Pudong Special Economic Zone

Last updated by david at 2015/5/20

The Pudong District of Shanghai lies near the center of the city, east of the Huangpu River, which divides the city into two halves. Pudong literally means "Pu east", the "Pu" being the Huang ("Yellow") Pu River, or the Huangpu, as it is most commonly written (the western half of the city, "Pu west", is Puxi). Shanghai is divided into 18 administrative districts, of which Pudong is the largest, comprising some 520 square kilometers.  Pudong New Area did not arise out of the blue, as it were, but is part of a larger drive on the part of the government of the PRC to develop the country via the establishment of a number of key, regional economic zones, generally called Special Economic Zones, which, according to the theory at least, will serve as economic locomotives for the regions in question.

2-Day Shanghai Highlights Tour from Beijing

The ultimate goal of the Special Economic Zone is increased wealth, both at the individual level and for society as a whole, for rising incomes provide not only the wherewithal for the individual to better him-/ herself, but also the wherewithal for the state, via taxation, to provide better infrastructure, defined in the broadest sense, i.e., to include better healthcare, education, etc. A necessary part of the construct of the Special Economic Zone is of course that it is a means to shortcut the normal lengthy process of bureaucracy that might otherwise hinder the smooth and rapid development of a region.

Pudong New Area (PNA) was launched in 1990, and, by all reckonings, is already a resounding success. In the two decades since its establishment, it has transformed the city of Shanghai - which was formerly little more than a large fishing village surrounded by farmland, where the large majority of the population existed on a subsistence-level income - into a highly prosperous center of trade, with a modern, bustling, tourist-friendly metropolis at its core that can also satisfy its inhabitants' desires for much more than simply the basic necessities of life; Shanghai is not only a center of commerce, but a center of culture as well, with countless museums, theatres and galleries, with riverside restaurants, cafés and fitness centers, with international-class hotels and shopping malls, and with a number of  green parks as well as riverside walkways, not to speak of the city's modern skyscraper skyline which blends in tastefully with the older, Colonial Era architecture of the city across the river in the Puxi area.

PNA consists of four sub-zones, each corresponding to a specific function within the Special Economic Zone. A brief description of the PNA's subzones follows.

Lujiazui Finance and Trade Area

Together with the Bund (located in the Puxi area), the Lujiazui Finance and Trade Area (LFTA) will act as the city's financial district (think of Manhattan in NYC, or of the City in London). Its function is to facilitate the financial side of the development of the PNA, that is, encouraging and facilitating investment partnerships, most notably foreign direct investments, etc. The LFTA is expected to be completed in 2013. The major buildings already here include the Pearl of the Orient Tower, the Jin Mao Building, the Bank of China Tower and the Shanghai World Financial Center. Most of the world's major investment banks have branches in the LFTA, including Morgan Stanley, Barclays, HSBC (Hongkong and Shanghai Banking Corporation), ABN Amro, Bank of America/ Merrill Lynch, Bank of Tokyo Mitsubishi, Credit Suisse, Deutche Bank, UBS, and Standard Chartered Bank.

Jinqiao Export-Processing Zone

The Jinqiao Export-Processing Zone (JEPZ) lies in the center of the PNA, and is slated to cover about 20 square kilometers. This zone is intended to be the industrial heart of the PNA, with an emphasis on the following outsourced-to-China industries: IT and communications hardware; automobiles and component parts; major household appliances; and foodstuffs/ pharmaceuticals/ new-materials (mainly plastics) processing. Some of the major brands currently represented in the JEPZ include Shanghai GM, Alcatel Shanghai Bell, Sony, Hitachi, Toshiba, Shanghai Sharp, Shanghai LG, Shanghai Huahong-NEC, Shanghai Kyocera Electronics, Siemens Mobile, Kodak China, and Johnson Cosmetics - in fact, almost any brand-name household appliance is made here.

Waigaoqaio Free-Trade Area

The Waigaoqaio Free-Trade Area (WFTA) will cover about 10 square kilometers when completed. It serves three main tariff-friendly and/or manufacturing functions:

a)  as a typical free-trade port, or free-trade import distribution center, where the tariff, usually demanded of wholesalers "up front" (i.e., upon entry in the country), is deferred until the imported item is purchased by the retailer, meaning that it is first taxed when it leaves the free-trade area and enters into a non free-trade area of the country (think of this as "just in time" tariff imposition);

b)  as a center for the duty-free import of expensive, high-tech equipment used in the final-phase manufacturing/ inspection of high-tech components, such as microchips (since the inspection of, for example, microchips - even with high-tech equipment - is labor-intensive, it is a prime candidate for outsourcing to markets with lower labor costs); and

c)  as an "assembled-in-China" center for high-tech industries, where various parts from around the world that go into, for example, a television (some parts may come from the US, others from the EU and Japan, etc., while still other, more labor-intensive parts such as the chassis may be made in China itself), are shipped to Shanghai to be assembled, with an eye to being shipped to markets all over the world where the item is sold, and where some of those items may be destined for the Chinese domestic market. The here-and-now benefits of the WFTA is that its jobs provide income to Chinese workers and tax revenues to the Chinese state, while the long-run benefit of these WFTA initiatives is that China moves from being a strictly labor-intensive economy to a mixed, labor-intensive/ capital-intensive economy, partly via just such "learning by doing" initiatives. In fact, China is already moving away from simply being a labor-intensive, "assembled-in-China" center, and one that increasingly itself manufactures high-tech items such as microchips.

Zhangjiang High-Tech Park

Zhangjiang High-Tech Park (ZHTP) lies in the south of the PNA, and will span about 17 square kilometers when completed. It is something of a mixed bag of initiatives, mainly focused on the healthcare industry, both as regards biochemical and pharmaceutical industries as well as healthcare-related hard- and software (everything from hospital equipment to pacemakers and the software, where relevant, by which they operate). Much of the emphasis at ZHTP is on education as well as on research & development.


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But Pudong is more than simply the hard, cost-effective business side of the PNA - it is a living, breathing part of greater Shanghai that also takes pride in its softer values. Here you will find green parks, plazas, museums, street markets, etc. The Shanghai Oriental Art Center and Technology Museum, for example, is located on Century Avenue (you will recognize it from its gargantuan sundial). Century Park is of course nearby, where you will see children skating or flying kites, and it is even said that if you look up at the modern skyline of the PNA from Century Park's central plaza, you might feel yourself transported to the set of a Star Wars film, so striking is the similarity!

A new Disneyland, even larger than the one in Hongkong, is under construction in Chuansha Town, Pudong, and is expected to open in time for the launch of Expo 2010, which will also be held in Pudong. From its recent role as a humble coastal fishing village/ subsistence-level farmland, Shanghai has indeed come a long way - and in a record-breaking short time span - thanks in no small part to the PNA.


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