Transformation and Chinas Special Economic Zones Overseas."World Development 63 (November 2014): 7891. https://doi.org/10.1016/j.worlddev.2013.10.010; Dollar, David.Understanding China's Belt and Road Infrastructure Projects in Africa, 2019, The Brookings Institution.https://www.brookings.edu/research/understanding-chinas-belt-and-road-infrastructure-projects-in-africa/
5. http://www.cccme.org.cn/cp/cooperation/zones.aspx; http://www.cocz.org/index.aspx (Chinese)
6. https://www.iisd.org/sites/default/files/publications/development-eco-efficient-industrial-parks-china-review-en.pdf
7. https://www.unglobalcompact.org/what-is-gc/our-work/social