Annual Report on the Development of China's Special Economic Zones (2020) 9811992347, 9789811992346

Table of contents :
Editorial Committee
Contents
Part I General Report
1 Annual Report on the Development of China’s Special Economic Zones (2019)
The Basic Background of the Development of the Special Economic Zones in 2019
How to Understand a Series of Major Issues Such as Changing the Economic Development Mode in the New Stage of Development
Progress in the Special Economic Zones and Comments
Special Economic Zones Will Further Advance and Deepen Reforms in Many Aspects Including China's Social and Economic Development
Progress Regarding Cultural Elements in the Special Economic Zones
Progress in the Innovation of the Special Economic Zones
Progress Regarding the Elements of Ecological Resources of the Special Economic Zones
“New District” Shoulders the National Strategy
Challenges and Suggestions for the Development of Special Economic Zones
Special Economic Zones Should Stimulate New Growth Drivers and Carry Out Sustained and High-Quality Development
Population Aging Has Become a Serious Challenge Currently that the Special Economic Zone Must Face Up to
Suggestions for the Development of Cultural Industries in the Special Economic Zones
Development Path and Issues to Be Noticed in the Next Year
The Special Economic Zones Should Slow Down Their Economic Growth Rate, Especially the Growth Rate of Investment, and Shift to the Pursuit of Quality
The Special Economic Zones Should Speed up the Direction of the Adjustment of the Advanced Manufacturing Industry: Resolve the Paradox and Promote High-Quality Economic Growth
References
Part II Special Topics
2 Report on the Development of the Green Transformation of China's Special Economic Zones in 2019
Background of Industrial Green Transformation
Environmental Regulation and Industrial Green Transformation
Industrial Green Transformation and Innovation in China's Special Economic Zones
Command-and-Control Environmental Regulation in the Five Special Economic Zones
Market Incentives for Environmental Regulations in the Five Special Economic Zones
Voluntary Environmental Regulations in the Five Special Economic Zones
The Effects of Environmental Regulation and Industrial Green Transformation in the Five Major Special Economic Zones
The Status of the Improvement of the Efficiency of Resources
Status of Pollutant Reduction
Status of the Improvement of the Capability for Innovation
Evaluation of Industrial Green Transformation and Capability for Development of the Special Economic Zones
Significance of the Evaluation
Construction of and Data Collection for an Evaluation Index System
Process of Evaluation
Policies and Suggestions for Industrial Green Transformation in the Special Economic Zones
Strengthen Command-and-Control Environmental Regulations and Strictly Control Pollution
Adopt Market Incentives for Environmental Regulation and Encourage the Innovation of Enterprises
Encourage Public Participation and Create a Beautiful Environment
References
3 Report on the Resource Efficiency and the Sustainable Development of China’s Special Economic Zones
Framework of Analysis at Regional and Urban Levels
Analysis Framework—MFA
Sustainable Development Index
Data Collection and Processing
Results of the Analysis of Material Flow in the Five Special Economic Zones
Analysis of Material Flow Index
Analysis of the Structure of Material Flow
Resource Productivity and Pearce Judgment
Policy Recommendations
There Is a Certain Application Value of the Method of Material Flow Analysis in the Research on the Evaluation of Resource Efficiency and Sustainable Development
Innovative Development and Sustainable Development Put Forward Higher Requirements for the Efficiency of the Utilization of Resources
The Study of Issues Regarding Sustainable Development Requires the Establishment of a “Resource-Environment” System of Dual-constrained Evaluation
References
4 Report on Innovation and Development of China’s Special Economic Zones
General Overview of the Status of the Innovation and Development of the Special Economic Zones
Shenzhen Special Economic Zone
Zhuhai Special Economic Zone
Xiamen Special Economic Zone
Shantou Special Economic Zone
Hainan Special Economic Zone
Analysis on the Innovation and Development of the Special Economic Zones
The Existing Economic Scale Plays a Decisive Role in Innovation and Development
The Financial Status of the Government Has an Important Impact on Innovation and Development
Influence of the Conditions of the Location, Regional Cooperation, and the National Strategies
Suggestions for the Innovation and Development of the Special Economic Zones
Further Strengthen the Basic Environment for Innovation and Development
Promote Innovation and Development with Industrial Development
Take Advantage of Agglomeration Effects and Regional Cooperation
References
5 Report on the Development of Social Security in China’s Special Economic Zones
The Development of Social Security in the Special Economic Zones
The Status of the Development of Social Insurance in the Special Economic Zones
Statue of the Development of Social Assistance and Social Welfare in the Special Economic Zones
Achievements in the Development of Social Security in the Special Economic Zones
Achievements in the Development of Social Insurance in the Special Economic Zones
Achievements in the Development of Social Assistance and Social Welfare in the Special Economic Zones
Realistic Difficulties in the Development of Social Security in the Special Economic Zones
The Medical Security System Still Needs to Be Further Improved
The Social Security Funds Need to Be Further Supervised
The Social Security Policy and Regulation System Urgently Needs to Be Improved
The Development of Social Assistance and Public Services Is Lagging Behind
The Relationship Between Commercial Insurance and Social Security Is Not Clear
There Are Still Some Limitations in the Construction of Social Security Information
Policy Suggestions for Promoting the Development of Social Security in the Special Economic Zones
Promote the Linkage of “Medical Insurance, Medical Treatment and Medicines” and Strengthen Medical Security
Establish and Improve the Internal Control System and Strengthen the Supervision of Social Security Funds
Speed Up the Improvement of the Social Security Policy and Regulation System, and Create a Good Legal Environment
Encourage Social Participation to Expand the Coverage of Social Assistance and Promote the Construction of a System for Social Assistance
Clarify the Relationship Between Commercial Insurance and Social Security, and Give Full Flay to the Complementary Role
Promote the Integration of “Internet+” and Human Resources and Social Security Services, and Innovate Informatization Methods for Management Services
References
6 Report on the Development of the System of Elderly Care Services in China's Special Economic Zones
The Urgency and Importance of the Construction of a System of Elderly Care Services
Population Aging Has Become a Serious Challenge that Must Be Faced Squarely on
Strengthening the Construction of the Social System of Elderly Care Services Is a Key Task for Building a Moderately Prosperous Society in All Respects
Building a Social System of Elderly Care Services Is an Important Measure in Promoting the Sustainable and Healthy Development of the Economy
Establishing a Complete Social System of Elderly Care Services Is an Inevitable Requirement for Creating a Harmonious Society
The Basic Situation of the Establishment of a System of Elderly Care Services in the Special Economic Zones
Shenzhen Special Economic Zone
Zhuhai Special Economic Zone
Shantou Special Economic Zone
Xiamen Special Economic Zone
Hainan Special Economic Zone
The Experience and Development Prospect of Constructing the System of Elderly Care Security in the Special Economic Zones
Experience in the Construction of the System of Elderly Services in the Special Economic Zones
Prospects for the Construction of the System of Elderly Care Services
References
7 Report on the Development of the Financial Industry in China's Special Economic Zones in 2019
The Main Characteristics of the Development of the Financial Industry in China's Special Economic Zones in 2018
Although the Scale Has Expanded, the Momentum Has Slowed Down Significantly
Although the Quality of Development Has Improved, the Differentiation Has Increased Significantly
Although the Risks Are Generally Controllable, the Hidden Worries Have Not Vanished
Although the Intensity of “Disconnecting with the Virtual Economy” Is Not Small, the Progress of “Connecting with the Real Economy” Is Still Relatively Slow
Although There Are Many Difficulties in Continuing to Move Forward, that Has not Stopped the Pace of Opening up
New Opportunities Facing the Financial Industry in the Special Economic Zones in 2019
Business Opportunities that May Be Brought About by Economic Adjustments
Business Opportunities that May Be Brought About by Financial Reform
Business Opportunities that May Be Brought About by the Improvement of the Operating Environment
Business Opportunities That May Be Brought About by Fintech Innovation
Business Opportunities That May Be Brought About by Mergers and Reorganizations
Business Opportunities that May Be Brought About by Intensified Opening-Up
New Challenges Facing the Financial Industry in the Special Economic Zones in 2019
Challenges in Expanding the Scale
Challenges in Improving Quality and Efficiency
Challenges Caused by Insufficient Service Capacity
Challenges in Risk Control
New Measures to Be Taken in the Development of the Financial Industry in the Special Economic Zones in 2019
References
8 Report on the Development of Cultural Industries in China's Special Economic Zones
Development of Cultural Industries in the Special Economic Zones
Shenzhen Special Economic Zone
Zhuhai Special Economic Zone
Xiamen Special Economic Zone
Shantou Special Economic Zone
Hainan Special Economic Zone
Analysis of the Development of Cultural Industries in the Special Economic Zones
The Cultural Industries Have Entered a New Stage of High-Quality Development
The Integration of Culture and Tourism Drives Forward Economic Growth
Digital Cultural Industry Ushered in the Peak of Development
Suggestions on the Development of Cultural Industries in the Special Economic Zones
Deepen the Reform of the Cultural System
Develop the Cultural Tourism Industry with Regional Characteristics
Vigorously Promote the Development of the Digital Cultural Industry
Improve Intellectual Property Protection
Part III Report on the Investigation of the Development of the Special Economic Zones
9 Report on the Construction and Development of Cuba's Special Economic Zone
The Foundations and Conditions for Establishing Special Economic Zones in Cuba
The Export-Oriented Economic Development of Cuba
Policy on Cuba's Special Economic Zone
Development of the Cuban Mariel Special Economic Development Zone
Conclusion
References

Citation preview

Current Chinese Economic Report Series

Yitao Tao Yiming Yuan Editors

Annual Report on the Development of China’s Special Economic Zones (2020)

Current Chinese Economic Report Series

The Current Chinese Economic Reports series provides insights into the economic development of one of the largest and fastest growing economies in the world; though widely discussed internationally, many facets of its current development remain unknown to the English speaking world. All reports contain new data, which was previously unknown or unavailable outside of China. The series covers regional development, industry reports, as well as special topics like environmental or demographical issues.

Yitao Tao · Yiming Yuan Editors

Annual Report on the Development of China’s Special Economic Zones (2020)

Editors Yitao Tao China Center for Special Economic Zone Research Shenzhen University Shenzhen, China

Yiming Yuan China Center for Special Economic Zone Research Shenzhen University Shenzhen, China

This report was initiated and funded by the Annual Report on the Development of China’s Special Economic Zones which is the Cultivation Program on the Report of the Philosophy and Social Science Development under the Ministry of Education, and funded by the Shenzhen Publicity Culture Fund. Meanwhile, this report is also specially supported by Guangdong Theory-Armed Forces . the Ministry of Education’s Key Research Base for Humanities & Social Science in Guangdong Province under the Publicity Department of the Guangdong Provincial Party Committee. ISSN 2194-7937 ISSN 2194-7945 (electronic) Current Chinese Economic Report Series ISBN 978-981-19-9234-6 ISBN 978-981-19-9235-3 (eBook) https://doi.org/10.1007/978-981-19-9235-3 Jointly published with Social Sciences Academic Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: Social Sciences Academic Press. ISBN of the China (Mainland) edition: 978-7-5201-8157-0 © Social Sciences Academic Press 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Editorial Committee

Directors: Zhong Wu, Yitao Tao Members: Zhong Wu, Qi Lin, Youkang Yu, Shouyi Hao Ruoyu Zhong, Kangtai Zhao, Yitao Tao, Yiming Yuan Editor-in-Chief: Tao Yitao Executive Editor-in-Chief: Yuan Yiming Executive Deputy Editor-in-Chief: Ruoyu Zhong, Fenglan Wu, Yikun Zhou

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Contents

Part I

General Report

1 Annual Report on the Development of China’s Special Economic Zones (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yitao Tao and Meng Li Part II

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Special Topics

2 Report on the Development of the Green Transformation of China’s Special Economic Zones in 2019 . . . . . . . . . . . . . . . . . . . . . . . Yiming Yuan, Chunhong Sheng, and Peiyao Wang

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3 Report on the Resource Efficiency and the Sustainable Development of China’s Special Economic Zones . . . . . . . . . . . . . . . . . . Ruoyu Zhong, Yirong Qin, Jiehua Zeng, and Xuedi Ren

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4 Report on Innovation and Development of China’s Special Economic Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yiheng Huang and Yu Kang

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5 Report on the Development of Social Security in China’s Special Economic Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xingmin Gao, Feng Qiu, and Jinhong Xu

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6 Report on the Development of the System of Elderly Care Services in China’s Special Economic Zones . . . . . . . . . . . . . . . . . . . . . . 137 Keting Zhang and Xin Wang 7 Report on the Development of the Financial Industry in China’s Special Economic Zones in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Maojia Guo 8 Report on the Development of Cultural Industries in China’s Special Economic Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Yaqin Zhong and Chunlin Liao vii

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Contents

Part III Report on the Investigation of the Development of the Special Economic Zones 9 Report on the Construction and Development of Cuba’s Special Economic Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Haiping Luo

Part I

General Report

Chapter 1

Annual Report on the Development of China’s Special Economic Zones (2019) Yitao Tao and Meng Li

This report is a continuation of last year’s report on the development of the special economic zones in China. Through the analysis of the latest available statistical data, it attempts to show the status of the recent development of China’s special economic zones. In order to continue with the previous annual report, this report1 basically has the introduction of the same writing framework and data analysis indicators as the previous annual report.

The Basic Background of the Development of the Special Economic Zones in 20192 In the new era, the development stage of China’s economy is transforming from high-speed growth to high-quality development. Accordingly, new challenges from 1 Achievements of “Research on the Upgrade Path of China’s Advanced Manufacturing Industry under the New Situation of Sino-US Trade Relations (Project Number: 19BJY098)” by the National Social Science Fund of China, the general project of the Ministry of Education Planning Fund “Research on Accelerating the Transformation and Upgrading of China’s Manufacturing Industry under the New Normal (15YJA790033)” and the key project of philosophy and social science planning of Shenzhen “Research on Building a System and Mechanism to Promote the High-quality Economic Growth of Shenzhen (Project Number: SZ2018A003)”. 2 Deepen Reform and Opening-up and Promote High-Quality Development (China Social Science Net), http://sky.cssn.cn/skyskl/skyskl_yw/201811/t20181120_4778478_2.shtml.

Y. Tao (B) China Center for Special Economic Zone Research, Shenzhen, China e-mail: [email protected] M. Li Chinese Academy of Social Sciences, Beijing, China © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_1

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being “large” to “strong” are at the forefront of the economic development of the special economic zones. When this new journey began, it coincided with a new round of technological innovation represented by big data, cloud computing, and artificial intelligence sweeping the world. This will be an industrial revolution that will profoundly change the modern industrial system. The special economic zones entering the new era must be reorganized and re-examined regarding the existing concepts of development under this condition, and the most suitable “development concept” for the new era should be explored—that is, from “getting rich” to “becoming stronger”. They should focus not only on the efficiency of economic growth but also on aspects including the capability to carry out innovation, technology and culture, and environmental protection. Based on this, the “supply-side reform” proposed by General Secretary Xi Jinping will surely become a major measure for China’s special economic zones during the period of the “14th Five-Year Plan” and beyond to lead economic development and respond to the new background of comprehensive competition for national power. The author Li Meng said3 that the essence of supply-side structural reform aims at moderately expanding aggregate demand while improving the structure of economic growth in the field of production and increasing total factor productivity. At present, efforts should be made to improve total factor productivity, bring forth new ideas to improve and restructure production factors, and innovate related systems to reduce costs, so as to achieve high-quality and sustainable economic development. Only in this way can we effectively solve the problems during the period of the 14th Five-Year Plan and even longer-term problems of insufficient economic growth momentum due to imbalanced structure. “The international and domestic situation has undergone extensive and profound changes, and the reform and development of special economic zones are faced with new situations, new tasks, and new challenges”. I believe that against the background of this new era, the mission as “pathfinder” of special economic zones has not changed. On the one hand, in a series of major reforms such as the structural reform on the supply-side, we must continue to uphold the policy of “early and pilot implementation”, and provide experience to replicate across the country; on the other hand, in the next wave of “Internet of Everything, Smart of Everything”, the special economic zones are constantly reconstructing their stories, and they will certainly continue to lead China in its transformation from traditional Made in China to a brand-new “Created in China”.4

To sum up, in response to the increasingly acute problems of imbalance and non-coordination in China’s economic and social development, looking at the social economy (political and legal elements, economic elements, technical elements, social elements, cultural elements and ecological resources) and many other aspects, the Party Central Committee systematically put forward a series of measures aimed at major issues such as the “Scientific Outlook on Development, and transformation of the economic growth mode”. 3

Deepen Reform and Opening-up and Promote High-Quality Development (China Social Science Net), http://sky.cssn.cn/skyskl/skyskl_yw/201811/t20181120_4778478_2.shtml. 4 http://sky.cssn.cn/skyskl/skyskl_yw/201811/t20181120_4778478_2.shtml.

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How to Understand a Series of Major Issues Such as Changing the Economic Development Mode in the New Stage of Development In the early stage of reform and opening-up, China chose an imbalanced development mode of “partial priority development”. There were other modes such as “economic growth first, pollution control second”, “efficiency first, fairness second”, and so on. Facts have shown that in a certain stage of the special economic zones, for example, in the early stage of China’s reform and opening-up, it may be effective to adopt the imbalanced development model of “developing the economy first, then developing the society”. However, during the current stage, this kind of imbalanced economic and social development model no longer shows long-term system stability, which leads to the instability of the entire social and economic system. To change the economic development mode, we shall actually look at the problems of economic development in a comprehensive and systematic way, and we shall comprehensively plan and handle the relationship between economic development and other aspects. The impact on social harmony caused by economic factors must ultimately be resolved within the economic field. In other words, the social disharmony caused by the flaws in the design of the economic system or economic mechanism cannot be fundamentally solved by non-economic methods such as laws and regulations, ideological education, moral rules, or charity assistance. Instead, it is necessary to find a way to solve the problem from the intrinsic relationship between economic development and social development. If this is not the case, the construction of an innovative harmonious society is taken as a series of remedial measures in the fields of society, laws, social elements, cultural elements, ecological resources, and moral rules outside the economic field, and it will turn out to be getting half the result with twice the effort but without solving the problem fundamentally. In other words, the construction of the “Chinese Dream” is not a single issue, but a systemic issue involving many aspects. According to the systematic point of view, human society is a complex system made up of economic, political, social, cultural, and natural ecological systems. This makes it necessary to analyze issues more systematically regarding the development of China’s economy and society, that is, to take issues involved in economic and social development as an organic system.

Progress in the Special Economic Zones and Comments In general, various types of special economic zones have adapted to the new situation in recent years, made new progress, and achieved new leaps in the process of promoting high-quality development. And they played a very important role in the continuous innovation and in-depth development of China’s economy and society— the “pole-driven”, “point to line”, “line to surface” strategy for the development of

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the economic gradient from the coast to the inland, along the river and along the border! Specifically, this part provides a good and solid theoretical and practical foundation for the further reform of the special economic zone by sorting data through the latest developments in the economy of the special economic zones and also has pointed out new directions for many aspects including China’s social economy henceforth (economic and industrial level, level of the political and social element, the level of the cultural element, the level of the ecological resources, etc.).

Special Economic Zones Will Further Advance and Deepen Reforms in Many Aspects Including China’s Social and Economic Development Progress in Industrial Green Transformation of the Special Economic Zones The important indicators of the green transformation of industry are whether the efficiency of the utilization of resources is improved, whether there are correspondingly fewer pollutants, and whether the competitiveness of the city, especially the capability for carrying out innovation, is improved as one of the main indicators. This section will discuss the effects of industrial transformation in the five special economic zones regarding these three aspects.

The Status of the Improvement of the Efficiency of Resources In terms of the efficiency of resources in the five major special economic zones, except Shantou, whose energy consumption increased compared with last year, other regions have experienced a decline. The energy consumption of Zhuhai per 10,000 yuan of GDP dropped by 8.8%, which is the fastest drop, followed by Shenzhen. The GDP per capita and GDP per unit land area of the five special economic zones all increased. The GDP per unit land area of Zhuhai shows the fastest growth rate among the five special economic zones, but the GDP output per square kilometer of Shenzhen is the highest, at 1,212.63 million yuan, 7 times that of Zhuhai. It is also worth mentioning that the consumption of water in Shenzhen dropped to 8.41 cubic meters per 10,000 yuan of GDP, which is the lowest level in China. In terms of environmental regulation and the improvement of the efficiency of resources in the five major special economic zones, the improvement of the efficiency of resources is more obvious in places with stricter environmental regulations, and the level of the improvement of the efficiency of resources is also quite low in places with loose environmental regulations. Shenzhen achieved better effects in the improvement of the efficiency of

1 Annual Report on the Development of China’s Special Economic Zones …

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Hainan

Xiamen GDP per capita growth rate (%)

Shantou

Zhuhai

GDP per unit land area growth rate (%)

GDP per 10,000 yuan energy consumption reduction rate (%)

Shenzhen

Fig. 1.1 The Status of the improvement of the efficiency of resources of the five major special economic zones in 2018

resources with stricter environmental regulations, which is conducive to the industrial green transformation and higher economic competitiveness (Fig. 1.1).

The Status of the Reduction of Pollutants In 2018, the five major special economic zones performed differently in terms of major pollutants. The air quality index, per capita park green area, inhalable particles PM10, and fine particles PM2.5 in Shenzhen all showed a decline. Zhuhai only outperformed last year in terms of fine particles PM2.5, and its performance in other aspects was relatively average. However, the air quality of Shantou is worse than last year. The performance of Hainan in all aspects remained unchanged from last year. It can be seen that stricter environmental regulations are effective in reducing pollutant emissions, while looser environmental regulations may be detrimental to the reduction of pollutant emissions (Fig. 1.2).

The Status of the Improvement of the Capability for Carrying Out Innovation That whether environmental regulations are strict or not is related to the improvement in corporate capability for carrying out innovation and this is an important argument of the Porter Hypothesis. Some people believe that strict environmental regulations are not conducive to innovation, while the Porter Hypothesis explains that it is conducive to corporate innovation. From the data of patent applications in

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Y. Tao and M. Li Annual reduction rate of the concentration of inhalable particles PM10 Annual rate of reduction of the concentration of fine particles PM2.5 Growth rate (%) of days (day) of air quality index (AQI) to or above Grade II

Shenzhen

Zhuhai

Shantou Xiamen

Growth rate (%) of per capita park green area (square meters)

Hainan

Fig. 1.2 The status of the reduction of pollutants of the five major special economic zones in 2018

Number of authorized patents Number of authorized invention patents

Shenzhen

Zhuhai

Shantou

Xiamen

Hainan

Fig. 1.3 Number of authorized patents and invention patents of the five major special economic zones in 2018

the five special economic zones in 2018, we can see the competitiveness of enterprises in the five special economic zones. Shenzhen undoubtedly has the strongest innovative power, and the number of its authorized patents and invention patents are far ahead of other special economic zones. It can be seen that stricter environmental regulations did not restrict the innovative capability of Shenzhen enterprises, while looser environmental regulations did not improve the innovative capability of enterprises. On the contrary, Shenzhen has implemented more environmental regulations in exchange for extremely high innovative capability (Fig. 1.3).

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Progress Regarding Cultural Elements in the Special Economic Zones Compared with the development in 2017, the development of cultural industries in the special economic zones in 2018 made some breakthroughs, showing the following characteristics.

The Cultural Industry Has Entered a New Stage of High-Quality Development From the “Twelfth Five-Year Plan” to the “Thirteenth Five-Year Plan”, China’s cultural industry has undergone a growth process from accelerating construction to paying more attention to the pursuit of quality and profitable development.5 In 2018, the Ministry of Culture and Tourism and the Ministry of Finance jointly issued the Guiding Opinions on Promoting Government and Social Capital Cooperation Models in the Tourism Field, which aims at boosting the innovation of the supply mechanism, stimulating investment vitality, promoting the high-quality development of the cultural industry by pushing forward the PPP model in the field of the cultural industry, so as to satisfy people’s spiritual and cultural life with a supply of high-quality cultural elements. The cultural industry in the special economic zones developed rapidly during the period of the “Twelfth Five-Year Plan” with policy support, and the growth rate of the cultural industry has slowed down in recent years. In 2018, the Xiamen Municipal Government focused on exploring the development potential of the film and television industry of Xiamen and began to compile the Film Industry Development Plan. In the future, the film and television industry is expected to become another growth point for the cultural and creative industries of Xiamen.6 In addition, the special economic zones have strategic layouts in several industries, such as that of the digital economy, of creative design, cultural tourism, cultural high-end intelligent manufacturing, and other high-end cultural industry systems. The series of results achieved are all manifestations of the cultural industry approaching the stage of high-quality development.

The Integration of Culture and Tourism Drives Economic Growth In order to implement the concept of “all-for-one tourism”, the State Council issued the Guiding Opinions on Promoting the Development of All-for-one Tourism in 2018. The Opinions put forward requirements for the integration of culture and tourism. 5

China Economic Net: China’s Cultural Industry toward High-Quality Development, China Economic Net, http://www.ce.cn/culture/gd/201804/04/t20180404_28716983.shtml, 2018-04-04. 6 Guangming Daily: Xiamen: Developing Cultural Industry with High Quality, Guangming Daily official website, http://share.gmw.cn/news/2019-04/04/content_32714405.htm, 2019-04-04.

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Through the implementation of the “Plan for the Revitalization of Chinese Traditional Crafts”, outstanding traditional culture is to be brought to light in various regions in order to integrate regional high-quality cultural resources into the development of tourism projects, and the cultural attributes of tourism products are to be enhanced. In recent years, China’s tourism industry has grown rapidly, and it has become a strategic pillar industry for the country’s economic build-up. According to relevant statistics, the total number of domestic tourists in 2018 increased by 10.8% over 2017, reaching 5.539 billion person-times; the total number of outbound tourists increased by 14.7% over the previous year, reaching 149.72 million person-times; the total tourism revenue for the year was higher than that of the previous year with an increase of 10.5%, reaching 5.97 trillion yuan.7 The year 2018 can be called the first year of “integration of culture and tourism”. Since the official establishment of the Ministry of Culture and Tourism in early April, by the end of November, the culture and tourism departments of Xinjiang and Tianjin had been officially established, and the reform of the culture and tourism institutions of the central and local governments was continuing to improve. The Tourism, Culture, Radio, Television and Sports Department was established in Hainan Province, the Culture, Radio, Television, Tourism and Sports Bureau was established respectively in Shenzhen, Zhuhai, and Shantou, and the Culture and Tourism Bureau was established in Xiamen. The integration of cultural institutions and tourism institutions has the aims of “promoting tourism with culture and displaying culture through tourism”, cultivating new forms of cultural tourism, expanding the supply of high-quality tourism products, and promoting the modernization, internationalization, intensification, and quality of the tourism industry. All the special economic zones have achieved gratifying results in the process of promoting the deep integration of culture and tourism. Among them, the total tourism revenue of Zhuhai, Xiamen, and Shantou has increased by more than 20%. The industrial model of the integration of culture and tourism has promoted new breakthroughs of cultural industries in the special economic zones.

Digital Cultural Industry Ushered in the Peak of Development In 2018, the Guiding Opinions on the Development of the Digital Economy to Stabilize and Expand Employment was released. Proposals were made in the Opinions to vigorously develop the digital economy, accelerate the construction of digital infrastructure, promote the digital transformation of traditional culture, and stimulate the vitality of innovation and entrepreneurship in the digital economy. With the renewal and iteration of digital technologies such as network technology, data processing technology, cloud computing, and AI, the digital cultural industry has forcibly risen. 7

Ministry of Culture and Tourism of the People’s Republic of China: “Statistical Bulletin of Culture and Tourism Development of the Ministry of Culture and Tourism of the People’s Republic of China in 2018”, official website of the Ministry of Culture and Tourism of the People’s Republic of China, http://zwgk.mct.gov.cn/auto255/201905/t20190530_844003.html?keywords=, 2019-05-30.

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Digital cultural products such as online games, online literature, online blockbusters, online music, and online variety shows have become the main products of mass cultural consumption. As an important field in the development of the digital economy, the industry of online audiovisual content developed rapidly in 2018. As of December 2018, the number of domestic online video users had accounted for 87.5% of the total netizens, and the number was as high as 725 million. In 2018, the market size of the entire video content industry grew by 52.8% compared with the previous year, reaching 187.13 billion yuan. As one of Shenzhen’s strategic emerging industries, Shenzhen’s digital economy industry exceeded the 100 billion mark in its industrial added value in 2018. Shenzhen’s cultural and creative enterprises, represented by Tencent, Fantawild, IDMT, and Artron, are at the forefront of the country regarding the development of digital cultural products.

Progress in the Innovation of the Special Economic Zones From a vertical perspective, the five major special economic zones in 2018 all made significant progress in promoting innovation and development, whether it is the contribution of high-tech industries to economic growth, the construction of innovation carriers, or the supply of innovative development talents. However, if the five major special economic zones are put together for a horizontal comparison, it can be found that there are significant differences in the achievements and choices of methods among the special economic zones in promoting innovative development. From the perspective of urban economics, we attempt to understand this difference from the perspective of the existing economic scale and structure and the status of government financing. In addition, location and regional cooperation and national policies also influenced this difference.

The Existing Economic Scale Plays a Decisive Role in Innovation and Development The agglomeration of production factors in geographical space, through matching factors and spillover effects, makes the production function show an increasing return to scale, which in turn leads to greater output and a higher rate of return on factors. This is the basic logic of the emergence of cities, and it is also valid to use this logic to examine the differences in the innovation and development of different special economic zones. Taking the added value of the high-tech manufacturing industry and the number of authorized patents as examples, the performance of each special zone is as follows in Table 1.1. The unit of regional GDP and the added value of the high-tech manufacturing industry is 100 million yuan, the unit of the number of authorized patents is piece, and the unit of population is 10,000 persons. Some data is missing.

529.80

Sanya

925.76

4462.54

1390.58

Hainan

Haikou

560.82

2350.97

Shantou

176.54

76.42

227.21

401.00

2675.18

4351.72

Zhuhai

1,252.83

22,490.05

Permanent Population at the end of 2017

Xiamen

Shenzhen

Regional GDP in 2017

–

–

–

53.31

1093.99

321.87

6131.20

Added Value of the High-tech Manufacturing Industry in 2018

–

–

4832.05

2512.05

4791.41

2914.74

24,221.98

Regional GDP in 2018

–

–

–

2.1%

22.8%

11.0%

25.3%

–

–

–

12,651

21,393

17,090

140,202

Added Value of the Number of High-tech Authorized Patents Manufacturing Industry/Regional GDP in 2018

–

–

–

408

2214

3452

21,309

Number of Authorized Invention Patents

Table 1.1 The added value of the high-tech manufacturing industry, the number of authorized patents, the regional GDP, and the permanent population at the year’s end

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It can be found from Table 1.1 that the higher the initial regional GDP is, the greater the proportion of the added value of high-tech manufacturing in the regional GDP and the greater the number of new authorized patents. For example, Shenzhen is higher than Xiamen, and Xiamen is higher than Zhuhai.8 It needs to be pointed out that although the regional GDP of Hainan Province is not low, in terms of the spatial scale under the city agglomeration effect, whether it is Haikou or Sanya, the economic aggregate and the scale of the population of the two cities are without any advantage, and thus Hainan Province is naturally in a weak position in terms of innovation and development.

The Status of Government Financing Has an Important Impact on Innovation and Development Promoting the improvement of the development of an environment that is inducive to innovation requires a large amount of investment. When the financial system cannot provide the required investment, government financial investment will naturally become an important driving force for the promotion of innovation and development. When government financing is relatively abundant, there will be more policy tools to choose from in order to promote the growth of innovative development carriers, and at the same time, the effects are more significant. On the contrary, if the capacity for government financing is weak, the number of policy tools it can choose from will be greatly narrowed, and the results may not be satisfactory. As a result, the status of government financing has also become one of the aspects for understanding the differences in the implementation of innovative development in the special economic zones. In Table 1.2 there are descriptions of the financial situation of the five major special economic zones. From the first two columns in Table 1.2, it can be found that among the five major special economic zones, except Shenzhen and Xiamen, which can achieve self-sufficiency in financial revenue and expenditure, Zhuhai, Shantou, and Hainan all require a certain amount of transfer payments or debt from higher-level governments to be able to cope with the need for total expenditures of the general public budget. In addition, judging from the year-end local government balance of debts, we can see that the year-end balance of debts regarding Shenzhen government is very low both in absolute and relative amounts—the year-end balance of government debts only accounts for 1.6% of the general public budget revenue and 2.88% of the general public budget total revenue. On the contrary, the debt burden of other special economic zones is relatively large. The balance of debts regarding Xiamen still does not exceed the general public budget revenue and the total revenue, but the balance of debts is 4.37 times that of Shenzhen; the balance of debts regarding 8

According to the study of urban economics on the law of changes in city scale, city scale will only move slowly up and down along the distribution of city scale. Therefore, the scale for 2017 can be used to characterize the previous city scale. In addition, we believe that the information contained in the city scale has a Markov nature, that is, the latest city scale contains the information necessary to reveal future development.

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Table 1.2 General public budget revenue, expenditure, and year-end local debt balance

Shenzhen

General public budget revenue

Total revenue of general public budget

Total expenditure of general public budget

Debt balance of local government at the end of the year

9102.40

5069.60

4949.60

145.90

Zhuhai

331.47

726.36

700.88

446.13

Xiamen

1283.29

818.30

892.49

637.00

Shantou

131.50

379.40

379.40

155.90

Hainan

1373.98

2163.40

2163.40

1941.70

Unit: 100 million yuan. Xiamen did not announce the actual completion of the total revenue of the general public budget. The corresponding figure was obtained from the 2018 budget report

Zhuhai and Shantou covers respectively 61.4% and 41.1% of the total revenue from their general public budget, while the balance of debts regarding Hainan Province reached 89.8% of the total revenue from the general public budget.

Influence of the Conditions of the Location, Regional Cooperation, and the National Strategies Conditions of the location affect the degree of agglomeration of production factors through the rate of return of production factors, and then profoundly affect the regional economic scale and the degree of innovation and development. Regional cooperation is the use of the conditions of the location to strengthen the balance of cooperation between different economies in the region in terms of industrial layout and technological innovation. The influence of national strategy is twofold. On the one hand, national strategy can promote intra-regional cooperation and strengthen the influence of the conditions of the location; on the other hand, national strategy can reverse some unfavorable conditions of the location with the power of the country, making regions with poor original conditions of location achieve rapid development and become new growth poles. This logic can be used to examine the differences in the innovation and development of the special economic zones. For Zhuhai, the Hong Kong–Zhuhai–Macao Bridge, which was completed and opened to traffic in 2018, will largely change the long-term development constraints of Zhuhai on the inconvenient transportation to the east bank of the Pearl River Estuary and improve the conditions of the location of Zhuhai. More importantly, leveraging on the gradually implemented national strategy of the Hong Kong– Zhuhai–Macao Greater Bay Area plan, Zhuhai keeps continuously optimizing the environment for the development of innovation by upgrading industrial parks, strengthening cooperation with Hong Kong and Macao, and has achieved good results. Shantou, located in eastern Guangdong, is in contrast to Zhuhai. Although the two cities are similar in terms of regional GDP and the proportion of the balance of government debts in the total revenue of the general public budget, there are huge

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differences in the effects of innovation and development and in the cultivation of those who carry innovative development forward. For example, there were 722 new high-tech enterprises in Zhuhai in 2018, equivalent to the total number of high-tech enterprises in Shantou at the end of 2018 (718). Unlike Zhuhai, with the help of the national policy to establish a pilot free trade zone all over the Hainan Island, Hainan Province makes up for the poor conditions of its location, the degree of economic agglomeration, and the status of government financing, and rapidly promotes innovation and development. Although the foundation of Hainan Province is relatively weak, those carrying forward innovation and development introduced by Hainan Province are of a considerable level, such as the Southern Base of the National Deep Sea Center, the National Seed Breeding Base in Hainan, and the introduction of the Sanya Institute of Oceanography, SCSIO, and the Aerospace Information Research Institute, CAS Sanya Branch, etc.

Progress Regarding the Elements of Ecological Resources of the Special Economic Zones Resource productivity is the core concept of green competitiveness. From 2004 to 2018, Shenzhen’s resource productivity increased year by year, reaching a significant overall increase. In 2018, Shenzhen’s resource productivity reached 152,500.4 yuan/ton, ranking first among the five special economic zones. Xiamen (37,618.84 yuan/ton), Zhuhai (22,967.4 yuan/ton), Shantou (15,774.73 yuan/ton), and Hainan (9,093.98 yuan/ton) decreased in turn. Before the period 2004–2012, the resource productivity of the four special zones, except Shenzhen, all experienced short-term declines, but they all maintained a steady growth after 2012 (Table 1.3). To calculate the identity relation based on the results of the analysis of the flow of materials of this study, it can be concluded that the growth of resources, population, Table 1.3 The relationship between the growth of resources, population, and output of each special economic zone in 2018 Special economic zone

Growth rate of per capita GDP (%)

Growth rate of Growth rate population (%) of resource productivity (%)

Calculated growth rate of DMI (%)

Actual growth rate of DMI (%)

Hainan

8.51

0.92

6.04

3.39

1.74

Shantou

5.78

0.67

4.62

1.83

1.91

Xiamen

6.91

2.43

4.42

4.93

5.24

Zhuhai

5.74

6.65

8.67

3.72

3.79

Shenzhen

3.68

3.83

2.10

5.40

5.68

Source According to the results of the analysis of the flow of materials of this study and relevant data after calculation and collation

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and GDP in Hainan, Shantou, and Zhuhai, except for Shenzhen and Xiamen, remain consistent. To avoid an increase in resource usage (generational balance), the growth of resource productivity must be greater than the sum of the population and the growth of per capita output. However, the growth of resource productivity in the five special economic zones does not meet the above condition, which indicates that the usage of resources in the five special economic zones is still increasing rapidly, and a balance among the population, resources, and environment cannot be achieved for the time being. From the horizontal comparison of the special economic zones, according to the comparison (figure) of the DMI composition for 2018 of the five major special economic zones, the special economic zones where fossil fuels account for more than 40% of the total material resources are Shantou (52.68%), Zhuhai (48.12%), and Shenzhen (41.35%). The material resource that accounts for the highest proportion in Hainan is industrial non-metallic minerals (38.06%), and the highest proportion in Xiamen is metallic minerals (48.97%). The biomass resource in Zhuhai and Xiamen accounts for less than 10%, which are the two lowest proportions. The various proportions of material resources are closely related to the local economy and natural resources. From the vertical comparison of the special economic zones, among the five major special economic zones, the changes in the structure of the DMI in the special economic zones are compared in chronological order. Take the changes in the structure of the DMI in Shenzhen and Zhuhai from 1996 to 2018 as examples. The composition of the DMI in Shenzhen from 1996 to 2018 shows that the proportion of metal minerals in the total DMI remained at a relatively high level from 1996 to 2004, with a downward trend since 2005 to 16.95% in 2014, showing a slight upward trend in recent years. The proportion in 2018 rose to 21.80%. During the same period, the proportion of fossil fuel input in the total DMI has been generally steadily on the increase, from 8.63% in 1996 to 41.35% in 2018, and its share in material resource input has continued to increase. However, Shenzhen covers a small land area with a large population, and the limited land area cannot meet the needs of the actual population regarding management, and the pressure on resources and the environment is huge. The change in the proportion of fossil fuel input in the past 22 years vividly reveals the serious situation of insufficient resources in the process of sustainable development in Shenzhen.

“New District” Shoulders the National Strategy Public information from the National Development and Reform Commission shows that the system supply will be enhanced in the “new district” soon. In the future, the National Development and Reform Commission will “focus on speeding up the construction of function zones such as the Shanghai Free Trade Zone and the Xinjiang Kashgar Special Economic Zone”, it will accelerate reforms in key areas and set up

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pilot trials, provide experience for the overall reform, and provide new impetus for transformation and development through institutional innovation. The Shanghai Free Trade Zone pushes China into a new path of reform: the China (Shanghai) Pilot Free Trade Zone9 was established in Shanghai on September 29, 2013, and China’s new round of reform and opening-up has set sail. As of the end of 2018, the total number of newly established enterprises in the 11 Pilot Free Trade Zones (excluding the Hainan Pilot Free Trade Zone) have reached 610,000, of which 34,000 are foreign-funded enterprises.10 The 11 pilot free trade zones, covering an area of 1,314.26 square kilometers, have attracted 12% of the foreign investment and created 12% of the imports and exports with an area of less than two ten thousandths of the country. According to Tang Wenhong, Director of the Foreign Investment Department of the Ministry of Commerce, in the first quarter of 2019, there were 73,000 newly established enterprises in the Pilot Free Trade Zone with an increase of 47% year-on-year, and the use of foreign capital was 24.86 billion yuan with an increase of 11% year-on-year. In the Shanghai Pilot Free Trade Zone, as of April 2019, a total of more than 60,000 new enterprises have been established, and the number of newly established enterprises is 1.6 times the number of enterprises in the same region during the previous 20 years. In the five years since the Shanghai Free Trade Zone was listed, 127 institutional innovations have been replicated and promoted throughout the country. In 2018, the Shanghai Pilot Free Trade Zone achieved 14.3% of the city’s gross industrial output value above the designated size; the import and export volume of foreign trade accounted for 42.8% of the total amount in this city; actual foreign capital accounted for 39.13% of the city’s total. About 7200 new enterprises were established throughout the year, and a total of 58,800 new enterprises were newly established. Nearly 1300 foreign-funded enterprises were newly established throughout the year. And there were a total of 88,500 enterprises in the Shanghai Pilot Free Trade Zone (Table 1.4). New developments in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen the year 2018 is an important year for the Qianhai Cooperation Zone regarding its entrance into full-scale development and construction. As the state-designated “Guangdong-Hong Kong Modern Service Industry Innovation Cooperation Demonstration Zone”, center of “institutional innovation, of the modern service industry agglomeration, of Shenzhen-Hong Kong cooperation”, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone shows the status and progress of development in the past year as follows11 : (1) Institutional innovation has always been an important mission of the 9

Hereinafter referred to as Shanghai Free Trade Zone. The data comes from the China Pilot Free Trade Zone Development Report issued by the Chinese Academy of International Trade and Economic Cooperation. 11 The data in this report comes from the statistics of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration. 10

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Table 1.4 The main economic indicators and growth rates of the China (Shanghai) Pilot Free Trade Zone in 2018 Indicator

Unit

Absolute value

Increase by… from the previous year (%)

General Public Budget Revenue

Hundred million RMB Yuan

648.16

12.0

Actual Amount of Foreign Direct Investment in Place

Hundred million US Dollars

67.70

−3.5

Total Investment in Fixed Assets of the Whole Society

Hundred million RMB Yuan

638.07

−6.2

Gross Industrial Output Value above the Designated Size

Hundred million RMB Yuan

4965.00

−0.7

Retail Sales of Consumer Goods

Hundred million RMB Yuan

1515.67

1.4

Total Merchandise Sales Hundred million RMB Yuan

40,874.86

7.2

Service Industry Operating Income

Hundred million RMB Yuan

5723.97

Total Foreign Trade Import and Export

Hundred million RMB Yuan

14,600.00

4.1

#Export Value

Hundred million RMB Yuan

4542.50

8.3

887

4.5

Number of Regulatory Financial Institutions at the End of the Period

11.8

Source 2018 Shanghai National Economic and Social Development Statistical Bulletin, Shanghai Bureau of Statistics website, http://tjj.sh.gov.cn/html/sjfb/201903/1003219.html

Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. As of June 2019, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone launched a total of 442 institutional innovations, of which 43 innovations have been replicated and promoted across the country, 69 innovations have been replicated and promoted in Guangdong Province, and 79 innovations have been replicated and promoted in Shenzhen. Before 2018, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone launched 123 new institutional innovations, covering finance, rule of law, management, etc., of which 15 landmark achievements were included in the briefing of the ministerial-level joint meeting of the State Council on the work of the pilot free trade zone; (2) the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone got remarkable results in the agglomeration of modern service industries and economic effect. As of the end of 2018, there were a total of 149,286 registered enterprises in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, a year-on-year increase of 3.4%,

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with a registered capital of 9,451.85 billion yuan, of which 46.53% were open. There were 55,285 registered enterprises in the financial industry, accounting for 37.0%, a year-on-year increase of minus 4.8%, with a registered capital of 5,402.026 billion yuan; 26,400 registered enterprises in the modern logistics industry, accounting for 17.7%, a year-on-year increase of 6.7%, with a registered capital of 967.377 billion yuan; 13,906 registered enterprises in the information services industry, accounting for 9.3%, a year-on-year increase of 4.0%, with a registered capital of 611.53 billion yuan; 53,655 registered enterprises in the technology and other service industries, accounting for 36.0%, a year-on-year increase of 11.2%, with a registered capital of 2,465.727 billion yuan; 40 registered industrial enterprises, accounting for 0.03%, a year-on-year increase of 60%, with a registered capital of 5.19 billion yuan. Among the modern service industries, the technology and other service industries grew the fastest in 2018 and have become the second pillar industry after the financial industry. In contrast, the financial industry was experiencing negative growth in 2018. Some financial services can be considered to have withdrawn from the Qianhai ShenzhenHong Kong Modern Service Industry Cooperation Zone for some reasons; (3) Deepening the new progress of Shenzhen-Hong Kong cooperation. “Relying on Hong Kong, serving the Mainland, and facing the world”, this is the functional positioning of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone set up by the State. In the past few years, centering on Shenzhen-Hong Kong industrial cooperation, Shenzhen-Hong Kong talent cooperation, cross-border financial cooperation, Shenzhen-Hong Kong trade cooperation, cooperation on institutional innovation, and on the construction of major projects, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone actively promotes Shenzhen-Hong Kong multi-field and all-round cooperation. Since the establishment of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, 17 pieces of land have been sold to Hong Kong-funded enterprises, covering an area of 35.55 hectares, accounting for12 47.3%. In terms of industrial cooperation, as of July 2019, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone has registered a total of 8,938 Hong Kong-funded enterprises with a registered capital of 912.974 billion yuan. A large number of well-known Hong Kong-funded enterprises such as HSBC, Hang Seng Bank, Hong Kong Stock Exchange, and Chow Tai Fook have gathered there. “Modern service industry clusters including modern logistics, information services, technological services, and professional services” have been formed, dominated by the financial industry. In terms of talent cooperation, in order to further promote the cooperation and exchange of talents between the two sides of the strait, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration in 2019 promulgated the Measures to Support the Development of Hong Kong and Macao Youth in Qianhai, proposing 36 preferential policies in terms of support for innovation and entrepreneurship, visits, internship and employment, life, etc. of Hong Kong and Macao youths to support them in coming

12

Percentage of the total land sold in Qianhai, http://qh.sz.gov.cn/ljqh/sghz/sg_gzdt/201907/t20 190703_18031151.htm.

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to Qianhai for internship, employment, innovation, and entrepreneurship. In addition, as an entrepreneurial incubator for Guangdong, Hong Kong, and Macao youths, Qianhai Shenzhen-Hong Kong Youth Dream Factory provides a full range of services and policy support for start-up teams “from free office space, entrepreneurial apartments with move-in condition, to tax reduction policies, entrepreneurial guidance, and even competitions, forums, and investment and financing matching information that can be obtained without leaving home”.13 As of the end of 2018, a total of 356 entrepreneurial teams have been incubated, of which 176 are Hong Kong, Macao, and international teams. More than half of the projects in the incubation team have successfully obtained financing, and the total amount of financing has exceeded 15 trillion yuan. At the same time, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone has also built a series of Shenzhen-Hong Kong cooperation platforms such as Shenzhen-Hong Kong Innovation Center, Shenzhen-Hong Kong Fund Town, Shenzhen-Hong Kong Cultural and Creative Town, ShenzhenHong Kong Design and Creative Industry Park, and the second phase of Dream Factory and the Guangdong-Hong Kong-Macao Youth Entrepreneurship Zone under planning and construction, which provide more cooperation carriers for young people from Guangdong, Hong Kong, and Macao to start their businesses in Shenzhen, and promote innovation and entrepreneurship among young people in the three regions.

Challenges and Suggestions for the Development of Special Economic Zones In general, 2018 was not only a year in which the special economic zones were to further accelerate structural adjustment and continue to move toward scientific development but also a year in which existing problems still existed and the situation remained severe. Urgent and practical measures as well as long-term efforts are required to resolve the main remaining problems. The issues that have been discussed include: the characteristics of extensional development are still outstanding, and the ability to innovate needs to be improved; the urgency of transformation and upgrading is on the increase, and the pressure of sustainable development cannot be ignored; the pressure on the resources and environment of the economic development of the special economic zones is still severe, and the welfare support system to improve people’s livelihood needs to be strengthened urgently. In the short to medium term, there is a need for a number of issues to be studied and practiced, which the broad masses of people are paying close attention to:

13

The official website of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Administration.

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Special Economic Zones Should Stimulate New Growth Drivers and Carry Out Sustained and High-Quality Development Changes in the industrial structure based on technological progress are one of the driving forces for the improvement of the quality of economic growth. Technological progress is concentrated in industries that can exert factor efficiency more through the transfer of economic growth input factors, while at the same time it creates new leading industries and emerging future industries, and it creates new economic growth points. Once technological innovation appears in a certain sector, through the complex connection with other sectors, technological progress will promote structural transformation, thereby improving the quality of economic growth, and will greatly promote the quality of economic growth and sustainable development.

Population Aging Has Become a Serious Challenge Currently that the Special Economic Zone Must Face Up to With the changes in the structure of the population and the impact of the birth policy, the trend of population aging and old aging in our country is becoming more and more obvious, and the old-age dependency ratio continues to rise. This has become an important issue that the special economic zones must face up to in the future. Establishing a sound social elderly care service system is an inherent requirement for building a well-off society in an all-round way and advancing the construction of a harmonious socialist society with Chinese characteristics. There is important practical significance for promoting urban and rural economic development, optimizing the layout of the industrial structure, and realizing the sustainable development of an aging society. According to the prediction of the National Office on Aging, it is estimated that by 2050, the number of elderly people in China will reach a peak of 487 million, accounting for 34.9% of the total population and one-quarter of the world’s total elderly population.14 At that time, “there will be at least one old person among three”, which indicates a deeply aging society. The rapid development of population aging, as well as the related trends of aging, empty nesting, and disability is gradually weakening the traditional function of the family pension. The increasing burden of the social pension year by year, the extreme shortage of professional senior service personnel, and the problems of “getting old before getting rich” and “getting old before preparing” make the capacity for economic support even more insufficient. The aging problem in the SEZs is no longer just a population issue. It has been intertwined with issues such as economic development and social construction and

14

Xinhua News, http://www.xinhuanet.com/health/2018-07/20/c_1123151851.htm.

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has become an important issue that has impeded the sustainable and healthy development of the economy and society in the SEZs in the future. To solve the problems caused by the aging population properly and promptly has become the common call of society and the times, and it is also an important mission entrusted to us by the new era. It’s challenging to promote the development experience of integrating medical and elderly care and smart elderly care, to establish a comprehensive supervision system, and to explore mutual assistance elderly care models.

Suggestions for the Development of Cultural Industries in the Special Economic Zones In the context of the new era, the domestic cultural industry is entering a new stage of high-quality development. The special economic zones are simultaneously facing huge market opportunities and challenges with the development of cultural industries. The special economic zones could start from the following aspects to promote the further improvement of cultural industries.

Deepen the Reform of the Cultural System The high-quality development of the cultural industry requires the joint promotion of the government and the market and the coordinated development of culture and technology. Therefore, the special economic zones need to further deepen the reform of the cultural system and mechanism. Deepening the reform of the cultural system requires the special economic zones to continue to innovate the policy system of cultural industries and cultural undertakings, and to support various cultural business entities in taxation, finance, land, and talents; increase the proportion of cultural services in the industry to achieve optimization of the structure of the cultural industry. It is also necessary to encourage technological innovation in the hightech field and promote the in-depth integration of emerging technologies such as network technology, data processing technology, cloud computing, AI, and 5G with the cultural industry. Efforts need to be made to promote the transition from cultural management to cultural governance, improve the mechanism of social participation, and stimulate the vitality of innovation and creativity in all sectors of society.

Develop the Cultural Tourism Industry with Regional Characteristics The special economic zones are mostly coastal cities with beautiful natural environments, relatively developed economies, a high degree of modernization and internationalization, and they are suitable for the development of the tourism industry. With the deepening of the development model of the “culture + tourism” industry

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in the special economic zones and the implementation of the “village revitalization strategy” and the “all-for-one tourism strategy”, it is imperative to develop a cultural tourism industry with regional advantages. Major issues have become making good use of cultural resources such as the characteristic port culture, intangible cultural heritage, folk culture, and urban culture, telling the stories of the special economic zones and building a cultural tourism city in the process of the integration and development of culture and tourism in the special economic zones.

Vigorously Promote the Development of the Digital Cultural Industry With the support of national policies, the domestic digital cultural industry has made great progress, and the digital content industry has obtained a broad market. At present, leading cultural and creative enterprises have deployed digital content production, and are constantly exploring new industrial models in the fields of online games, online movies, online literature, online music, and online variety shows. However, there are still problems in the current development of China’s digital cultural industry, such as the lack of content creativity, the shortage of content production talents, the coexistence of homogeneity and vulgarity, and the backward management system. All special economic zones should seize opportunities for the development of the digital cultural industry, make use of the existing policies and economic advantages to avoid corresponding problems and support the digital cultural industry in encouraging innovation, talent introduction and cultivation, and market supervision and management.

Improve Intellectual Property Protection Content production is the core area of the cultural industry, and it is also the key for cultural business entities to build their own core competitiveness. The weak content production has long restricted the improvement of cultural industry production efficiency, and the scarcity of high-quality content is still the ordinary state of the current cultural industry. The development of cultural industries in special economic zones needs to pay attention to support for content production, focus on content innovation and talent training, and strive to improve the capability for content industry innovation. At the same time, each special economic zone should establish a sound evaluation system for their cultural product content, implement scientific and effective supervision, and strengthen intellectual property protection to create a good environment for the innovation and development of cultural industries.

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Development Path and Issues to Be Noticed in the Next Year The Special Economic Zones Should Slow Down Their Economic Growth Rate, Especially the Growth Rate of Investment, and Shift to the Pursuit of Quality In 2019, the special economic zones must make great efforts to resolutely shift economic growth to the pursuit of quality, accelerate structural adjustment, and focus on strengthening and improving the effectiveness of the macro-level and industrial upgrading regulation. Each special economic zone should effectively implement a Scientific Outlook on Development, actively reverse the tendency of blindly pursuing GDP, and set the improvement of the quality and efficiency of economic development as a priority.

The Special Economic Zones Should Speed up the Direction of the Adjustment of the Advanced Manufacturing Industry: Resolve the Paradox and Promote High-Quality Economic Growth Solving the development paradox of the manufacturing industry is the direction of the adjustment of the advanced manufacturing structure, which has also become another huge potential for economic growth in special economic zones. We believe that the reality of the manufacturing industry shows that the development of manufacturing in the special economic zones should be strategically adjusted from the following aspects in the future, which will become a powerful driving force for the economic growth of the special economic zones. Direction 1: Increasing the proportion of high-tech manufacturing industries, replacing labor price advantages with technological advantages, which will trigger an increase in investment and promote economic growth of this quality. In the future, the development of the manufacturing industry in the special economic zones must focus on the adjustment of the structure of the industry, the development of communication electronics, electrical machinery, instrumentation, medicine, and the manufacturing industry with high technical content and high valueadded directly related to the improvement of the people’s quality of life. While developing transportation equipment manufacturing, petroleum processing equipment, and other equipment manufacturing industries, the special economic zones should increase the proportion of high-tech manufacturing industries and optimize the structure of production in the manufacturing industry on the premise of maintaining the total scale. At the same time, efforts should be made to improve quality, transform traditional industries with modern technology, and eliminate industries with low technical content and poor production efficiency. For some industries with

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low efficiency and poor efficiency, such as the textile industry, costumes manufacturing, wood product processing, rubber product manufacturing, plastic product manufacturing, non-metallic mineral product manufacturing, chemical fiber manufacturing, paper-making, and paper product manufacturing will be developed within restrictions. In terms of manufacturing investment in science and technology, the investment will be increased in the development of new products to continuously improve the production skills and technical level of manufacturing workers, and comprehensively improve the quality of labor producers. Direction 2: Cultivating leading advanced manufacturing industries and cultivating internationally renowned manufacturing brands, which has become a potential incentive for economic growth in the special economic zones. The leading industries are characterized by a high rate of innovation and rapid introduction of technological innovation; at the same time, they show a high growth capacity, and their growth rates are often higher than the macroeconomic growth rate; in addition, there is still a high effect of the diffusion of the leading industries, which helps to promote the development of other industries, with a large influence coefficient and inductance coefficient. The development of advanced manufacturing in the future will accelerate the cultivation of independent product R&D centers, high-tech product design centers, and intellectual property control centers; in terms of important products, production technology of key equipment and parts must be mastered. A manufacturing industry with absolute technological advantages and a group of large-scale equipment manufacturing enterprise groups with international competitiveness and world-renowned manufacturing brands will gradually be cultivated; the development of industries that provide final consumer products for social production such as daily necessities, durable consumer goods, machinery and equipment, etc. will be accelerated; leading industries in the manufacturing industry will become a key project to be cultivated; the cultivation of electronic and communication equipment, electrical machinery and equipment, transportation equipment, some chemical products, and some precision machinery, special equipment and other industries will show high growth rates and strong growth endurance, which is expected to become the leading industry; at the same time, investment in technology research and development of the core of the manufacturing industry will be focused on in order to promote the scale of manufacturing products through the construction of the main functional areas of the special economic zones.

References National Bureau of Statistics (2000–2019) China statistical yearbooks. National Bureau of Statistics (2005) Comprehensive statistical data and materials on 55 years of New China. Xinhua Press. China Statistical Abstract 2019 National, provincial and municipal statistical bulletins for 2019 Relevant data from the National Bureau of Statistics on www.stats.gov.cn.

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Relevant policies of the Chinese government on www.gov.cn. Relevant plans, policies and bulletins of the Ministry of Land and Resources on www.mlr.gov.cn. Relevant plans, policies and bulletins of the State Environmental Protection Administration on www.mep.gov.cn. Relevant plans and policies of the National Development and Reform Commission on www.ndrc. gov.cn. Report on the Development of China’s Special Economic Zones, in: Blue Book of Special Economic Zones (2018), Social Sciences Academic Press (China), 2018.

Part II

Special Topics

Chapter 2

Report on the Development of the Green Transformation of China’s Special Economic Zones in 2019 Yiming Yuan, Chunhong Sheng, and Peiyao Wang

Background of Industrial Green Transformation The definition of industrial green transformation by the United Nations Industrial Development Organization is: Increase investments in public green, and combine that with the implementation of public policies to encourage environmentally friendly business investments, so as to achieve sustainable economic development (UNIDO 2014). Developed countries have introduced industrial green transformation strategies and supporting policies. For example, Norway has launched a plan to innovate industrial green transformation, and Germany has proposed green industry 4.0 in addition to industry 4.0. Many scholars believe that industrial green transformation will help improve environmental quality, stimulate corporate capability for green innovation, reduce corporate consumption of resources, improve the efficiency of corporate production, and promote economic development (Porter and Linde 1995a, b). This report studied the industrial green transformation of China’s special economic zones for many years and evaluated the green transformation of industries in the five major special economic zones. It has indeed found economic development going parallel with environmental quality. For example, the environmental quality and economic development of Shenzhen are both showing a good momentum of development, and there are few worrying phenomena, which reflect an increase in the cost of development cost for enterprises and a slowdown of economic growth due to the green transformation policies. Y. Yuan (B) China Center for Special Economic Zone Research, Shenzhen University, Shenzhen, China e-mail: [email protected] C. Sheng Shenzhen University, Shenzhen, China P. Wang Hanlun Green Development Research Institute, Shenzhen, China © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_2

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The purpose of the series of reports on the industrial green transformation of China’s special economic zones is to demonstrate the pioneering and innovative spirit of the special economic zones in solving China’s most pressing practical problems, that is, the coordinated development of a beautiful environment and economic growth. Many people think that China’s special economic zones have lost their original special significance because the policies entrusted to them by the central government have already covered many other regions. This study believes that the significance of China’s special economic zones should not be limited to the special mission entrusted to them by the central government, but that it also lies in the innovative solutions to China’s problems provided by China’s special economic zones. That is, the special features of special economic zones are their ability to courageously innovate and solve challenging problems. The special economic zones in the past used to make contributions to liberating productivity and developing the economy. In the new era, the special feature of China’s special economic zones is to provide solutions to China’s environmental difficulties.

Environmental Regulation and Industrial Green Transformation Environmental regulation is a collection of various measures taken in industrial green transformation. By means of different environmental regulations, the government promotes enterprises to aim at cleaner production, fewer pollutant emissions, and renewable energy to improve the efficient use of resources. Based on the hypothesis of classical traditional economics, environmental regulation converts unexpected external costs such as environmental pollutants into internal costs of enterprises. The enterprises need to invest resources, capital, and manpower to control pollution, leading to more operating costs and less corporate innovation investment, thereby reducing the competitiveness of enterprises. This theory opposes economic development and environmental protection, causing many governments to worry about the slowdown in economic growth and dare not vigorously promote industrial green transformation, and enterprises also believe that industrial green transformation is a burden for them. This theory was broken by Porter. In his article “National Competitive Advantage” published in 1990, Porter stated that strict environmental regulations could improve the overall industrial level of the country, which meant that it could promote the industrial green transformation of a country or a region. Porter believed that if environmental regulations were rationally designed and effectively implemented, they would not increase the cost of the enterprises, but would stimulate their innovative vitality, thereby the enterprises would gain profit and enhance international competitiveness. Porter believed that the external cost internalization theory of traditional economics was based on static assumptions, while he believed that enterprise development was a process of dynamic innovation. Environmental pollution is caused

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by enterprises not using resources effectively and fully. Environmental regulations are conducive to improving the effectiveness of the use of resources. In addition, environmental regulations guide enterprises to find market deficiencies and imperfections, reduce investment risks and uncertainties, provide more information, and create pressure to promote innovation through policies (Porter and Van der Linde 1995a). The Porter hypothesis shatters the conclusion that environmental regulation and economic growth cannot be achieved at the same time (Porter and Van der Linde 1995b). Scholars who support the Porter Hypothesis believe that under strict environmental regulations if enterprises first invest in research and development on environmental protection technology, they will gain first-mover advantage if they face increasingly stringent environmental regulations in different countries. Strict environmental regulations will prompt enterprises to reorganize their capital and eliminate outdated technologies and mechanical equipment, thereby improving production efficiency and profits (Xepapadeas and Zeeuw 1999). Similar to the Porter Hypothesis, there is also the German ecological modernization theory, which also advocates environmental regulation to improve the country’s competitiveness in the international market (Jänicke et al. 1989). Both the Porter Hypothesis and the ecological modernization theory are illustrated by the examples of Germany and Japan, because the strong environmental regulations of the two countries did not lead to the loss of competitiveness of enterprises in their related fields, but strengthened their international comparative advantages. After entering the twenty-first century, in view of the increasingly serious and worsening trend of environmental problems, a high rate of support for the Porter Hypothesis has also appeared in academia. Many empirical studies have provided empirical analysis and support for the Porter Hypothesis. For example, Popp (2005) observed the patent data and desulfurization effect, the performation of innovation, and environmental performance of the flue gas desulfurization equipment of 186 US factories, and the enterprises improved the desulfurization efficiency. By observing the environmental R&D and cleaner production of OECD SMEs, Popp found that environmental regulation was conducive to the improvement of the environmental performance and that of innovation of the special economic zones (Labonne 2006). Research on environmental regulation and innovation in China has also become very popular in recent years. On the one hand, many scholars introduced the classic theoretical literature of the Porter Hypothesis. On the other hand, Chinese scholars have also launched an empirical analysis of the Porter Hypothesis. This paper summarizes several aspects of intensive discussion in China of the Porter Hypothesis, and the first one is the relationship between the Porter Hypothesis and industry. Dai (2013) believes that strict environmental regulations will promote innovation and increase productivity for enterprises in the long run, but he said that it would be difficult for strict environmental regulations to eliminate the inefficiencies of high-polluting enterprises. Some scholars have proposed that for pollution-intensive enterprises, the effects of strict environmental regulations require consideration of the scale of the industry and the input of innovative talents (Li et al. 2013). In terms of manufacturing, some researchers believe that environmental regulations in China have

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not led to an increase in the level of manufacturing innovation. The second aspect of strict environmental regulations is that in view of the impact of environmental regulations on the level of industrial profit and technological innovation in China, many scholars believe that strict environmental regulations will help improve the industrial level (Li et al. 2013; Zhao and Gu 2015). Third, in terms of environmental regulations and foreign trade, many scholars have discussed whether the strictness of environmental rules affects the comparative advantages or competitiveness of enterprises in foreign trade. Lu (2009) analyzed data on pollution-intensive products in 95 countries in 2005 to conclude that it is not advisable for the government to reduce the level of environmental regulations to gain international comparative advantages. Instead, strengthening environmental regulations on pollution-intensive products is conducive to gaining international comparative advantages. This report will explain the government’s environmental regulations, the implementation of corporate environmental regulations, and the capability for industrial innovation of the five major special economic zones, Shenzhen, Zhuhai, Shantou, Xiamen, and Hainan through the practice of green industrial transformation in the five zones. At the same time, it provides an evaluation of the capability for industrial green transformation in the five zones.

Industrial Green Transformation and Innovation in China’s Special Economic Zones China’s five major special economic zones have introduced local environmental regulations in addition to national-level environmental regulations in terms of industrial green transformation. This report will focus on the environmental regulation measures of the five special economic zones and combine them with the capability for innovation. This paper will be divided into three major categories of environmental regulation: first, administrative order, which refers to environmental protection laws, regulations, policies, and systems formulated by the legislative and administrative departments; second, market incentive, which refers to the system designed by the government according to market mechanisms leading enterprises to be more environmentally friendly by dint of the market signals; third, public participation, which refers to the system to achieve environmental protection through voluntary actions of enterprises and individuals. This section will explain the environmental regulatory systems of the five major special economic zones regarding these three categories of environmental regulations.

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Command-and-Control Environmental Regulation in the Five Special Economic Zones In the five major special economic zones, command-and-control environmental regulation is the dominating means of controlling pollutants. Some scholars have pointed out that command-and-control environmental regulation is more effective when environmental pollution is serious and needs to be solved urgently. For example, the government has passed laws and administrative orders to force companies to meet certain pollutant emission standards and achieve energy-saving emission reduction targets, thereby realizing industrial green transformation. Judging from the government documents of the five major special economic zones in 2018, we can see that all of the five zones have adopted command-and-control environmental regulations to varying degrees (Table 2.1). Judging from the command-and-control environmental regulations of the five major special economic zones in 2018, we can see that the environmental laws and regulations of Shenzhen are the most numerous, sound, and detailed, covering areas involving noise, sea, water, air, motor vehicles, and fuel. In terms of environmental protection approvals for construction projects, the Shenzhen Environmental Protection Bureau rejected 1697 items, with a rejection rate close to 30%. The highlight of Zhuhai environmental law enforcement in 2018 was the pilot work on the enterprise environmental protection credit and the paid use and trading of emission rights. Shantou strengthened environmental legislation in 2018, focusing on cleaner production of enterprises, public reporting, and control of soil pollution. While environmental protection legislation has been strengthened, law enforcement in the five major special economic zones has also been intensified. In terms of the number of environmental penalties, the penalties of Shenzhen in 2018 reached 244 million yuan, an increase of 22% over the same period last year; the city with the fastest increase in environmental penalties was Shantou with an increase of more than 50 times, from 2 million yuan to 12.95 million yuan; the penalties of Xiamen and Hainan also grew by more than 50% (Fig. 2.1). The command-and-control environmental regulations of the five major special economic zones obtained the following effects on industrial green transformation: (1) It eliminated industries with high environmental pollution and optimized the industrial structure; (2) In terms of new projects, higher standards restricted the entry of backward production capacity and provided opportunities for high-quality projects; (3) It improved the level of environmental technology of local enterprises and enhanced the competitiveness of their products and services. Judging from the environmental command of environmental regulations of the five major special economic zones in 2018, we can see that Shenzhen has the most environmental protection laws and regulations, but this did not affect the competitiveness of Shenzhen. It can be seen that strict environmental protection regulations do not have a significant negative effect on the competitiveness of a city.

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Table 2.1 Local command-and-control environmental regulations for the five major special economic zones in 2018 Five special economic zones Local command-and-control environmental regulations promulgated in 2018 Shenzhen (15)

1. Regulations on Environmental Protection of Construction Projects in Shenzhen Special Economic Zone (Amended on December 27, 2018) 2. Regulations on Prevention and Control of Environmental Noise Pollution in Shenzhen Special Economic Zone (Amended on December 27, 2018) 3. Regulations on Prevention and Control of Sea Pollution in Shenzhen Special Economic Zone (Amended on December 27, 2018) 4. Regulations on Protection of Drinking Water Sources in Shenzhen Special Economic Zone (Amended on December 27, 2018) 5. Regulations on Prevention and Control of Motor Vehicle Exhaust Pollution in Shenzhen Special Economic Zone (Amended on December 27, 2018) 6. Measures of Shenzhen Municipality for Prevention and Control of Dust Pollution (Amended on December 21, 2018) 7. Measures for the Implementation of Exhaust Pollution Inspection and Compulsory Maintenance of Motor Vehicles in Use in Shenzhen Special Economic Zone (Amended on December 21, 2018) 8. Provisions on the Management of Centralized Disposal of Medical Waste in Shenzhen (Amended on December 21, 2018) 9. Regulations on Safety Assurance and Environmental Management of Restricted Areas around Daya Bay Nuclear Power Plant (Amended on December 27, 2018) 10. Regulations on Environmental Protection in Shenzhen Special Economic Zone (Amended on December 27, 2018) 11. Supplementary Notice on the Implementation of the Sixth Phase of the National Motor Vehicle Air Pollutant Emission Standard for Light Vehicles 12. Announcement on Delimiting Areas Where the Use of High-emission Non-road Mobile Machinery Is Prohibited 13. Notice on the Issuance of the 2018 “Shenzhen Blue” Sustainable Action Plan 14. Notice on Delimiting High-Pollution Fuel Banning Zones

Zhuhai (3)

Administrative Penalty Discretionary Rules of Zhuhai Environmental Protection Bureau (Revised) Measures for the Evaluation of Zhuhai Enterprise Environmental Credit Measures for the Pilot Administration of the Compensated Use and Trading of Pollutant Discharge Rights in Zhuhai (Trial) (continued)

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Table 2.1 (continued) Five special economic zones Local command-and-control environmental regulations promulgated in 2018 Shantou (8)

1. Regulations on the Prevention and Control of Environmental Noise Pollution in Shantou 2. The highest award for reporting environmental violations is 30,000 yuan 3. Measures of Shantou Environmental Protection Bureau for Encouraging the Public to Report Environmental Violations 4. Notice of Shantou Motor Vehicle Exhaust Pollution Management Center on Matters Related to the Reform Policy for Freight Vehicle Inspection and Testing 5. Work Plan for Soil Pollution Prevention and Control of Shantou in 2018 6. Notice on the Release of the Second Batch of Enterprises to Implement Cleaner Production Audits Legally in 2018 7. Notice on Recommending Shantou Environmental Emergency Experts 8. Notice on the Release of the First Batch of Enterprises to Implement Cleaner Production Audits Legally in 2018

Xiamen (4)

1. Environmental Access Guidelines and Negative List Drafting Instructions for Heavy Metal Pollutant Discharge Construction Projects in Xiamen 2. Measures for the Management of the Xiamen Environmental Protection Bureau for Environmental Impact Assessment Expert (Trial) 3. Rules for the Implementation of the Management of Xiamen Environmental Protection Credit Information (Trial) 4. Opinions on Carrying out Joint Incentives for Trustworthiness and Joint Punishments for Non-trustworthiness to Producers and Operators in the Environmental Protection Field

Hainan (6)

1. Notification on the Promotion of the Use of National VI Standard Automobile Gasoline and Diesel in Hainan Province 2. Notice on Regulating the Management of the Redevelopment and Utilization of Contaminated Land in Hainan Province 3. Notice on the Establishment of a Leading Group to Promote the Construction of a Pilot Free Trade Zone (Free Trade Port) 4. Notice on the Release of the Regulations on the Environmental Protection Management of Restricted Imported Solid Wastes that Can Be Used as Raw Materials 5. Notice on the Implementation of the Standard Management Inspection of the Environmental Impact Assessment Institutions in Hainan Province in 2017 6. Notice on Issuance of the Interim Regulations on the Management of Soil Pollution Prevention and Control Projects in Hainan Province

Source Shenzhen Ecology and Environment Bureau, http://meeb.sz.gov.cn/xxgk/zcfg/zcfg/index_ 1.htm; Zhuhai Ecology and Environment Bureau; Shantou Ecology and Environment Bureau, http://zhepb.gov.cn/xxgkml/gzwj/gfxwj/; Xiamen Ecology and Environment Bureau; Department of Ecology and Environment of Hainan Province, http://sthjj.xm.gov.cn/zwgk/zcfg/xmsfg/

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Shenzhen

Zhuhai

Shantou

2018 Environmental protection penalty amount (ten thousand yuan)

Xiamen

Hainan

2017 Environmental protection penalty amount (ten thousand yuan)

Penalty amount growth rate (%)

Fig. 2.1 Intensity and growth rate of environmental law enforcement in the five special economic zones in 2018

Market Incentives for Environmental Regulations in the Five Special Economic Zones Market incentives for environmental regulations aim to encourage enterprises to make investments that are conducive to environmental protection and sustainable development through various market means, stimulate enterprises to carry out technological innovation and equipment upgrades, and thereby improve the efficiency of production (Sun et al. 2019). The five major special economic zones also use market incentives for environmental regulations to promote the development and industrial transformation of the environmental protection industry. However, in terms of quantity, they still mainly focus on command-and-control regulations. It can be seen from Table 2.2 that Shenzhen’s market incentives for environmental regulations cover a wide range with more policies, stronger pertinence, and more investment. Shenzhen has implemented a series of subsidies involving industrial transformation and upgrading, energy conservation and environmental protection, cleaner production, and atmospheric improvement; at the same time, it has increased its R&D investment in environmental protection and energy conservation industries. In 2018, 19 environmental research projects were set up, and a total of 30.5 million yuan was allocated. In terms of major project plans, there were a total of 546 items in 2018, of which 70 were designed for energy conservation and environmental protection. In 2018, the added value of Shenzhen’s green and low-carbon industries was 99.073 billion yuan, an increase of 11.7%. In 2018, the innovative measures for Shenzhen’s market incentives and environmental regulations were to take the lead in piloting the implementation of compulsory environmental pollution

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liability insurance for enterprises in industries with higher environmental risks. In 2018, 774 enterprises in Shenzhen bought environmental pollution liability insurance, with a premium of 19.4607 million yuan and an insured amount of 1.152 billion yuan. Other special zones have promulgated some market incentives for environmental regulations based on their own characteristics. Zhuhai features green buildings, Shantou provides subsidies for small and medium-sized enterprises, Xiamen focuses on energy conservation and a circular economy, and Hainan lays emphasis on cultivated land protection. But they have fewer policies compared with Shenzhen. Shenzhen has adopted the most market incentives for environmental regulations among the five special economic zones, and at the same time, the urban competitiveness of Shenzhen has always been in a leading position among the five. Therefore, it is confirmed again that stricter environmental regulations did not weaken the urban competitiveness of Shenzhen. Market incentives for environmental regulations can bring the following benefits: (1) They encourage innovation and entrepreneurship regarding energy conservation and environmental protection. Shenzhen regards the energy conservation and environmental protection industry as one of the strategic emerging industries, and provides greater financial support; (2) They create a better business environment and attract enterprises and talents that have high requirements on the environment; (3) They lay a solid foundation for the sustainable development of the city. The energy-saving and environmental protection industry will be the source of future economic growth. As the requirements for energy-saving and environmental protection in various regions increase, enterprises in Shenzhen will have the first-mover advantage.

Voluntary Environmental Regulations in the Five Special Economic Zones To realize industrial green transformation, an area cannot rely solely on the government, but it also needs the mobilization of the power of enterprises and citizens. Voluntary environmental regulations with public and enterprise participation as the main mode is an important supplement to the command-and-control regulation and market incentives for environmental regulation, and it is a new direction for development. The difference between voluntary environmental regulation and commandand-control environmental regulation is that enterprises can choose to participate or not. At the same time, the agreements, commitments, and plans are proposed by industrial associations, enterprises themselves and other subjects with the purpose of protecting the environment. This section will discuss the development of voluntary environmental regulations in the five major special economic zones through voluntary environmental regulations for enterprises and social organizations.

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Table 2.2 Market incentives for environmental regulations of the five major special economic zones in 2018 Special economic zone Market incentive policy Shenzhen (12)

1. Shenzhen’s Special Fund for Industrial Upgrading 2. Shenzhen’s Special Fund for Environmental Protection 3. Shenzhen’s Notice on Organizing the Implementation of the New Energy Industry and the Energy Conservation and Environmental Protection Industry Support Plan in 2018 4. Shenzhen’s Measures for Atmospheric Environmental Quality Improvement Subsidy (2018–2020) 5. Shenzhen’s Special Fund for Circular Economy and Energy Conservation and Emission Reduction 6. Special Application for Energy Saving and Emission Reduction Technology in 2018 7. Shenzhen’s Special Fund for Building Energy Conservation Development 8. Special Fund for Water Development 9. Shenzhen’s Technological Transformation Investment Subsidy in 2018 10. Shenzhen’s Plan for Supporting Enterprise Technology Transformation in 2018 11. Special Subsidy for Cleaner Production Enterprises in Shenzhen 12. Opinions of Shenzhen’s Municipal People’s Government on Implementation of Building a Green Financial System

Zhuhai (3)

1. Zhuhai’s Policy on Green Building Demonstration Project Subsidy in 2018 2. Zhuhai’s Special Fund for Energy Conservation and Emission Reduction in 2018 3. Zhuhai’s Technical Transformation Fund in 2018

Shantou (2)

1. Proposed Subsidy Fund for Transformation and Upgrading Project of Improving the Quality and Efficiency of Small and Medium-sized Enterprises in 2018 2. The Special Fund for Promoting Economic Development in 2018 (for Enterprise Technological Transformation Purposes)

Xiamen (3)

1. Xiamen’s Special Fund for Industrial Transformation and Upgrading in 2018 2. Xiamen’s Notice on the Measures for the Administration of Special Funds for Energy Conservation and Development of Circular Economy at the Municipal Level 3. Measures for the Administration of the Use of Special Funds for Environmental Protection in Xiamen

Hainan (2)

1. Subsidy for the Protection of Arable Land in Hainan Province in 2018 2. Special Fund for Low-Carbon Manufacturing Development of Hainan Province in 2017–2018

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Corporate social responsibility is one of the manifestations of voluntary environmental regulation for enterprises. Corporate social responsibility shows that enterprises not only need to pursue profits but should also bear corresponding responsibilities for society and the environment. The following paragraphs will focus on the performance of enterprises in the five major special economic zones in terms of corporate social responsibility. Among the top ten events selected by the China Corporate Social Responsibility Network in 2018, Shenzhen occupies two, which fully reflects the advancement of Shenzhen in corporate social responsibility and the challenges it faces. First, on January 15, 2018, the State-owned Assets Management Committee of Shenzhen asked state-owned enterprises to set an example in corporate social responsibility and released the Shenzhen State-owned Corporate Social Responsibility Report in 2017 for the first time. Second, it is about the “Gene Edited Children” incident at the end of 2018. This incident stimulated discussions on technology and ethics and resulted in emphasizing that in scientific and technological research, ethics and humanity should be respected, and life should be respected. The five major special economic zones all have outstanding enterprises that practice corporate social responsibility. Tencent, Huawei, etc. are located in Shenzhen, Gree Electric in Zhuhai, Xiamen International Bank in Xiamen, and Hainan Airlines in Hainan Province. These enterprises have established great models for other companies in voluntary corporate social responsibility. Besides enterprises, social organizations are also an important part of voluntary environmental regulations. As of 2018, there were 10,230 social organizations in Shenzhen, 2426 in Zhuhai, and 7618 in Hainan, and the number in Shantou and Xiamen is unknown. Through the reform of separating industrial associations from the competent authorities, Shenzhen has established a special service bureau for industrial associations to conduct unified management of those associations. In addition, Shenzhen has also issued industrial policies to encourage the development of industrial associations, which provides a good communication platform for the industrial green transformation of Shenzhen. The total number of industrial associations and chambers of commerce in Shenzhen increased from 565 in 2014 to 910 in 2017, with an average annual growth rate of 17.23%. Take the Shenzhen Green Building Association as an example, which was established in 2008. It is committed to developing green buildings and promoting a circular economy, providing members with technical services, and training, and it helps to set standards for construction units. It promotes Shenzhen in becoming a city with the biggest scale and density of green buildings, and one of those cities with the most green building awards and innovation awards. Shenzhen has 10 green ecological districts and parks, and the area that the energy-saving buildings in Shenzhen cover reach 150 million square meters, of which 73.2 million square meters are green buildings. Take the Shenzhen Green and Low-Carbon Development Foundation as an example. Through the effort of joint think tanks, the Shenzhen Green and LowCarbon Development Foundation provides forward-looking research for the design of government urban low-carbon development policies and mechanisms; at the same time, it assists enterprises in finding new economic growth points in green upgrading

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and transformation; and it helps the public to foster low-carbon awareness and form the habit of sustainable carbon emission reduction. On the one hand, the public participates in industrial green development by establishing social organizations to assist enterprises; on the other hand, it plays its supervisory role and promotes greening through complaints. It is different from the common belief that the more environmental complaints, the worse the local environment. It is believed in this paper that the more environmental letters and visits there are, the higher the degree of public participation in green development will be, which is an important indicator that effectively reflects public supervision of green transformation. In terms of environmental complaints, Shenzhen did not receive the lowest number of environmental complaints because of its better environment. On the contrary, the number of environmental complaints is much higher than in other regions. The total number of environmental complaints in Shenzhen is the highest, and the number of environmental complaints per 10,000 people is also the highest. This shows that the citizens of Shenzhen are voluntarily participating in the industrial green transformation. The number of environmental complaints per 10,000 people in Zhuhai ranks second, while the number in Shantou is the lowest, with only 10 cases per 10,000 people, which is less than one-seventh of the number in Shenzhen (Fig. 2.2). Letters and visits from the five major special economic zones in 2018

Shenzhen

Zhuhai Environmental complaints in 2018

Shantou

Xiamen

Hainan

Complaints per 10,000 people

Fig. 2.2 The total number of environmental complaints in the five special economic zones and the number of environmental complaints per 10,000 people in 2018

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The Effects of Environmental Regulation and Industrial Green Transformation in the Five Major Special Economic Zones The important indicators of industrial green transformation are whether the efficiency of resource utilization is improved, whether there are correspondingly fewer pollutants, and whether the competitiveness of the city, especially the city’s capability for innovation, is improved. This section will discuss the effects of industrial transformation in the five special economic zones from these three aspects.

The Status of the Improvement of the Efficiency of Resources In terms of resource efficiency in the five major special economic zones, except Shantou which increased energy consumption compared with last year, other regions have experienced a decline. The energy consumption of Zhuhai per 10,000 yuan of GDP dropped by 8.8%, which is the fastest drop, followed by Shenzhen. The GDP per capita and GDP per unit land area of the five special economic zones all increased. The GDP per unit land area of Zhuhai shows the fastest growth rate among the five special economic zones, but the GDP output per square kilometer of Shenzhen is the highest, at 1,212.63 million yuan, 7 times that of Zhuhai. It is also worth mentioning that the water consumption of Shenzhen per 10,000 yuan of GDP dropped to 8.41 m3 , which is the lowest level in China. In terms of environmental regulation and improvement of the efficiency of resources in the five major special economic zones, the improvement of the efficiency of resources is more obvious in places with stricter environmental regulations, and the level of the improvement of the efficiency of resources is also quite low in places with loose environmental regulations. Shenzhen achieved better effects of the improvement of the efficiency of resources with stricter environmental regulations, which is conducive to industrial green transformation and higher economic competitiveness (Fig. 2.3).

Status of Pollutant Reduction In 2018, the five major special economic zones performed differently in terms of major pollutants. The air quality index, per capita urban green area, inhalable PM10 particles, and fine particles of Shenzhen all showed decline. Zhuhai only outperformed last year in terms of PM2.5 fine particles, and its performance in other aspects was relatively average. However, the air quality of Shantou was worse than last year. The performance of Hainan in all aspects remained unchanged from last year. It

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Xiamen GDP per capita growth rate (%)

Shantou

GDP per unit land area growth rate (%)

GDP per 10,000 yuan energy consumption reduction rate (%)

Zhuhai

Shenzhen

Fig. 2.3 Improvement of the efficiency of resources in the five major special economic zones in 2018

Annual reduction rate of the concentration of inhalable particles PM10 Annual rate of reduction of the concentration of fine particles PM2.5 Growth rate (%) of days (day) of air quality index (AQI) to or above Grade

Shenzhen

Zhuhai

Shantou Xiamen

Hainan

Growth rate (%) of per capita park green area (square meters)

Fig. 2.4 Status of pollutant reduction in the five major special economic zones in 2018

can be seen that stricter environmental regulations are effective in reducing pollutant emissions, while looser environmental regulations may be detrimental to the reduction of pollutant emissions (Fig. 2.4).

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Number of authorized patents Number of authorized invention patents

Shenzhen

Zhuhai

Shantou

Xiamen

Hainan

Fig. 2.5 Number of authorized patents and invention patents in the five major special economic zones in 2018

Status of the Improvement of the Capability for Innovation That whether environmental regulations are strict or not is related to the improvement of corporate capability for innovation is an important argument of the Porter Hypothesis. Some people believe that strict environmental regulations are not conducive to innovation, while the Porter Hypothesis explains that it is conducive to corporate innovation. From the data on patent applications in the five special economic zones in 2018, we can see the competitiveness of enterprises in the five special economic zones. Shenzhen undoubtedly has the strongest innovative power, and the number of its authorized patents and invention patents is far ahead of other special economic zones. It can be seen that stricter environmental regulations did not restrict the innovative capability of Shenzhen enterprises, while looser environmental regulations did not improve the innovative capability of enterprises. On the contrary, Shenzhen has implemented more environmental regulations in exchange for an extremely high degree of capability for innovation (Fig. 2.5).

Evaluation of Industrial Green Transformation and Capability for Development of the Special Economic Zones Significance of the Evaluation The five major special economic zones have adopted green transformation measures to varying degrees. Industrial green transformation is a systematic project involving

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many aspects, including government industrial policies, green investment, public participation, and the effects of green transformation. It requires an overall assessment in order to assess the capability for the green transformation of the five major special economic zones. At the same time, corresponding policies and recommendations are put forward based on the results of the evaluation. Through the establishment of an index system for evaluating the capability for industrial green transformation, the overall and comprehensive evaluation of the industrial green transformation of the five special economic zones is carried out, combined with the methods of analysis of quantitative research and comparative research. On the one hand, it reveals the status of the development of the industrial green transformation in the five special economic zones, and on the other hand, it helps to find out the shortcomings in the industrial green transformation of the five special economic zones and proposes corresponding countermeasures on this basis.

Construction of and Data Collection for an Evaluation Index System This paper is committed to constructing a comprehensive and representative evaluation index system to truly and effectively evaluate the capability for the industrial green transformation of the five special economic zones.

Construction of an Evaluation Index System The system of an industrial green transformation index in this paper combines the status of the development of the five major special economic zones and focuses on the evaluation of their capability for industrial green transformation. Five firstlevel indicators are constructed, namely green investment, green production, green control, green benefits, and green environment. Under the five first-level indicators, the system of an evaluation index 13 second-level indicators are set up based on the type of indicator including the proportion of R&D expenditure in GDP, the value of the three changes in the industrial structure, the reduction rate of electricity consumption per 10,000 yuan of GDP, GDP per unit land area and capita urban green area, etc. (Table 2.3)

Data Collection By means of a review of the official data such as the government work report of the five major special economic zones, the statistical bulletin of national economic and social development, and the environmental quality bulletin, the data of the secondlevel indicators in the system of the evaluation index of the capability for the industrial

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Table 2.3 The system of an evaluation index of the capability for industrial green transformation of the special economic zones Evaluation objective

First-level indicator

Second-level indicator

Type of indicator

Capability for Industrial Green Transformation of the Special Economic Zones

Green investment

Proportion of R&D expenditure in GDP

Positive

Permanent population growth rate

Positive

Fixed asset investment growth rate

Positive

Value of the change in the structure of the three industries

Positive

Growth rate of added value of the high-tech industry

Positive

Growth rate of added value of the modern service industry

Positive

Rate of reduction of energy consumption per 10,000 yuan of GDP

Positive

Rate of reduction of electricity consumption per 10,000 yuan of GDP

Positive

GDP per unit land area

Positive

GDP per capita

Positive

Days of air quality index (AQI) at or above Grade II

Positive

Urban green areas per capita

Positive

Annual concentration of PM2.5 fine particles

Negative

Green production

Green control

Green benefits Green environment

green transformation of the five major special economic zones in 2018 were sorted out, and the data was compared and analyzed (Table 2.4).

Process of Evaluation In this paper, the method for the evaluation of entropy is used to evaluate the capability for the industrial green transformation of the special economic zones. The method for the evaluation of entropy is an objective weighting method of evaluation, and its basic idea is to determine the objective weight according to the magnitude of

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Table 2.4 Basic data for the evaluation of the capability for the industrial green transformation of the five special economic zones in 2018 (xi j ) Second-level indicators

Shenzhen Zhuhai

Shantou Xiamen Hainan

Proportion of R&D expenditure in GDP (%)

4.2

2.9

1.4

3.4

0.52

Permanent population growth rate (%)

4.6

5.4

0.5

2.5

0.9

Fixed asset investment growth rate (%)

20.6

20.7

19.2

10.1

10.1

Value of the change in the structure of the three industries (%)

0.4

2.2

1

0.8

2.6

Growth rate of added value of the high-tech industry (%)

13.3

13

15.9

8.8

6

Growth rate of added value of the modern service industry (%)

7.1

1.7

6.8

7.4

9.1

Rate of reduction of energy consumption per 4.21 10,000 yuan of GDP (%)

8.8

–3.28

1.85

0.3

Rate of reduction of electricity consumption per 10,000 yuan of GDP (%)

–4.1

–5.1

–2.8

1.7

2.22

GDP per unit land area (10,000 yuan/square kilometer)

121,263

16,786

11,452

28,195

1425

GDP per capita (yuan)

189,568

159,400 44,672

118,015 51,955

Days of air quality index (AQI) at or above Grade II (day)

345

325

337

360

359

Urban green areas per capita (square meter)

23

19.9

15.16

14.65

16

27

27

25

18

Annual concentration of PM2.5 fine particles 26 (microgram per cubic meter)

the variability of the indicators. The smaller the entropy value of a certain indicator, the greater the degree of variation of the index value, the more information will be provided, the greater its role in the comprehensive evaluation, and the greater its weight; on the contrary, the larger the entropy value of a certain indicator, the smaller the degree of variation of the index value, the less information provided, the smaller its role in the comprehensive evaluation, and the smaller its weight. The specific process of evaluation occurs following these steps:

Data Standardization Because the measurement units of the basic data of the second-level indicators are not uniform, the basic data must be standardized before calculating the entropy value, that is, the absolute value of the indicator is converted into a relative value, so as to solve the problem of homogeneity of different values of quality indicators. And because the meanings of positive indicators and negative indicators are different, two different algorithms are used for the process of standardization. The specific method is as follows:

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Table 2.5 Standardized evaluation data of the capability for the industrial green transformation of the five special economic zones in 2018 (yij ) Shenzhen Zhuhai Shantou Xiamen Hainan

Second-level indicator Proportion of R&D expenditure in GDP

1.0000

0.6467 0.2391

0.7826

0.0000

Permanent population growth rate

0.8367

1.0000 0.0000

0.4082

0.0816

Fixed asset investment growth rate

0.9906

1.0000 0.8585

0.0000

0.0000

Value of change in the structure of the three industries

0.0000

0.8182 0.2727

0.1818

1.0000

Growth rate of added value of the high-tech industry

0.7374

0.7071 1.0000

0.2828

0.0000

Growth rate of added value of the modern service industry

0.7297

0.0000 0.6892

0.7703

1.0000

Rate of reduction of energy consumption per 0.6200 10,000 yuan of GDP

1.0000 0.0000

0.4247

0.2964

Rate of reduction of electricity consumption 0.1366 per 10,000 yuan of GDP

0.0000 0.3142

0.9290

1.0000

GDP per unit land area

1.0000

0.1282 0.0837

0.2234

0.0000

GDP per capita

1.0000

0.7918 0.0000

0.5062

0.0503

Days of air quality index (AQI) at or above Grade II

0.5714

0.0000 0.3429

1.0000

0.9714

Urban green area per capita

1.0000

0.6287 0.0611

0.0000

0.1617

Annual concentration of PM2.5 fine particles 0.0625

0.1250 0.0625

0.0000

1.0000

Positive indicator: yi j =

xi j − min (x j ) (0 ≤ yi j ≤ 1) max (x j ) − min (x j )

(2.1)

max(x j ) − xi j (0 ≤ yi j ≤ 1) max (x j ) − min (x j )

(2.2)

Negative indicator: yi j =

where, i represents each region and j represents each second-level indicator. The results of the standardization process are as follows (Table 2.5).

Calculation of Entropy Value, Difference Coefficient, and Weight Before calculating the entropy value, the first step is to calculate the contribution of each region under each second-level indicator based on the results of the standardization of the original data. The specific formula is as follows (Table 2.6):

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Table 2.6 Contribution of each region under each second-level indicator (Pi j ) Shenzhen Zhuhai Shantou Xiamen Hainan

Second-level indicator Proportion of R&D expenditure in GDP

0.3747

0.2424 0.0896

0.2933

0.0000

Permanent population growth rate

0.3596

0.4298 0.0000

0.1754

0.0351

Fixed asset investment growth rate

0.3477

0.3510 0.3013

0.0000

0.0000

Value of change in the structure of the three industries

0.0000

0.3600 0.1200

0.0800

0.4400

Growth rate of added value of the high-tech industry

0.2704

0.2593 0.3667

0.1037

0.0000

Growth rate of added value of the modern service industry

0.2288

0.0000 0.2161

0.2415

0.3136

Rate of reduction of energy consumption per 0.2649 10,000 yuan of GDP

0.4272 0.0000

0.1814

0.1266

Rate of reduction of electricity consumption 0.0574 per 10,000 yuan of GDP

0.0000 0.1320

0.3904

0.4202

GDP per unit land area

0.6967

0.0893 0.0583

0.1556

0.0000

GDP per capita

0.4259

0.3372 0.0000

0.2156

0.0214

Days of air quality index (AQI) at or above Grade II

0.1980

0.0000 0.1188

0.3465

0.3366

Urban green area per capita

0.5401

0.3396 0.0330

0.0000

0.0873

Annual concentration of PM2.5 fine particles 0.0500

0.1000 0.0500

0.0000

0.8000

yi j Pi j = Σ n i=1

yi j

(2.3)

Then, calculate the entropy value of each second-level indicator according to the formula: E j = −k

n Σ

Pi j ln Pi j

(2.4)

i=1

In this formula, let k = ln1n , if Pi j = 0, , according to the practice of Huang et al. (2015), set Pi j approximately equal to 0.0001 to ensure that Pi j ln Pi j is valid and there is no significant impact on the final result. Finally, calculate the weight of each indicator, the formula is as follows: Dj W j = Σ m j=1

Dj

(2.5)

In this formula, define the difference coefficient: D j = 1 − E j , D j represents the degree of consistency of the contribution of each region under each second-level indicator. The entropy value, difference coefficient and weight of each second-level indicator are as follows (Table 2.7):

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Table 2.7 Entropy value, difference coefficient and weight of each second-level indicator Second-level indicator

Entropy value (E j ) Difference coefficient (D j ) Weight (W j )

Proportion of R&D expenditure in GDP

0.8004

0.1996

0.0541

Permanent population growth 0.7173 rate

0.2827

0.0766

Fixed asset investment growth 0.6823 rate

0.3177

0.0862

Change value in the structure of the three industries

0.7372

0.2628

0.0713

Growth rate of added value of 0.8124 high-tech industry

0.1876

0.0509

Growth rate of added value of 0.8551 modern service industry

0.1449

0.0393

0.7999 Reduction rate of energy consumption per 10,000 yuan of GDP

0.2000

0.0543

Reduction rate of electricity 0.7231 consumption per 10,000 yuan of GDP

0.2769

0.0751

GDP per unit land area

0.5739

0.4261

0.1155

GDP per capita

0.7109

0.2891

0.0784

Days of air quality index (AQI) to or above Grade II

0.8130

0.1870

0.0507

Urban green area per capita

0.6374

0.3626

0.0984

Annual concentration of fine particles PM2.5

0.4494

0.5506

0.1493

Calculation of the Final Result According to the above-mentioned contribution Pi j and weight W j , the score of each second-level indicator can be obtained with the values substituted into the formula (Table 2.8): Zi j =

m Σ

Pi j W j

(2.6)

j=1

According to the above-mentioned setting of the system of the evaluation index for the capability for the industrial green transformation of the special economic zones, the scores of the first-level indicators and the final scores of each region can be obtained (Table 2.9).

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Table 2.8 Scores of second-level indicators in the evaluation of the capability for the industrial green transformation of the five special economic zones in 2018 (Z ij ) Second-level indicator

Shenzhen Zhuhai

Shantou Xiamen Hainan

Proportion of R&D expenditure in GDP

0.0203

0.0132

0.0049

0.0159

0

Permanent population growth rate

0.0276

0.0329

0

0.0134

0.0027

Fixed asset investment growth rate

0.0300

0.0302

0.0260

0

0

Value of change in the structure of the three industries

0

0.0257

0.0086

0.0057

0.0314

Growth rate of added value of the high-tech industry

0.0138

0.0132

0.0187

0.0053

0

Growth rate of added value of the modern service industry

0.0090

0

0.0085

0.0095

0.0123

Rate of reduction of energy consumption per 0.0144 10,000 yuan of GDP

0.0232

0

0.0098

0.0067

Rate of reduction of electricity consumption 0.0043 per 10,000 yuan of GDP

0

0.0099

0.0293

0.0315

GDP per unit land area

0.0805

0.0103

0.0067

0.0180

0

GDP per capita

0.0334

0.0264

0

0.0169

0.0017

Days of air quality index (AQI) at or above Grade II

0.0100

0

0.0060

0.0176

0.0171

Urban green area per capita

0.0531

0.0334

0.0032

0

0.0086

Annual concentration of fine particles PM2.5

0.0124

0

0

0.0249

0.1120

Table 2.9 Final scores of the evaluation of the capability for the industrial green transformation of the five special economic zones in 2018 First-level indicator

Shenzhen

Zhuhai

Shantou

Xiamen

Hainan

Green investment

0.0778

0.0763

0.0308

0.0293

0.0027

Green production

0.0227

0.0388

0.0357

0.0205

0.0437

Green control

0.0187

0.0232

0.0099

0.0391

0.0384

Green benefits

0.1139

0.0368

0.0067

0.0349

0.0017

Green environment

0.0756

0.0334

0.0093

0.0425

0.1376

Final score

0.3087

0.2085

0.0924

0.1663

0.2241

Analysis of the Results of the Evaluation It can be seen from the results of the evaluation of the capability for the industrial green transformation of the five major special economic zones in 2018 that Shenzhen still ranks first. Shenzhen’s score for the capability for green transformation is higher than that of other special economic zones. On the one hand, it continues to lead other regions in terms of green investment and green benefits, and on the other hand, it has good scores in green production, green control, and green environment while

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having no other obvious shortcomings. Hainan ranks second, but 60% of the scores for Hainan Province come from the green environment, while it has obvious shortcomings with seriously insufficient green investment and poor performance in green benefits. And Zhuhai ranks third. In terms of green investment, it closely follows the level of Shenzhen, and even surpasses Shenzhen in terms of green production and green control. However, its scores in green benefits and green environment are lower, which affects its overall score. Xiamen ranks fourth. The gap between Xiamen and Zhuhai lies in the fact that Xiamen’s score for green investment is less than half that of Zhuhai, which affects its final ranking. Shantou is the last, and the overall score of Shantou is less than one-third that of Shenzhen. In terms of green control, green benefits and green environment, the extremely low score indicates that there are many shortcomings in its industrial green transformation (Table 2.10). It can be seen from the ranking of the results of the evaluation of the industrial green transformation of the five special economic zones in 2013–2018, Shenzhen has consistently ranked first. It has the best capability for industrial green transformation among the five special economic zones and is a model for industrial green transformation. In recent years, Shenzhen has maintained a relatively high level of green investment. The proportion of R&D expenditure in GDP even exceeds that of most high-income countries, and it has reached the world’s leading level, close to the level of Israel, the country with the highest proportion of R&D expenditure in GDP in the world. Shenzhen’s high-level green investment has also achieved a good green effect, and its green effect scores the highest among the five special economic zones. Shenzhen’s experience shows that one of the keys to realizing industrial green transformation is to increase green investment, especially in R&D. In terms of environmental regulations, Shenzhen has the most complete and strictest environmental regulations among the five major special economic zones. At the same time, it has adopted more market incentives for environmental regulations, which effectively stimulated the capability for innovation of Shenzhen’s enterprises. At the same time, its excellent ecological environment and environment conducive to innovation have attracted more talent inflows, forming a virtuous circle system between innovation, Table 2.10 Analysis of the ranking of the evaluation of the capability for the green transformation of the five major special economic zones during the period 2013–2018 Year

Shenzhen

Zhuhai

Shantou

Xiamen

Hainan

2013 年

Top 1

Top 2

Top 4

Top 3

Top 5

2014 年

Top 1

Top 2

Top 5

Top 4

Top 3

2015 年

Top 1

Top 3

Top 4

Top 2

Top 5

2016 年

Top 1

Top 2

Top 4

Top 3

Top 5

2017 年

Top 1

Top 3

Top 4

Top 5

Top 2

2018 年

Top 1

Top 3

Top 5

Top 4

Top 2

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talents, and the ecological environment. The more high-quality the ecological environment is the more high-quality enterprises it attracts, and the high-quality enterprises attract more outstanding talents to settle down there, thus further strengthening Shenzhen’s capability for industrial green transformation. Hainan Province ranked second in 2018. On the one hand, based on the industrial structure, compared with the other special economic zones, the proportion of the primary industry is relatively high, the secondary industry is relatively low, and the tertiary industry is relatively high. The challenge for Hainan Province is that with the continuous advancement of industrialization, as the ratio of the primary industry continues to decrease and the ratio of the secondary industry increases, can it reduce the impact on the ecological environment and maintain its excellent ecological environment? Another shortcoming of Hainan Province is that the proportion of investment in R&D is seriously insufficient. How to improve the level of innovation in Hainan Province has become a tough problem. The R&D investment of Hainan accounts for only 0.52% of its GDP. Although Hainan is a province, there is indeed a gap between Hainan and other special economic zones. According to data from the World Bank, its level is similar to that of sub-Saharan Africa, which is extremely low. Zhuhai ranked third. In 2018, the air quality of Zhuhai ranked last among the five special economic zones. This data shows that there are still many enterprises in Zhuhai that emit more pollutants, and how to control industrial pollutant emissions is still a challenge for Zhuhai. According to the statistical bulletin, in 2018 industries with higher environmental impacts in Zhuhai grew faster than those with lower environmental impacts. For example, ferrous metal smelting and rolling processing industries grew faster, reaching 13.3%, while industries with lower environmental impacts, such as computer, communications, and other electronic equipment manufacturing industries grew by less than 1%. Xiamen ranked fourth. Although the investment in R&D of Xiamen accounted for a relatively high proportion of GDP in 2018, compared with Shenzhen and Zhuhai, there is no advantage for its attractiveness to talents and fixed asset investment. Comparing the policies for high-level talents in Shenzhen, Zhuhai, and Xiamen, we can see that although their criteria for identifying high-level talents are the same, the subsidies for high-level talents in Xiamen are significantly lower than those in Shenzhen and Zhuhai, and the period of subsidies is also longer. For example, the C-type high-level talents in Shenzhen will be awarded 1.6 million yuan in five years, while Xiamen will provide 35,000 yuan in ten years. A question for Xiamen to consider is how to increase its attractiveness to talents. Among the five major special economic zones, Shantou ranks last from 2013 to 2018, and the gap between Shantou and other special economic zones is still relatively large. Shantou’s score is just one-third that of Shenzhen, city ranking first place, and it is far from fourth-place Xiamen. Among Shantou’s five evaluation indicators, only its score of green production is satisfactory, the scores of the other four aspects including green investment, green control, green benefits, and green environment are all extremely low, that is, Shantou has the greatest number of shortcomings and only one advantage. Shantou is also facing the greatest pressure for industrial

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green transformation. In 2018, the permanent population growth rate of Shantou was even lower than that of Hainan Province. Compared with the virtuous circle of talents, innovation, and ecology of Shenzhen, Shantou shows a trend of a vicious circle. A poor environment is difficult to attract talents, and without talent inflow, it is difficult to improve on innovation, which leads to difficulties in industrial green transformation. That Shantou obtained a low score in green control indicates that the government of Shantou lacks environmental governance, which urgently needs to be strengthened.

Policies and Suggestions for Industrial Green Transformation in the Special Economic Zones Strengthen Command-and-Control Environmental Regulations and Strictly Control Pollution The command-and-control environmental regulations of Shenzhen involve a wide range of areas, and the targeted and detailed management of the government of Shenzhen reflects its strong willingness and ability to act in environmental governance. However, other special economic zones still take fewer measures in commandand-control environmental regulations, and they may take into account that higher environmental standards will slow down economic development. However, from the experience of Shenzhen, the command-and-control environmental regulation is an important starting point for stimulating enterprise innovation, promoting industrial upgrading and transformation, and creating a better environment. From the perspective that Shenzhen has always ranked first in the evaluation of the industrial green transformation of the five major special economic zones, Shenzhen with stricter environmental regulations laid a solid foundation for fostering long-term urban competitiveness, while Shantou, as a city of command-and-control type with the loosest environmental regulations among the five major special economic zones, is the worst regarding competitiveness. It can be seen from the comparison that stricter commandand-control environmental regulations are conducive to the sustainable competitiveness of cities. In 2013, Shenzhen was also faced with various industrial transformations and enterprises moving out. Many Shenzhen enterprises still complain about the strict environmental regulations, but these did not stop the pace of the industrial green transformation of Shenzhen. If there is doubt in other special economic zones that strict environmental regulations are not conducive to economic development, the process of industrial green transformation will be inevitably delayed and the competitiveness of cities will be damaged.

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Adopt Market Incentives for Environmental Regulation and Encourage the Innovation of Enterprises The second experience of Shenzhen as a good practice case of industrial green transformation in the five major special economic zones is that more incentive-based environmental regulations should be adopted to encourage enterprises to produce industrial green transformation. On the one hand, it is to strengthen the penalties for polluters, and on the other hand, it is the incentive measures for reducing pollution and upgrading technology. In 2018, Shantou made great progress in penalizing polluters, but it still lacks in rewarding enterprises for industrial green transformation. Once the government has established strict and high environmental standards, enterprises will inevitably encounter various challenges ranging from talents, technology to management, etc. in the process of implementing the environmental standards. The government needs to follow up on the needs of enterprises and use market tools such as financial and fiscal means to help enterprises overcome the challenges, and then enhance their capabilities for innovation.

Encourage Public Participation and Create a Beautiful Environment The third experience of the industrial green transformation of Shenzhen is to actively use social forces other than the government to participate in the process of industrial green transformation. First, support the development of social organizations, especially industrial associations, so that enterprises have the opportunity to solve common environmental challenges faced by the industry. Second, promote the development of non-profit organizations, and mobilize social capital to invest in projects regarding industrial green transformation. Third, encourage public participation. Let the public supervise the status of environmental pollution, and put forward suggestions and opinions for the improvement of the quality of the environment. The number of social organizations in Shenzhen and the ownership rate of social organizations by 10,000 people are in first place among the five major special economic zones, ahead of the other regions of China. Social organization is an important joint force for the government in environmental governance and an important driving force for industrial green transformation. Shenzhen’s public participation in industrial green transformation is reflected in its extremely high number of environmental complaints. It is believed in this paper that the high number of environmental complaints is an important manifestation of the high degree of public participation. And there is poor environmental quality data in some places, but their rate of environmental complaints is lower than that of Shenzhen, then there is a need for those areas to think about why their public participation is so low.

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Acknowledgements Yuan Yiming, Professor, Doctoral Supervisor, Deputy Director of China Center for Special Economic Zone Research, Shenzhen University, Dean of Shenzhen Hanlun Green Development Research Institute; Sheng Chunhong, Ph.D. at Technical University Munich DE, Postdoctorate at Shenzhen University; Wang Peiyao, Assistant Research Fellow of Shenzhen Hanlun Green Development Research Institute, Master Results of the key research base of humanities and social sciences of the Ministry of Education major project “Research on the Social Distribution of Industrial Transformation and Development Opportunities in the Special Economic Zones (Project Number: 15JJDZONGHE032)” and the project “Research on the Progress of Industrial Transformation in China’s Special Economic Zones in 2019” by the China Center for Special Economic Zone Research, Shenzhen University.

References Ambec S, Cohen MA, Elgie S, Lanoie P (2013) The Porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness? Rev Environ Economics Policy 7(1):2–22 Bulletin on the Status of the Ecological Environment of Hainan Province in 2018, Department of Ecology and Environment of Hainan Province, http://hnsthb.hainan.gov.cn/hjzl/hjzlxx/hjzkgb_ 51008/201906/t20190603_2581826.html Bulletin on the Ecological Environment of Shantou in 2018, Shantou Ecology and Environment Bureau, http://www.shantou.gov.cn/epd/hjzkgb/201906/e255c772200c4c7a9ba025d647ed865f. shtml Bulletin on the Environmental Status of Shenzhen in 2018, Shenzhen Human Settlement and Environment Commission, http://www.sz.gov.cn/szsrjhjw/xxgk/tjsj/ndhjzkgb/201904/t20 190411_16764040.htm Bulletin on the Quality of the City’s Environment for Xiamen in 2018, Xiamen Ecology and Environment Bureau, http://xiamen.xmtv.cn/2019/06/03/ARTIl7vo6HJ1ZbgYMJGOaPuj 190603.shtml Bulletin on the National Economic and Social Development Statistics of Zhuhai in 2018, Zhuhai Municipal Bureau of Statistics, http://zhuhaidaily.hizh.cn/html/2019-04/01/content_171450_101 4568.htm Bulletin on the Quality of the City’s Environment for Zhuhai in 2018, Zhuhai Ecology and Environment Bureau, http://zhepb.gov.cn/xxgkml/tjsj/hjzkgg/201903/t20190326_40503.htm Bulletin on the National Economic and Social Development Statistics of Shenzhen in 2018, Shenzhen Municipal Bureau of Statistics, http://wap.sz.gov.cn/sztjj2015/xxgk/zfxxgkml/tjsj/tjgb/201 904/t20190419_16908575.htm Dai Y (2013) Current testimony and advice on the three levels of the porter hypothesis. Seeker (11). Huang P, Guo M, Lan S (2015) Analysis of the coupling status of urbanization and of the ecological environment in Fujian province. J Fujian Agric For Univ (Nat Sci Ed) (2) Jänicke M, Mönch H, Ranneberg T, Simonis UE (1989) Economic structure and environmental impacts: East-West comparisons. Environmentalist 9(3):171–183 Labonne, J. (2006). A comparative analysis of the environmental management, performance and innovation of SMEs and larger firms. http://ec.europa.eu/environment/archives/sme/pdf/final_rep ort_sme_en.pdf Li X, Lu X, Tao X (2013) Have environmental regulations affected the profit level of the industries in China? Acad Res (4) Li W, Bi K, Sun B (2013) Study on the impact of the intensity of environmental regulations on green technological innovation in pollution-intensive industries: an empirical test based on panel data from 2003 to 2010. Res Dev Manag (6) Lu Y (2009) Have environmental regulations affected the comparative advantage of trade in pollution-intensive commodities? Econ Res (4)

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Popp D (2005) Uncertain R&D and the Porter hypothesis. Contrib Econ Anal Policy 4(1):1–14 Porter ME, Van der Linde C (1995a) Toward a new conception of the environment-competitiveness relationship. J Econ Perspect 9(4):97–118 Porter ME, Van der Linde C (1995b) Green and competitive: ending the stalemate. Harv Bus Rev 73(5):120–134 Statistical Bulletin on the National Economic and Social Development of Hainan Province in 2018, Hainan Provincial Bureau of Statistics, http://www.hainan.gov.cn/hainan/tjgb/201901/3508453ef db443f3a4310be618b1a2d5.shtml Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2018, Shantou Municipal Bureau of Statistics, http://www.shantou.gov.cn/tjj/tjgb/201904/9c8 0e7cd90be4d3ca930f0edccd0bff4.shtml Statistics of Environmental Letters and Visits in 2017 and 2018, Shantou Ecology and Environment Bureau, http://www.shantou.gov.cn/epd/hjxf/201904/5e1854dd4af545b1ad4f96f8e06 65dcc.shtml Statistical Bulletin of the National Economic and Social Development of Xiamen in 2018, Xiamen Municipal Bureau of Statistics, http://www.xm.gov.cn/zfxxgk/xxgkznml/gmzgan/tjgb/201903/ t20190327_2239484.htm Sun Y, Song Y, Yang C (2019) The Impact of Environmental Regulations on the Quality of Economic Growth: Promote or Suppress?—Based on the Perspective of Total Factor Productivity, Contemporary Economic Management, first published online in 2019 UNIDO (2014) Green industry initiative. https://www.unido.org/our-focus/cross-cutting-services/ green-industry/green-industry-initiative Xepapadeas A, de Zeeuw A (1999) Environmental policy and competitiveness: the Porter hypothesis and the composition of capital. J Environ Econ Manag 37(2):165–182 Zhao H, Gu Q (2015) Environmental regulations, leading to R&D and total factor productivity. J Chongqing Univ (Soc Sci Ed) (5)

Chapter 3

Report on the Resource Efficiency and the Sustainable Development of China’s Special Economic Zones Ruoyu Zhong, Yirong Qin, Jiehua Zeng, and Xuedi Ren

Resource efficiency is a key component of sustainable policies and practices. In order to achieve the global goals of sustainable development, domestic and foreign scholars have conducted research in the fields of energy, the environment, economics, etc. (Josie 2010). Among the research, material flow analysis (MFA) links the capacity for economic development with environmental carrying capacity and pollution index (Xin et al. 2016). Material flow is a quantitative analysis of material to study the rationality of material flow, including input, output, stock, etc., so as to establish the quantitative relationship between the social economic system and the environmentsocial economic system. MFA provides a concise and novel research method for this kind of economic development based on environmental sustainability. It can not only measure the exchange of substances between the environment and the economic system, but also study the pressure on the environmental load, and ultimately track the flow and deposition of material resources effectively within a circular economy (Ruoyu 2010). The concept of and policy evaluation for sustainable development can be made via the two core indicators of MFA and resource productivity (Ruoyu 2010). This study takes China’s five major special economic zones (Shenzhen, Zhuhai, Shantou, Xiamen, and Hainan) as samples, and collates the data from material flow input and output of the special zones during the 22 years from 1996 to 2018 to analyze and compare the differences in resource efficiency of the five special economic zones with MFA. This study analyzes the issue of material resource utilization from the regional and urban levels, and offers advice and suggestions for the coordinated development of population-environment-energy. R. Zhong (B) · Y. Qin · J. Zeng The China Center for Special Economic Zone Research, Shenzhen University, Shenzhen, China e-mail: [email protected] X. Ren School of Economics, Shanxi University of Finance and Economics, Taiyuan, China © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_3

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Framework of Analysis at Regional and Urban Levels Analysis Framework—MFA This study carried out a simplified material flow analysis at the regional and urban levels. Since the definition of the regional boundary system is not clear enough, and data on the use of regional material resources is difficult to obtain, the simplified MFA will further classify the input index (direct material input) at the regional level. The results are shown in Table 3.1. Table 3.1 Simplified framework of urban material flow analysis: classification of the DMI index for direct material input Index

Main Class

DMI Input Index Direct Material Input = Domestic DMC Consumption Index Export+Import DMI = DE +I Direct Material Consumption = Direct Material Input-Export DMC = DMI-E

Component Project

Simplified Index

Main Content

Domestic Export DE

1. Chemical fuel

(1) Raw coal (2) Crude oil (3) Natural gas

2. Industrial metallic minerals

(1) Iron ore (2) Aluminum ore (3) Copper ore (4) Others

3. Industrial non-metallic minerals

(1) Chemical raw materials (2) Plastic in primary form (3) Glass, cement, etc (4) Others

4. Biomass

(1) Agricultural products (2) Forest products (3) Aquatic products (4) Animal by-products

Transfer in (import) I

Chemical fuel; Industrial metallic minerals; Biomass

Transfer out (export) E

Chemical fuel; Industrial metallic minerals; Biomass

Note (1) The urban framework of material flow analysis draws on the national framework of material flow analysis. “Import” and “export” at the urban level corresponding to the national level are collectively referred to as “transfer in” and “transfer out”; (2) The above-simplified framework was originally taken from the Annual Report on the Development of China’s Special Economic Zones (2012) (Ruoyu and Weifeng 2012)

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Sustainable Development Index The sustainable development in this report can be expressed as resource productivity. The formula is as follows: Pr esour ce =

V alue Material

(3.1)

Pr esour ce is the resource productivity, Value is the total GDP (that is, the value of economic and social development), and Material is the physical quantity of resources. The formula for calculating natural resource productivity is as follows: PPear ce =

Vout put Minput

Ppearce is the natural resource productivity, Vout put is the value form output, and Minput is the material resource input. Carry out Pearce accounting on the index obtained above, and analyze the resource consumption, resource efficiency, population growth, and economic growth of the special economic zones: R D M I = y Ppopulation /Pr esour ce

(3.2)

R D M I is the usage of resources (actual value), y is the output per capita, denoted by G D Pr eal /Ppopulation , Ppopulation is the population, denoted by the permanent population at the end of the year, and Pr esour ce represents resource productivity. R˙ D M I = y˙ + P˙ population − P˙r esour ce

(3.3)

where, y˙ = 1y dy , and the rest can be deduced by analogy. This expression explains dt the basic relationship between resource consumption and population and economic output. Only when the growth of resource productivity ( P˙r esour ce ) is greater than the sum of the growth of population and output per capita, will there be no absolute increase in the usage of resources (Allan and Hanley 2006).

Data Collection and Processing The data are mainly derived from the statistical yearbooks of China’s five major special economic zones, local statistical bulletins, and the results of field investigations. In the process of calculation, there are problems of inconsistent statistical standards and missing data. Therefore, the relevant data is processed according to the following assumptions: (1) Consumer demand basically adheres to the principle of local production first, especially for specific substances. (2) Assume that

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the volume of imports of a specific substance (specifically local production) whose supply exceeds demand is zero. (3) Assume that the volume of exports of a specific substance (specifically local production) whose supply is less than demand is zero.1 In this report, the material flow data of the main categories of the special economic zones will be processed as below: First of all, in view of the fact that local fossil fuels, unmined metal minerals, and industrial non-metallic minerals are basically imported from outside the city, the volume of imported material is assumed to be zero; the volume of fossil fuels is converted into standard coal for calculation2 and measured by the annual output. Second, due to the limited data regarding output on the components of industrial metal minerals3 in the statistical yearbooks over the years, the demand for raw ore can be estimated when the input–output analysis of the existing data is carried out. According to assumption (3), if the local production is in short supply, the direct material input can be regarded as the sum of the volume of local mining and the volume of imported materials, that is, the demand for raw ore. At the same time, this report does not include the value of the ecological baggage of the mining of mineral resources in the scope of the calculation. At last, the content of biomass includes crops, and cash crops, and the output of aquatic products and the annual output of forest trees, etc. will be estimated from local per capita consumption.

Results of the Analysis of Material Flow in the Five Special Economic Zones Analysis of Material Flow Index Total DMI, DMI Per Capita, and Their Changes over the Years The changes in the total DMI of each special economic zone from 1996 to 2018 are shown in Fig. 3.1 and Table 3.2. During the inspection of the five major zones, it was found that the total direct material consumption of Hainan Province by far exceeded that of other special zones during the period of inspection. In 2018, the total amount of the direct material input (DMI) of Hainan Province was close to three times the sum of Xiamen and Zhuhai. The total DMI of Shantou and Shenzhen was relatively lower. 1

The five major economic zones (except Hainan Province) are in a state of insufficient internal supply of metallic minerals, industrial non-metallic minerals, and fossil fuels, which need to be imported or transferred outside the region; therefore, data analysis is carried out based on assumption (3). 2 Fossil fuels include raw coal, crude oil, and natural gas. 3 Industrial metal minerals are mainly metals such as aluminum, lead, zinc, iron ore, gold, and copper.

3 Report on the Resource Efficiency and the Sustainable Development … Zhuhai

(10,000 tons)

Hainan Shenzhen Xiamen Shantou

61

Fig. 3.1 Comparison of the direct material input of the five special economic zones from 1996 to 2018 Table 3.2 The direct material input (DMI) of the five special economic zones from 1996 to 2018 (Unit: 10,000 tons) Direct material input (DMI) Year

Shenzhen

Hainan

Xiamen

Zhuhai

Shantou

1996

1150.4

1327.0

211.4

307.7

647.4

2000

1340.2

1829.4

313.0

470.7

605.7

2005

1743.0

2285.4

571.0

644.4

745.6

2006

1889.3

2599.8

679.8

691.2

771.5

2007

1910.8

2843.3

674.6

932.3

77.1

2008

1863.5

2996.5

766.5

1031.0

760.4

2009

1787.3

3397.8

768.1

1052.2

873.6

2010

1861.3

3844.0

944.1

1123.0

1177.6

2011

2024.7

4512.8

1049.1

1144.1

1288.8

2012

1912.1

4827.4

1109.5

1065.5

1200.7

2013

1838.8

5232.7

1126.8

1123.7

1398.4

2014

1692.0

5438.0

1147.8

1158.4

1422.8

2015

1620.2

5395.9

1174.3

1111.8

1464.5

2016

1601.3

5229.3

1214.7

1115.6

1547.9

2017

1503.0

5222.8

1210.2

1222.7

1562.6

2018

1588.3

5313.5

1273.7

1269.1

1592.5

Source Calculated and compiled based on the simplified framework of material flow analysis. The data in the bulletin of 2018 was revised according to the latest yearbook

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R. Zhong et al. Hainan

Shenzhen

Xiamen

Shantou

Zhuhai

Fig. 3.2 Comparison of the growth rate of the DMI in each special economic zone from 1996 to 2018

In terms of DMI growth, Xiamen showed the fastest average annual growth rate from 1996 to 2018, reaching 8.5%; Zhuhai and Hainan followed closely, with an average annual growth rate of 6.7% and 6.5% respectively; the annual growth rate of Shantou was 4.3%; Shenzhen was still at the lowest average annual growth rate of DMI, with a growth rate of only 1.5% in 2018. From the perspective of time, the DMI growth rate of Hainan was relatively stable, while the other four special economic zones had relatively extensive fluctuations. Since 2012 in Shenzhen, the annual DMI index has shown a downward trend, which is due to the reduction in the consumption of fossil energy and industrial non-metallic minerals. The specific growth rate of each special economic zone is shown in Fig. 3.2.

Per Capita DMI and Comparison The level of per capita input of material resource consumption in the economic growth of the five special zones can be reflected by the per capita DMI. Zhuhai had the highest per capita DMI among the five special economic zones in 2018, reaching 6.71 tons/person. The per capita DMI of the other special zones are as follows: Hainan Province (5.69 ton/person), Xiamen (3.10 ton/person), Shantou (2.82 ton/person) and Shenzhen (1.22 ton/person) (see Table 3.3). As shown in Fig. 3.3, the per capita DMI for Shantou and Xiamen remained generally flat from 2015 to 2018. Hainan had little change in 2018 compared to the previous year. The per capita DMI for Shenzhen has shown a downward trend for ten consecutive years arriving at 1.22 tons per person in 2018. From 1996 to 2018, the per capita DMI for Zhuhai was higher than that of other regions. In recent years, there has been a convergent tendency, with 6.71 tons/person in 2018. According to the average annual growth rate of per capita DMI in the inspection of the five major special economic zones, Hainan, Xiamen, and Zhuhai showed a rapid growth of per capita consumption of material resources, with respective increases of

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Table 3.3 Comparison of per capita DMI in each special economic zone from 1996 to 2018 (Unit: ton/person) Per capita DMI Year

Shenzhen

Hainan

Xiamen

Zhuhai

Shantou

1996

2.38

1.86

1.10

3.24

1.52

2000

1.91

2.40

1.53

3.81

1.29

2005

2.11

2.76

2.09

4.55

1.51

2006

2.17

3.11

2.36

4.78

1.54

2007

2.09

3.36

2.22

6.32

1.52

2008

1.95

3.51

2.35

6.82

1.48

2009

1.80

3.93

2.33

6.83

1.67

2010

1.79

4.43

2.65

7.19

2.18

2011

1.93

5.14

2.91

7.30

2.38

2012

1.81

5.45

3.02

6.73

2.20

2013

1.73

5.84

3.02

7.07

2.55

2014

1.57

6.02

3.01

7.18

2.58

2015

1.42

6.22

3.04

6.80

2.64

2016

1.34

5.70

3.10

6.66

2.77

2017

1.20

5.64

3.02

6.93

2.79

2018

1.22

5.69

3.10

6.71

2.82

Note The per capita index is calculated according to the number of permanent residents over the years

Shenzhen

Xiamen

Shantou

Zhuhai

(ton/person)

Hainan

Fig. 3.3 Changes in per capita DMI for the five major special economic zones from 1996 to 2018

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Table 3.4 Comparison of per capita DMI and the average annual growth rate of each special economic zone from 1996 to 2018 Per capita DMI (ton/person) Year

Shenzhen

Hainan

Xiamen

Zhuhai

Shantou

1996

2.38

1.86

1.10

3.24

1.52

2018

1.22

5.69

3.10

6.71

2.82

Average annual growth rate (5)

−3.00

5.22

4.84

3.37

2.86

Source Calculated and compiled based on the material flow analysis of this study and the results of relevant statistical reports

5.22%, 4.84%, and 3.37%. Compared with the above-mentioned special zones, the growth of per capita DMI for Shantou was relatively flat, at 2.86%. It is worth noting that, among the special economic zones, only Shenzhen has experienced a negative growth in per capita material resources, with a growth rate of -3.0%. Please refer to Table 3.4 for details. Taken into account that the average annual growth rate of Shenzhen’s permanent population in the past 22 years has reached 4.43%, while the average annual growth rate of the total DMI in the same period was only 1.5%, the decline in its per capita DMI would be reasonable. In addition, Shenzhen has basically achieved industrial transformation and upgrading ahead of the other special zones, and it is in the postindustrial development stage where the demand for material resource consumption slows down.

Analysis of the Structure of Material Flow Horizontal Comparison According to the comparison of the DMI composition of the five special economic zones in 2018 (Fig. 3.4), the special zones whose fossil fuels accounted for more than 40% of the total material resources were Shantou (52.68%), Zhuhai (48.12%), and Shenzhen (41.35%). The material resources that accounted for the highest proportion in Hainan were industrial non-metallic minerals (38.06%), and the highest proportion in Xiamen was metallic minerals (48.97%). The biomass resources in Zhuhai and Xiamen accounted for less than 10% respectively, which ranked among the lowest. The various proportions of material resources are closely related to the local economy and to the condition of the natural resources.

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Hainan Fossil fuels

Zhuhai Metallic minerals

Shantou

65

Shenzhen

Industrial non-metallic minerals

Xiamen Biomass

Fig. 3.4 Comparison of the composition of the DMI of the five special economic zones in 2018

Vertical Comparison In the vertical comparison of the five special economic zones, the changes in the structure of DMI are compared in chronological order. Take the changes in the structure of DMI in Shenzhen and Zhuhai from 1996 to 2018 as examples (Figs. 3.5 and 3.6). Fossil fuels

Metallic minerals

Industrial non-metallic minerals

Biomass

Fig. 3.5 Changes in the composition of the DMI of Shenzhen from 1996 to 2018

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R. Zhong et al. Fossil fuels

Metallic minerals

Industrial non-metallic minerals

Biomass

Fig. 3.6 Changes in the composition of the DMI of Zhuhai from 1996 to 2018

The composition of the DMI of Shenzhen from 1996 to 2018 shows that the proportion of metallic minerals in the total DMI remained at a relatively high level from 1996 to 2004, but showed a downward trend from 2005 arriving at 16.95% in 2014, and a slight increasing tendency of the proportion in recent years, rising to 21.80% in 2018. During the same period, the proportion of fossil fuel input to the total DMI was generally on a steady upward trend from 8.63% in 1996 to 41.35% in 2018. The share of material resource input has been on the rise. However, Shenzhen is a small city with a large population. The limited land area cannot meet the actual management population, and the pressure on resources and the environment is huge. The change in the proportion of fossil fuel input in the past 22 years vividly reveals the serious situation of insufficient resources in the process of sustainable development in Shenzhen. According to the composition of the DMI of Zhuhai from 1996 to 2018, the input of the overall direct material resources for Zhuhai increased from 3.0775 million tons in 1996 to 12.6907 million tons in 2018, with an average annual growth rate of 6.7%. Among them, the proportion of fossil fuels has experienced a process of rising and then falling, fluctuating in the range of 40%-60%; the proportion of metallic minerals increased from 17.1% in 1996 to 33.14% in 2018; and the input of biomass showed a continuous declining trend, with the proportion in DMI decreasing from 35.81% in 1996 to 4.98% in 2018. Please refer to Fig. 3.6 for details.

Resource Productivity and Pearce Judgment According to the results of the index of the material flow analysis, resource productivity is calculated based on the GDP at comparable prices in 2000, and the efficiency

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Table 3.5 Resource productivity of the five special economic zones (Unit: yuan/ton) Xiamen

Hainan

8686.74

19,197.81

3440.63

8528.11

9860.93

17,628.75

4020.15

9315.26

10,799.77

17,266.97

4099.10

35,595.57

10,757.67

9598.37

20,790.52

4410.98

2008

41,785.05

12,516.63

9671.43

21,013.07

5016.09

2009

46,383.91

11,858.05

9872.35

22,616.87

4868.51

2010

52,507.90

10,265.99

10,782.05

21,820.90

5370.65

2011

56,877.71

9898.75

12,326.66

24,205.11

5589.95

2012

67,838.29

11,867.79

14,165.00

25,390.27

5915.25

2013

79,252.27

11,197.96

14,941.14

26,680.72

6072.45

2014

94,572.56

12,060.71

16,119.51

28,519.37

6437.56

2015

108,032.64

12,632.64

18,213.95

29,516.28

6862.28

2016

121,731.29

13,440.77

19,956.89

31,152.58

7734.34

2017

149,293.71

15,045.68

20,975.91

35,957.62

8544.31

2018

152,500.40

15,774.73

22,967.48

37,618.84

9093.98

Year

Shenzhen

Shantou

2004

24,090.89

8157.92

2005

28,404.68

2006

30,771.31

2007

Zhuhai

of the utilization of resources of the five special economic zones in the past 15 years is obtained (see Table 3.5). The improvement of resource productivity can relatively reduce the environmental problems that are associated with economic growth, and make the economy and society green and sustainable. Resource productivity is the core concept of green competitiveness. From 2004 to 2018, the resource productivity of Shenzhen increased year by year, with a significant growth rate. In 2018, the resource productivity of Shenzhen reached 152,500.4 yuan/ton, ranking first among the five special zones, while Xiamen, Zhuhai, Shantou, and Hainan decreased sequentially at 37,618.84 yuan/ton, 22,967.4 yuan/ton, 15,774.73 yuan/ton, and 9,093.98 yuan/ton. Before the period 2004–2012, the resource productivity of the five special zones all experienced a short-term decline, except Shenzhen, but they all maintained steady growth after 2012. In combination with formula 3.3, to calculate the basic relationship between resources, population, and output of each special economic zone, the right side of the equation is the accounting DMI growth rate. And according to the formula, there is an identical relationship between the accounting DMI and the actual DMI. Based on the identitical relationship calculated from the results of the material flow analysis of this study, it is concluded that the growth of resources, population, and GDP in Hainan, Shantou, and Zhuhai are consistent, with the exception of Shenzhen and Xiamen. To avoid generational balance, the growth of resource productivity must exceed the sum of population and output growth per capita (see Table 3.6). While the growth of resource productivity in the five special economic zones does not meet the above conditions, indicating that the use of resources in the five special economic

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Table 3.6 Annual basic judgment on the relationship among resources, population, and output growth for each special economic zone in 2018 Special economic zone

GDP per capita Population growth rate (%) growth rate (%)

Resource productivity growth rate (%)

Accounting DMI growth rate (%)

Actual DMI growth rate (%)

Hainan

8.51

0.92

6.04

3.39

1.74

Shantou

5.78

0.67

4.62

1.83

1.91

Xiamen

6.91

2.43

4.42

4.93

5.24

Zhuhai

5.74

6.65

8.67

3.72

3.79

Shenzhen

3.68

3.83

2.10

5.40

5.68

Source calculated and compiled based on the results of the material flow analysis and relevant data from this study

zones is still increasing rapidly, and a balance among the population, resources, and the environment cannot be achieved for the time being.

Policy Recommendations There Is a Certain Application Value of the Method of Material Flow Analysis in the Research on the Evaluation of Resource Efficiency and Sustainable Development Material flow analysis is one of the widely accepted and widely used tools for analysis in industrial ecology. It measures the input and output resources, and examines the path and flow of each material in the entire cycle to assess the loss in the material life cycle and provide measures for more efficient use of resources. In recent years, the method of material flow analysis has been applied not only to environmental protection, industrial engineering, and other disciplines, but also gradually in the fields of circular economy, environmental economy, mobile finance, etc. It is a popular method of analysis for studying resource efficiency and circular economy domestically and abroad. This kind of emerging technological experience in the study of circular economy and ecological economy should further include information about the trends, characteristics, research gaps, and challenges of the methods of material flow analysis. It not only deals with the resource efficiency of the special economic zones at the regional level and analyzes the material metabolism of the regional economy, but it can also be applied to the national level, product level, and element level. At the same time, resource and environmental efficiency analysis is the main content of material flow analysis and evaluation. Traditional indicators of material

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flow analysis and evaluation mainly focus on intensity and efficiency, and the quantity and structure of efficiency make up the main content of research. By using the values of “import” and “export” at the national level and “transfer in” and “transfer out” data at the regional level to evaluate the efficiency of the utilization of resources, the intensity of resource input and output, and the environmental Gini coefficient, the feedback and restraint effect of the material flow of resources, the environment, and impacts can be reflected more normatively (Huanlong et al. 2017). We can use MFA to further study the relationship among economic development, resource consumption and environmental pollution, and provide a reasonable basis for solving problems such as the non-coordination of resource control and environmental load (Tiejun et al. 2017). The future perspective for the research on resource efficiency can start from the decoupling and re-linking relationship between economic growth and environmental pressure, the relationship between material flow analysis and the environmental Kuznets curve, etc. to further provide potential solutions for sustainable economic development.

Innovative Development and Sustainable Development Put Forward Higher Requirements for the Efficiency of the Utilization of Resources Since the global launch of the Sustainable Development Goals in 2015, some countries, organizations, environmental protection groups, and research institutions have pledged to achieve innovation development and green development. As the experimental field and pioneer of economic development in China, the special economic zones of China show obvious differences in resource consumption and efficiency of the utilization of resources from each other. At present, only Shenzhen has experienced a negative increase in consumption per capita of material resources, which is in line with the trend of the mid-to-late stage of industrialization. The special economic zones represented by Hainan and Shantou are still in the early stages of industrialization, with a relatively extensive economic growth mode, and a large demand for fossil fuels and other material resources. The development of economic industry depends on the development and utilization of material resources. Material consumption is high while resource productivity is very low (Xin et al. 2016). The actual growth of resource productivity still cannot meet the needs of the generational balance, and there is still a long way to go along the road to sustainable development. To build a long-term mechanism for innovation and sustainable development, it is not only necessary to establish an evaluation mechanism for the upstream and downstream of resource development, but also to coordinate the interest relationships among governments, regions, and country. Form the “Three-in-one Seven Development Mechanism” with all factors and full life cycle, and strive to build an evaluation system that is standardized in advance, shared during the process, and evaluated after

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the event (Liping 2017). From the perspective of innovation and sustainable development, to assess the total amount of resources and the efficiency of the utilization of resources and emphasize the establishment of a green evaluation system nationwide, it is not only necessary to advocate the government’s conducting green behavior, but also supporting the strict control on whether the output of the resource industry meets environmental protection standards or not. In order to achieve the harmony and unity of resources, the environment, the economy and society, urban transformation and development must be promoted from the aspects of the adjustment of industrial structure and upgrading, investment in scientific and technological innovation, and the construction and promotion of urban functions.

The Study of Issues Regarding Sustainable Development Requires the Establishment of a “Resource-Environment” System of Dual-constrained Evaluation Resource productivity can reflect the concept of sustainable development. However, the evaluation system of sustainable development should not only show the efficiency of resources, but should also include evaluation indicators of ecological quality. An evaluation system for sustainable development with all factors and dual constraints should be built up based on the indicators such as resource input and waste discharge. Dual constraints refer to the common constraints of “resources and environment”. Traditional resource efficiency and resource structure mainly focus on the energy reserves of metals, industrial minerals and fossil fuels, and the output indicators are based on the export indicators of fossil fuels, industrial minerals, and biomass. However, as the proportion of traditional heavy industry in the economic structure declines, resource efficiency is greatly affected by insufficient energy reserves, destruction of the ecological environment, and changes in the external environment of economics and trade. The expansion of economic aggregates is in contradiction with the limited carrying capacity of natural resources. On the other hand, the important impact of the resource factor on economic development cannot be ignored, and the importance of the scientific research factor and the population factor is becoming more prominent. In order to alleviate the contradiction between regional economic growth and environmental pressure, the promotion of technological innovation, personnel training, and the upgrading of the industrial structure has become the only way to achieve sustainable social and economic development. Adhering to the combination of economic benefits and energy conservation and environmental protection and strengthening the construction of a system of a dual-constrained evaluation index is showing more practical significance for promoting sustainable economic development.

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References Tiejun D, Rui L, Wanjun W (2017) Research on material metabolism in Beijing from the perspective of material flow analysis [J]. J Environ Sci 37(8):3220–3228 Allan G, Hanley N (2006) The macro-economic rebound effect and the UK economy, report for DEFRA, May 2006 Josie J (2015) Looking at the inclusive and sustainable development of public infrastructure investment from the perspective of the BRICS (English) [A], IMI research trends (2015) compilation [C]. International Monetary Institute of Renmin University of China. p 10 Xin L, Yunlong L, Chen Y (2016) Analysis of the liaoning province environmental economic system based on MFA [J]. Oper Res Manage 25(5):222–230 Huanlong P, Jiahua D, Siyuan Z, Kejing F (2017) Research on the analysis and evaluation method and application of regional material flow resource and environmental efficiency——taking Nansha district of Guangzhou city as an example [J]. Ecol Econ 33(1):38–42 Liping Y (2017) Long-term mechanism for sustainable development of resource-based cities in the Central and Eastern Regions [J]. Reform 8:110–114 Ruoyu Z (2010) Resource productivity and sustainable development policies of 15 EU countries— —research and comparison based on material flow analysis [J]. Eur Stud 28(4):56–70+160 Ruoyu Z, Weifeng Z (2013, April) Report on the resource efficiency and sustainable development of China’s special economic zones (2012). In: Annual report on the development of China’s special economic zones (2012), Social Sciences Academic Press, China, pp 41–47

Chapter 4

Report on Innovation and Development of China’s Special Economic Zones Yiheng Huang and Yu Kang

According to the theory of endogenous economic growth, unlike traditional factors such as capital, labor, and land, production factors such as knowledge, technology, and human capital can be accumulated to overcome the law of diminishing marginal returns, so as to achieve continuous accumulation of factors and bring about sustainable economic growth (Lucas 1988; Romer 1990). This is the internal logic of the world’s major economies attaching great importance to technological innovation and talent training. Since the 18th National Congress of the Communist Party of China, the CPC Central Committee with General Secretary Xi Jinping at its core has attached great importance to the role of innovation and development in economic growth. For example, when General Secretary Xi Jinping participated in the deliberations of the Guangdong delegation at the First Session of the 13th National People’s Congress, he clearly stated that “development is the first priority, talent is the first resource, and innovation is the first driving force. If China does not take the innovation-driven path, and old growth drivers cannot be replaced with new ones, it will be impossible for China to be truly strong, or China will be just large instead of strong.” Under the strong leadership of the CPC Central Committee and the promotion of the central government, all regions of the country also attach great importance to local innovation and development, and actively create a favorable environment for innovation and development, and the special economic zones are no exception. Unlike European and American countries with mature financial systems, due to the degree of development of its financial system, China has to rely more on government financial support in the process of promoting innovation and development. This became particularly prominent after the excessive prosperity of the financial market and the flow of large amounts of capital toward the real estate sector from 2015 to 2017 (Yang and Meifang 2018). When local finance becomes the most important Y. Huang (B) · Y. Kang China Center for Special Economic Zone Research, Shenzhen University, Shenzhen, China e-mail: [email protected] © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_4

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support for regional innovation and development, the potential problems associated with financial investment have also become the main points that must be paid attention to when considering regional innovation and development. First, the state of government fiscal revenue and expenditure has become an important constraint restricting regional investment in innovation and development. Special economic zones with large fiscal revenues, abundant fiscal surpluses, and low government debt levels have the ability to implement more aggressive and innovative promotion policies and achieve better results; on the contrary, those with small fiscal revenues, tight fiscal surpluses, and high government debt levels can only choose within a limited policy space. In addition, the State Council uniformly deployed 1.1 trillion yuan in tax cuts in 2018, and the actual tax cuts were about 1.3 trillion yuan, which will also have a certain impact on the investment in innovation and development of the special economic zones. Second, with government financial investment as the most important impetus for innovation and development, efficiency issues have become the focus of controversy. The so-called efficiency problem includes not only the efficiency of related fund management, but also the selection of government-funded projects and methods, as well as output measurement and cost-benefit analysis of government investment. More importantly, taking government financial investment as the most important impetus for innovation and development means essentially that the government imposes its own evaluation of investment in innovation and development on the economy, which is an intervention in the spontaneous operation of market mechanisms. Although in the short term, taking government financial investment as the most important impetus can solve the problem of insufficient investment caused by the imperfect development of the financial system, while in the long term, the fact that the local governments have the incentive to significantly fluctuate prices driven by regional competition and implement innovation and development strategies that are beyond the current stage of development will reduce the overall investment efficiency, and will also hinder private capital from growing and entering the field of innovation and development investment, which will block the process of marketization. In addition to the impact of government financial investment as the most important impetus for innovation and development, the Sino-US trade dispute has also intensified, especially as on April 16, 2018, the U.S. Department of Commerce suddenly announced the activation of a ban on ZTE on purchasing products from U.S. companies. Although the ban was conditionally lifted on July 12, 2018, the ZTE case reflects the technical shortcomings of China’s high-tech industry and the current limitations of promoting innovation and development. Moreover, the case of gene editing of infants conducted by Dr. He Jiankui, former associate professor of Southern University of Science and Technology, also reflects some deficiencies in the construction of an environment inductive to innovation and development.

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General Overview of the Status of the Innovation and Development of the Special Economic Zones Shenzhen Special Economic Zone As one of the most important innovation development bases in China, Shenzhen continued to advance steadily on the original basis in 2018, not only increasing investment in innovation and development, but also making progress in the ecological construction of innovation and development. 1. The contribution of the output of the high-tech industry. In 2018, the regional GDP was 2422.198 billion yuan (preliminary accounting, the same below), an increase of 7.6% over the previous year; among this, the added value of industrial enterprises above the designated size was 910.954 billion yuan, an increase of 13.5% over the previous year. In modern industries, the added value of advanced manufacturing and high-tech manufacturing was 656.483 billion yuan and 613.12 billion yuan, an increase of 12.0% and 13.3% over the previous year. Among the four pillar industries, the added value of the high-tech industry was 829.663 billion yuan, an increase of 12.7%, which was much higher than that of the financial industry (306.721 billion yuan, 3.6%), the logistics industry (254.158 billion yuan, 9.4%), and cultural and related industries (above the designated size, 156.052 billion yuan, 6.3%). According to the statistics for Shenzhen, the added value of strategic emerging industries in 2018 was 915.518 billion yuan in total, an increase of 9.1%, accounting for 37.8% of the regional GDP. Among this, in addition to the decline in the added value of the marine economy industry (42.169 billion yuan, − 11.3%), the added value of other industries has increased significantly, including the new generation of the information technology industry (477.202 billion yuan, 10.9%), the digital economy industry (124.073 billion yuan, 3.8%), the high-end equipment manufacturing industry (106.582 billion yuan, 10.7%), the green and low-carbon industry (99.073 billion yuan, 11.7%), the new materials industry (36.561 billion yuan, 8.6%) and the biomedical industry (29.858 billion yuan, 22.3%). In 2018, the number of authorized domestic patents in Shenzhen was 140,202, an increase of 48.76%. Among these, the number of invention patents was 21,309, an increase of 12.59%. The number of PCT international patent applications was 180.81 million, a decrease of 11.6%. There were 91.25 invention patents per 10,000 people. In 2018, a total of 16 scientific and technological achievements in Shenzhen were awarded the National Science and Technology Awards, of which 13 were for hosted or participated enterprises. The status of enterprise as the innovation mainstay was prominent. 2. The building up of innovation and development carriers. In 2018, Shenzhen actively built up a whole-process innovation ecological chain in accordance with

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the model of “basic research + technological research + achievement industrialization + technology finance.” The fiscal expenditure on science and technology for the whole year was 55.5 billion yuan, an increase of 57.7% over the previous year; the R&D investment of the whole society increased by 10 billion yuan over the previous year, and the total amount exceeded 100 billion yuan. It is estimated that there will be more than 3000 new national high-tech enterprises, with a total of more than 14,000. In 2018, Shenzhen was approved for the building of a marine economic development demonstration zone. Based on the demonstration zone, Shenzhen will increase innovation in marine technology and lead the development of the marine high-tech industry and the service industry. In 2018, Shenzhen strengthened the measures for the implementation of basic research, initiated major infrastructure constructions including national key laboratories concerning synthetic biology research, tumor chemical genomics, brain analysis, and brain simulation, and established 10 new basic research institutions such as the Third Generation Semiconductor Research Institute. There were 189 new innovation carriers of various types in the city, including 5 nationally recognized enterprise technology centers and 37 provincial engineering (technical) research centers. Besides, Shenzhen introduced measures to implement the strengthening of basic research, to promote the construction of basic research institutions in quantum science, mathematics, and other fields, as well as key technological breakthroughs in key components such as chips and medical devices. 3. Supply of talents for innovation and development. In 2018, through the establishment of a national human resource service industrial park and the implementation of policies such as the Pengcheng Talent Plan and the Pengcheng Peacock Plan, Shenzhen introduced 285,000 new talents, an increase of 8.4% over 2017. Among them, there were 12 full-time academicians and 2678 high-level talents. At the end of the year, there were 1,666,000 professional and technical personnel of various majors, an increase of 8.3% over the previous year. Four universities including Shenzhen University were selected into the provincial high-level university and discipline construction plan. The Harbin Institute of Technology (Shenzhen) started to recruit undergraduates separately, the construction of the Shenzhen campus of Sun Yat-sen University began, Shenzhen Technology University was formally established, the Shenzhen International Graduate School of Tsinghua University was approved to be established, and a cooperation contract was signed for the establishment of CAS Shenzhen Institutes of Advanced Technology. 4. Cross-regional cooperation on innovation and development. In 2018, Shenzhen made full efforts to implement the implementation opinions and three-year action plan of the Guangdong-Hong Kong-Macao Greater Bay Area development plan, and strive to deepen the cooperation among Shenzhen, Hong Kong, and Macao. Through the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub, 31 new entrepreneurial teams from Hong Kong and Macao were introduced to accelerate the planning and construction of the Shenzhen-Hong Kong Cooperation Zone for Technology and Innovation in the Lok Ma Chou Loop. The measures for the Management of the Shenzhen-Hong Kong Innovation

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Circle Project and other policies were formulated to explore cross-border project funding models, and steadily promote the construction of the Shenzhen-Macao Traditional Chinese Medicine Innovation Research Institute and other projects. The Shenzhen-Shantou Special Cooperation Zone was officially established, 10 new major industrial projects were started, and the Shenzhen-Dongguan-Huizhou “3 + 2” economic circle cooperation was continuously deepened. 5. Other events. On April 16, 2018, the U.S. Department of Commerce announced that it would ban U.S. companies from selling parts to ZTE Corporation for seven years on the grounds of ineffective rectification of violations of the export ban. The outside world generally believes that if the U.S. Department of Commerce’s ban is not lifted, ZTE will stagnate within two to three months due to its high dependence on US chips. On July 13, 2018, after ZTE changed its leadership, reorganized its board of directors, and paid US$1.4 billion in fines and security deposits, the U.S. Department of Commerce lifted the export ban on ZTE, and this incident came to an end. On November 26, 2018, under the title of The World’s First Genetically Edited Baby Immune to HIV/AIDS Was Born in China, People’s Daily Online disclosed that Dr. He Jiankui, former associate professor of Southern University of Science and Technology, and his team used gene editing technology to modify the genes of a pair of twins and make it natural to resist AIDS after birth. Because of the serious ethical issues involved, the scientific community at home and abroad immediately questioned and condemned this experiment, which attracted great attention from the Party and the country. On December 6, 2018, Premier Li Keqiang of the State Council presided over the meeting of the National Science and Technology Leading Group and pointed out, “misconduct that violates scientific research morals and ethics should be investigated and dealt with seriously.”

Zhuhai Special Economic Zone Based on the original foundation, improving the environment for innovation and entrepreneurship, strengthening the construction of innovation carriers, advancing the “dual-automatic linkage,” and taking advantage of the opening of the Hong KongZhuhai-Macao Bridge to improve the level of cooperation are the overall ideas for Zhuhai in promoting innovation and development in 2018. Following this line of thought, Zhuhai City made remarkable achievements in innovation and development in 2018. 1. The contribution of the output from the high-tech industry. In 2018, Zhuhai achieved a regional GDP of 291.474 billion yuan (preliminary accounting, the same below), an increase of 8.0% over the previous year. The added value of the high-tech manufacturing industry was 32.187 billion yuan, an increase of 29.7%,

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of which the pharmaceutical manufacturing, medical equipment and instrumentation manufacturing, and aerospace vehicle and equipment manufacturing industries all increased by more than 18%, being 23.5%, 28.5%, and 19.3%, respectively.1 The added value of advanced manufacturing was 59.497 billion yuan, an increase of 11.2%. Among them, the added value of advanced textile manufacturing, biomedicine, and high-performance medical device industries both exceeded double-digit growth, reaching 31.2% and 18.5%. In 2018, the number of authorized patents in Zhuhai was 17,090, an increase of 36.2% over the previous year. Among them, the number of authorized invention patents was 3452, an increase of 39.3%. The number of PCT international patent applications was 693, an increase of 59.3%. There were 66.49 invention patents per 10,000 people. Eighty-four new scientific and technological achievements were registered, all of which were applied technology achievements; 8 scientific and technological achievements won the Guangdong Science and Technology Award. 2. The building up of innovation and development carriers. In 2018, Zhuhai City invested 10.97 billion yuan in improving the infrastructure of various industrial and development parks, and implemented the “Ten, Hundred and Thousand Enterprises Thriving Movement”; 8.161 billion yuan of R&D expenditure were invested in the whole society, accounting for 2.8% of the regional GDP. A total of 722 new high-tech enterprises were added, bringing the total number to 2053. In 2018, the layout of the Southern Marine Science and Engineering Guangdong Laboratory was built in Zhuhai; a total of 2 national-level technology centers, 17 provincial-level technology centers, 56 provincial-level engineering centers, and 2 provincial-level manufacturing innovation centers were added throughout the year. By the end of 2018, Zhuhai had 14 provincial-level new R&D institutions, 17 incubator enterprises above the provincial-level, 4 national-level engineering research centers, 246 provincial-level engineering research centers, 5 nationallevel enterprise technology research centers, 94 provincial-level enterprise technology research centers, 341 municipal-level key enterprise technology centers, and 5 provincial-level strategic emerging industrial bases. In 2018, Zhuhai implemented a three-year action plan for scientific and technological innovation, and introduced policies such as cultivating and introducing “unicorn” enterprises and purchasing and ordering innovative products. Zhuhai introduced and implemented the “Fourteen Financial Measures,” established risk compensation and government financial resource incentive mechanisms, introduced measures such as technology financing incentives, technology credit, and venture capital risk compensation, and established the municipal financial technology center. The Hengqin Smart Finance Industrial Park was officially opened, 1

Zhuhai Municipal Bureau of Statistics did not announce the added value of the high-tech manufacturing industry, only its proportion in the added value of industrial enterprises above designated size and the increase in the added value over the previous year. The added value of high-tech manufacturing here is calculated by the author based on known information, as is the added value of advanced manufacturing.

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and the South China University of Technology-Zhuhai Institute of Modern Industrial Innovation was put into use to accelerate the construction of the Zhuhai Fudan Innovation Institute and Hengqin Science City. 3. Supply of innovation and development talents. In 2018, Zhuhai launched the Zhuhai Talents Program, held a series of talent theme activities, built 1171 talent housing units, and introduced 27,000 talents of various types; 6 new postdoctoral workstations and 24 doctoral workstations were added; 5 people were selected into the National Innovative Talent Promotion Plan. The promotion of upgrading the Zhuhai branch of Beijing Normal University to the Zhuhai campus of Beijing Normal University was progressing smoothly. The Zhuhai campus of Beijing Normal University will become a branch campus with the same level and the same school-running standards as the headquarters in Beijing.2 In 2018, the city’s general institutes of higher education full-time students were 139,000, an increase of 1.6%; and 35,200 graduates, an increase of 14.3%. 4. Cross-regional cooperation on innovation and development. Taking advantage of the opening of the Hong Kong-Zhuhai-Macao Bridge, Zhuhai has actively promoted the implementation of the Guangdong-Hong Kong-Macao Greater Bay Area plan and carried out various cooperation projects on cross-regional innovation and development. Institutional innovation was speeding up in the Free Trade Zone, the construction of a demonstration zone for close cooperation between Guangdong, Hong Kong, and Macao in Hengqin was accelerating, and the land for the Guangdong-Macao Cooperation Industrial Park was delimited, of which 21 projects were started. The Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macao has developed rapidly, the scientific research headquarters building in the incubation zone has been put into use, and a total of 111 enterprises had been registered as of the end of 2018. In 2018, 74 projects from Hong Kong and Macao were introduced into the INNO VALLEY HQ, and a total of 181 projects from Hong Kong and Macao were incubated.

Xiamen Special Economic Zone Based on a relatively complete foundation for industrial cluster and innovation, Xiamen continued to promote innovation and development on the original basis in 2018. The pace of innovation was significantly accelerated, and the ideas for innovation and development continued to be broadened. 1. The contribution from the output of the high-tech industry. In 2018, the regional GDP of Xiamen was 479.141 billion yuan, an increase of 7.7% over the previous 2

Regarding the latest news on the Zhuhai campus of Beijing Normal University, on April 8, 2019, the Ministry of Education of the People’s Republic of China issued the “Approval of the Ministry of Education on Approving the Construction of the Zhuhai Campus of Beijing Normal University” to Beijing Normal University (ME. Letter [2019] No. 14), formally approving the construction of the Zhuhai campus of Beijing Normal University.

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year. The added value of high-tech industries above the designated size was 109.399 billion yuan, an increase of 9.3% over the previous year, which was 0.5 percentage points higher than the average growth rate of industries above the designated size. Among the high-tech industries above the designated size, the added value growth of the pharmaceutical manufacturing, computer, communications and other electronic equipment manufacturing industries was 24.6% and 14.5%, respectively 15.8 percentage points and 5.7 percentage points higher than the average growth rate of the industries above the designated size. From January to November, the revenue from the high-tech service industry and the technology service industry in key service industries above the designated size increased by 13.1% and 18.0% year-on-year, respectively, which exceeded the average growth rate of the service industry above the designated size by 2.0 and 6.8 percentage points. In 2018, the number of domestic authorized patents in Xiamen was 21,393, an increase of 45.7%. Among them, the number of invention patents was 2214, a decrease of 5.1%. The number of PCT international patent applications was 223, a decrease of 19.8%; the average number of valid invention patents per 10,000 people reached 27.5. And 532 scientific and technological achievements were newly registered, an increase of 19.0%; 4 scientific and technological achievements won the National Science and Technology Award, and 55 scientific and technological achievements won the Fujian Science and Technology Award. 2. Building up innovation and development carriers. In 2018, the entire R&D investment of Xiamen reached 16.29 billion yuan, accounting for 3.4% of the regional GDP; among government fiscal expenditures, science and technology expenditures were 2.856 billion yuan, an increase of 20.3%. And 201 new high-tech enterprises were established, bringing the total number to 1626. The construction of the National Innovation and Entrepreneurship Demonstration Base in the Torch High-tech Zone was commended by the State Council. Four new nationallevel enterprise technology centers were established, and nearly a thousand new growth-oriented small and medium-sized enterprises, small giant leading enterprises, and technological innovation demonstration enterprises were established. In 2018, Xiamen added 9 national, provincial, and municipal key laboratories, reaching a total of 130; the number of engineering technology research centers decreased by 2, with a total of 129; there were 9 new enterprise technology centers, totaling 165; and 3 new enterprise postdoctoral workstations, totaling 28. Thirteen new technology business incubators were established, bringing the number of technology business incubators to 28, including 5 nationallevel incubators. There were 203 municipal-level maker spaces, of which 69 were provincial-level, an increase of 18; and 33 were national-level. Above all, Xiamen was also approved to build a national marine economic development demonstration zone. 3. Supply of innovation and development talents. Xiamen continued to promote the implementation of the “Double Hundred Plan,” the “Inclusive to Diversity” talent plan, and the new 18 and 45 talent policies. In 2018, Xiamen introduced about 48,000 graduates, mature talents, skilled talents, overseas students, and

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foreign talents. Among them, there were 40,163 college graduates, an increase of 14.1% over the previous year; 4834 mature talents, an increase of 27.8%; 4790 postgraduates, an increase of 28%. The total number of talents in the national “Thousand Talents Program” has increased to 110. Local Xiamen universities such as Xiamen University and Jimei University continued to provide talents for the innovation and development of Xiamen. At the beginning of the 2018 academic year, there were 50,000 students enrolled and 162,500 students in the university. 4. Cross-regional cooperation on innovation and development. Xiamen has taken advantage of sharing the same roots and language with Taiwan compatriots to vigorously carry out cross-strait exchanges and cooperation. In 2018, Xiamen held exchange activities such as the Industrial Expo, the Cross-Strait TCM Development and Cooperation Seminar, the Cross-Strait Science and Technology Expert Forum, and the Cross-Strait and International Innovation Industry (Haicang) Cooperation and Exchange Conference; 794 Taiwan-funded projects were newly approved; the number of licensed cross-strait youth innovation bases authorized by the Taiwan Affairs Office of the State Council reached 7 and the number of Taiwanese entrepreneurial teams reached 500. In addition to cooperation with Taiwan, Xiamen has also vigorously promoted the construction of a coordinated development zone in southwestern Fujian. The implementation of the first 22 major projects has been accelerated. The new city base and Jimei New City have collected investments of 99.28 billion yuan and 20.28 billion yuan respectively, and the operating income growth of the thirdphase of the software park has increased to 40.3%. The industrial parks such as the machinery industry nesting zone were under development into agglomerations. The construction of the Tongxiang High-tech Industrial Base was progressing smoothly.

Shantou Special Economic Zone Restricted by factors such as development history and location, the innovation and development foundation of Shantou is relatively weak; however, in 2018 Shantou still made certain achievements in innovation and development. 1. The contribution from the output of the high-tech industry. In 2018, Shantou achieved a regional GDP of 251.205 billion yuan, an increase of 6.9% over the previous year, and the growth rate was 2.3 percentage points lower than the same period the previous year. The added value of industrial enterprises above the designated size was 82.268 billion yuan, an increase of 9.5% over the previous year. The added value of high-tech manufacturing was 5.331 billion yuan, an increase of 15.9% over the previous year, which was 6.4 percentage points higher than the average growth rate of the industrial added value above the designated size. Among them, the added value of the medical equipment and instrumentation manufacturing industry, the pharmaceutical manufacturing industry, and the

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electronic and communication equipment manufacturing industry grew rapidly at 25.6%, 22.3%, and 11.1% respectively. The added value of advanced manufacturing was 31.034 billion yuan, an increase of 9.3%, of which the added value of the advanced equipment manufacturing increased by 12.9%, which was 3.4 percentage points higher than the average growth rate of industrial added value above the designated size. In addition, the added value of the producer service industry was 58.043 billion yuan, and its proportion in the service industry further increased to 51.6%, which was 7.4 percentage points higher than the average growth rate of the service industry. In 2018, the number of domestic authorized patents in Shantou was 12,651, an increase of 31.9%. Among them, the number of invention patents was 408, an increase of 6.3%. In 2018, a total of 8 scientific and technological achievements were assessed as the outstanding scientific and technological achievements in Guangdong Province. Among them, Shantou University hosted 4 projects and enterprises hosted 3 projects, indicating that enterprises are becoming important participants in technological innovation. 2. Building up innovation and development carriers. In 2018, the total expenditure on R&D in Shantou was 2.515 billion yuan, an increase of 30.2% over the previous year, and its share in the regional GDP increased by 0.18 percentage points over the previous year.3 During the whole year, 198 new state-level hightech enterprises were established, bringing the total to 718, an increase of 29.6% over the previous year; 443 enterprises passed the evaluation of high-tech SMEs. Breakthroughs have been made in the construction of scientific research and innovation platforms. The Chemistry and Chemical Engineering Guangdong Laboratory, the Shantou Robotics and Intelligent Manufacturing Research Institute, and the “Belt and Road” Technology Innovation and Service Research Institute have been launched; 48 provincial-level engineering technology research centers have been established. The GHTECH National Enterprise Technology Center was recognized by the state, the Guangdong Intelligent Ultrasound Imaging Technology Innovation Center was approved for construction, and the strategic development plan for the China-Israel (Shantou) Science and Technology Innovation Cooperation Zone was evaluated positively. 3. Supply of innovation and development talents. The lack of high-end talents has always been one of the important factors restricting the innovation and development of Shantou. In 2018, Shantou also joined the war for talent that had already begun in various regions. The Shantou Municipal Party Committee issued the Implementation Opinions on Accelerating the Development of Talents in Our City and introduced 30 new talent policies. The “Golden Phoenix Plan” was created to actively introduce high-end talents in an attempt to attract talents through providing high amounts of special funds, living subsidies, housing subsidies, 3

Since the 2019 Shantou Statistical Yearbook has not been published at the time of writing, the R&D expenditures of the whole society are calculated using the internal expenditures of research and experimental development funds in 2017 and the growth rate in 2018, without price adjustments. The same below.

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and other conveniences at work and in life. As a carrier for attracting talents, the Shantou Overseas Chinese Economic and Cultural Cooperation Experimental Zone built a talent building in the golden zone of its direct management area to create a complex integrating talent services, talent apartments, and innovation and entrepreneurship incubation bases. In addition, Shantou established national and provincial natural fund project cultivation plans, a medical science and technology talent cultivation plan, and a clinical scientific research technology improvement plan. The enrollment scale of Shantou University and Guangdong Technion-Israel Institute of Technology also increased rapidly. 4. Cross-regional cooperation on innovation and development. As a traditional hometown of overseas Chinese, making full use of overseas Chinese hometown ties for Shantou to promote innovation and development has become a natural idea. In 2018, the Overseas Chinese Experimental Zone intensified reform and innovation, implemented a unified plan for telecommunications infrastructure, the co-construction and sharing mode, and the new model of “enterprises supporting loans,” and piloted the construction of a comprehensive demonstration zone in the provincial coastal zone; the strategic plan for the development of the China-Israel (Shantou) Science and Technology Innovation Cooperation Zone was evaluated positively and advanced Israeli technologies in the fields of food, chemical industry and aviation will be introduced, undertaking the achievements of Israeli inventions and innovations to realize the transformation and industrialization of the achievements in Shantou.

Hainan Special Economic Zone Constrained by the existing industrial structure that focuses on tourism services and agriculture, the scientific and technological innovation foundation of Hainan has been relatively weak. Since 2017, Hainan has gradually promoted the implementation of innovative development strategies taking advantage of the “Belt and Road” initiative and the South China Sea development strategy. 1. The contribution from the output of innovation and development. In 2018, the regional GDP of Hainan Province was 483.205 billion yuan, an increase of 5.8% over the previous year. The added value of the three industries was 100.011 billion yuan, 109.579 billion yuan, and 273.615 billion yuan, an increase of 3.9%, 4.8%, and 6.8%, respectively over the previous year. The added value of industries above the designated size increased by 6.0% over the previous year, of which the added value of the petroleum processing industry increased by 12.9%, and that of the pharmaceutical manufacturing industry increased by 15.9%. The operating income of the service industry above the designated size increased by 18.0% year-on-year, of which the information transmission, software, and information technology service industry increased by 13.0%, and the scientific research and technical service industry increased by 75.9%.

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2. Building up innovation and development carriers and talent supply. In 2018, there were 120 new high-tech enterprises in Hainan Province, bringing the total number of high-tech enterprises to 381, an increase of 46.1%. Four provinciallevel key laboratories and two engineering technology research centers were newly established, bringing the total number of provincial key laboratories and engineering technology research centers to 106. There were 4 newly recognized incubators and 17 maker spaces. The State Key Laboratory of Space Earth Observation was included by the Ministry of Science and Technology in the provincial and ministerial joint state key laboratory plan, and the Chinese Academy of Sciences was introduced to establish the Sanya Institute of Oceanography, SCSIO and the Sanya Branch of the Aerospace Information Research Institute, the Chinese Academy of Sciences. The first provincial and ministerial joint advanced technology clinical medicine research center was under preparation, and 6 provincial-level clinical medicine research centers were recognized. In 2018, Hainan Province introduced and cultivated 12 people from the provincial “Hundred Talents Project” and 31 entrepreneurial talents, recognized 26 provincial academician workstations, and flexibly introduced 29 academicians and nearly 100 high-level experts. 3. Cross-regional cooperation on innovation and development. Hainan Province has made full use of the opportunity of setting up the whole island as a free trade zone and fully launched the construction of the free trade zone. Among them, 12 pilot projects have been accelerated with phased results. The construction of the Southern Base of the National Deep Sea Center, the National Seed Breeding Base in Hainan, and the transfer base for the introduction of global animal and plant germplasm resources was steadily promoted. Hainan actively introduced multinational enterprises, central enterprises, and leading private enterprises, and the actual use of foreign capital increased by 112.7%. In addition, Hainan actively connected with the Guangdong-Hong Kong-Macao Greater Bay Area and the Beibu Gulf Economic Zone. Important progress has been made in the construction of the “Hainan-Chengmai-Wenchang” integrated comprehensive economic circle.

Analysis on the Innovation and Development of the Special Economic Zones From a vertical perspective, in 2018, the five major special economic zones have made significant progress in promoting innovation and development, whether it is the contribution of high-tech industries to economic growth, the building up of innovation carriers, or the supply of innovative development talents. However, if the five major special economic zones are put together for a horizontal comparison, it can be found that there are significant differences in the achievements and choices of methods of the special economic zones in promoting innovation and development. From the perspective of urban economics, we try to understand the differences by looking at

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the existing economic scale and structure and the status of government financing. In addition, location and regional cooperation and national policies also have impact on the differences.

The Existing Economic Scale Plays a Decisive Role in Innovation and Development The agglomeration of production factors in geographical space, through matching factors and spillover effects, makes the production function exhibit an increasing return to scale, which in turn leads to greater output and a higher rate of return on factors. This is the basic logic of the emergence of cities, and it is also valid for examining the differences in the innovation and development of different special economic zones. Taking the added value of the high-tech manufacturing industry and the number of authorized patents as examples, the performance of each special zone is as shown in Table 4.1. It can be found from Table 4.1 that the higher the initial regional GDP is, the greater the proportion of the added value of high-tech manufacturing in the regional GDP and the number of new authorized patents. For example, the index of Shenzhen is greater than Xiamen, and the index of Xiamen is greater than Zhuhai.4 It needs to be pointed out that the regional GDP of Hainan Province is not low, while in terms of the spatial scale under the agglomeration effect of the city, whether it is Haikou or Sanya, there is no advantage of the two cities in economic aggregate and scale of population. Therefore, Hainan Province is naturally in a weak position in terms of innovation and development. Urban economics, taking the urban systems of the United States and France as examples, found that the distribution of city scales roughly obeys the constraints of Zipf’s Law, and the scale of a single city can only be adjusted slowly along the city scale distribution described by Zipf’s Law (Duranton 2007). Although the economic system of China is very different from that of the United States and France, they roughly follow the same law of urban scale distribution under market economy conditions. This means that the adjustment of the status of regional innovation and development can only be a slow and long-term process. The backward areas copy and follow the policies in advanced areas to promote innovation and development. Although they can optimize the local environment for innovation and development, it is another matter as to whether the optimized environment for innovation and development can bring the desired performance. In the last research report of this blue book, it was also pointed out that although special economic zones with relatively 4

According to the study of urban economics on the law of changes in city scale, city scale will only change slowly along the distribution of city scale, so the city scale in 2017 can be used to characterize the city scale in the previous years. In addition, we believe that the information contained in the city scale shows a Markov nature, that is, the latest city scale contains the information necessary to reveal future development.

Shenzhen

529.80

Sanya –

–

–

53.31

1093.99

321.87

6131.20

Added value of the high-tech manufacturing industry in 2018

–

–

4832.05

2512.05

4791.41

2914.74

24,221.98

Regional GDP in 2018

–

–

–

2.1%

22.8%

11.0%

25.3%

Added value of the high-tech manufacturing industry/regional GDP in 2018

–

–

–

12,651

21,393

17,090

140,202

Number of authorized patents

–

–

–

408

2214

3452

21,309

Number of authorized invention patents

Source Statistical Bulletins on National Economic and Social Development of Shenzhen, Zhuhai, Xiamen, Shantou and Hainan Province in 2017 and 2018. The unit of regional GDP and the added value of the high-tech manufacturing industry is 100 million yuan, the unit of patent authorization is piece, and the unit of population is 10,000. Some data is missing

76.42

925.76

227.21

4462.54

1390.58

Hainan

401.00

560.82

4351.72

2350.97

Xiamen

Shantou

Haikou

176.54

1252.83

22,490.05

2675.18

Zhuhai

Permanent population at the end of the year 2017

Regional GDP in 2017

Table 4.1 The added value of the high-tech manufacturing industry, the number of authorized patents, the regional GDP and the permanent population at the year-end

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weak innovation capabilities and foundations have begun to strengthen the innovation functions of traditional parks, the actual effect is not obvious (Yang and Meifang 2018). Similarly, we can also understand why other special economic zones have also introduced various preferential policies for talents but it is difficult to achieve the attractiveness of talents like Shenzhen did.

The Financial Status of the Government Has an Important Impact on Innovation and Development Promoting the improvement of the innovation and development environment requires a large amount of investment. When the financial system cannot provide the required investment, government financial investment will naturally become an important driving force for the promotion of innovation and development. When government financing is relatively abundant, it can choose more policy tools when promoting the growth of innovation and development carriers, and at the same time, the effects are more significant. On the contrary, if the government’s financial capacity is weak, the policy tools to choose will be greatly reduced, and the results may not be satisfactory. As a result, the state of government finance has also become a perspective for understanding the differences in the implementation of innovation and development in special economic zones. Descriptions of the financial status of the five major special economic zones are shown in Table 4.2. From the first two columns in the table, it can be seen that among the five major special economic zones, except for Shenzhen and Xiamen, which can achieve selfsufficiency in fiscal revenue and expenditure, Zhuhai, Shantou, and Hainan all require a certain amount of transfer payments or borrowing from higher-level governments to be able to respond to the total expenditure needs of the general public budget. In addition, judging from the year-end local government debt balance, the year-end Table 4.2 General public budget revenue, expenditure, and year-end local debt balance General public budget revenue

Total general public budget revenue

Total general public budget expenditure

Year-end local debt balance

9102.40

5069.60

4949.60

145.90

Zhuhai

331.47

726.36

700.88

446.13

Shenzhen Xiamen

1283.29

818.30

892.49

637.00

Shantou

131.50

379.40

379.40

155.90

Hainan

1373.98

2163.40

2163.40

1941.70

Source Budget implementation of Shenzhen, Zhuhai, Xiamen, Shantou, and Hainan Province in 2017 and budget draft reports in 2018, as well as budget implementation in 2018 and budget draft reports in 2019. Unit: 100 million yuan. Xiamen did not announce the actual completion of the total general public budget revenue, and the corresponding figures are obtained from the budget report for 2018

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debt balance of the government of Shenzhen is very low both in absolute and relative amounts—the year-end government debt balance only accounts for 1.6% of the general public budget revenue and 2.88% of the total general public budget revenue. On the contrary, the debt burden of other special economic zones is relatively large. The debt balance of Xiamen City still does not exceed the general public budget revenue and total revenue, but its debt balance is 4.37 times that of Shenzhen; the debt balance of Zhuhai and Shantou accounts for 61.4% and 41.1% of the total general public budget revenue; while the debt balance of Hainan Province reached 89.8% of the total general public budget revenue. With sufficient financial support, Shenzhen adopts more comprehensive and aggressive measures to cultivate innovation and development carriers and promote the supply of innovative talents, while making greater progress. Based on the comparison between Shenzhen and Zhuhai, which belong to the Guangdong-Hong Kong-Macao Greater Bay Area, Shenzhen added 5 national-level enterprise technology research centers in 2018, which was equivalent to Zhuhai; in 2018, Shenzhen introduced 285,000 new talents including 12 new full-time academicians and 2678 high-level talents. Zhuhai introduced 27,000 talents of various types, which was only 9.5% of the number of Shenzhen. In addition, Shenzhen’s efforts in introducing wellknown universities and preparing for the establishment of new universities are far ahead of other special economic zones. In addition to Shenzhen, Xiamen has also performed well in cultivating innovation and development carriers and promoting the supply of innovative talents. In 2018, Xiamen added 4 national-level enterprise technology centers and 5 national-level technology business incubators. The total number of talents in the national “Thousand Talents Program” has increased to 110. The outstanding performance of Xiamen also illustrates to some extent the importance of local financial conditions in promoting innovation and development.

Influence of the Conditions of the Location, Regional Cooperation, and the National Strategies The conditions of the location affect the degree of agglomeration of production factors through the rate of return of production factors, and then profoundly affect the regional economic scale and the degree of innovation and development. Regional cooperation is the use of conditions of location to strengthen the balance of cooperation between different economies in the region in terms of industrial layout and technological innovation. The influence of national strategy is twofold. On the one hand, national strategy can promote intra-regional cooperation and strengthen the influence of the conditions of location; on the other hand, national strategy can reverse some unfavorable conditions of location with the power of the country, making regions with poor original conditions of location achieve rapid development and become new growth poles. This logic can be used to examine the differences in the innovation and development of the special economic zones.

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For Zhuhai, the Hong Kong-Zhuhai-Macao Bridge, which was completed and opened to traffic in 2018, will largely change the long-term development constraints of Zhuhai on the inconvenient transportation to the east bank of the Pearl River Estuary, and improve the conditions of Zhuhai’s location. More importantly, leveraging on the gradually implemented national strategy of the Hong Kong-ZhuhaiMacao Greater Bay Area plan, Zhuhai keeps continuously optimizing the environment for the development of innovation by upgrading industrial parks, strengthening cooperation with Hong Kong and Macao, and has achieved good results. Shantou, located in eastern Guangdong, is in contrast to Zhuhai. Although the two cities are similar in terms of regional GDP and the proportion of government debt balance in the general public budget total revenue, there are huge differences in innovation and development effects and in the cultivation of innovative development carriers. For example, there were 722 new high-tech enterprises in Zhuhai in 2018, equivalent to the total number of high-tech enterprises in Shantou at the end of 2018 (718). Unlike Zhuhai, with the favor of the national policy to establish a pilot free trade zone all over the Hainan Island, Hainan Province makes up for the poor conditions of its location, degree of economic agglomeration, and government financial status, and rapidly promotes innovation and development. Although the foundation of Hainan Province is relatively weak, the innovation and development carriers introduced by Hainan Province are of a considerable level, such as the Southern Base of the National Deep Sea Center, the National Seed Breeding Base in Hainan, and the introduction of the Sanya Institute of Oceanography, SCSIO, and the Aerospace Information Research Institute, CAS Sanya Branch, etc.

Suggestions for the Innovation and Development of the Special Economic Zones Based on the analysis in the previous sections, we believe that special economic zones should adopt diversified ideas when further promoting innovation and development, that is, design corresponding strategies based on their own factor endowments and relative rankings in the entire urban system, rather than blindly imitate and copy the experience and practices of advanced regions (such as Shenzhen). Only through differentiated development strategies and transforming their own comparative advantages into absolute advantages can they smoothly promote the innovation and development of the zones, instead of wasting resources in inter-regional competition.

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Further Strengthen the Basic Environment for Innovation and Development For Shenzhen and Xiamen, since their investment and achievements in innovation and development are among the top in China, the problem they need to solve is how to further strengthen the basic environment for innovation and development, including exploring and improving the evaluation system for talents and achievements, and promoting the development and implementation of basic research and the cultivation of market innovation investment entities, etc. Regarding the evaluation system for talents and achievements, although Shenzhen has had a relatively complete evaluation system as of the end of 2018, there is still the “pursuit of titles only” phenomenon in some institutional arrangements, and some practices are still quite different from the internationally-accepted understanding methods and rules, so there is a need for further improvement. The necessity for advancing basic research is not difficult to see from the events such as the sanctions of ZTE and the recent suppression of Huawei. In addition, the incident of Dr. He Jiankui also highlighted some neglected areas in the construction of the basic research environment. In fact, a good environment for the development of innovation requires not only sufficient innovation incentives, but also a supporting humanistic environment and behavioral restraint mechanism. As for the necessity of cultivating market innovation investment entities, there is no need to go into details, because Shenzhen has been committed to proving this.

Promote Innovation and Development with Industrial Development The important reason why Shenzhen and Xiamen have achieved good results in innovation and development is that they have a relatively complete and competitive industrial chain from a static point of view, and their pragmatic development strategies from a dynamic point of view. Taking Shenzhen as an example, it is not difficult to find out from a comprehensive view of its process of development that in the process of realizing innovation and development, Shenzhen has never purely innovated for innovation, but promoted innovation and development for the purpose of promoting industrial development and economic growth. The advantage of this development strategy is that innovation results can be quickly transferred into economic output and provide sufficient investment for further innovation and development. For Zhuhai, Shantou, and Hainan Province, the strategy of promoting innovation and development through industrial development is particularly important, because only when relevant industries can provide sufficient tax contributions to the special economic zones and enable the special economic zone governments to have a strong investment capacity for innovation and development, can innovation and development then be smoothly promoted. Otherwise, it is difficult to ask a special economic

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zone government with a heavy debt burden to provide continuous investment in the innovation and development of the region.

Take Advantage of Agglomeration Effects and Regional Cooperation For Hainan Province, although its economic aggregate and population size are in the middle of the five special economic zones, the degree of city agglomeration is still far lower than that of the other four special economic zones. The suggestion in this regard is to promote the factors to Haikou and Sanya as soon as possible in the way of promoting industrial development, and these two cities can use the agglomeration effect to drive forward breakthroughs in innovation and development. For Shantou, located in eastern Guangdong, regional cooperation is the only way for it to achieve economic take-off and innovative development. It should actively connect with advanced regions in terms of industrial development, and solve the existing problems of a small economic scale and tight government finances through industrial cooperation and development, so that production factors can be concentrated in the region on the premise of the pursuit of agglomeration effects, and at the same time, the government of the special economic zone could have stronger investment capabilities, and then achieve innovation and development.

References Duranton G (2007, March) Urban evolutions: the fast, the slow, and the still. Am Econ Rev 97(1):197–221 Jiahan Z, Report on the Work of the Xiamen Government in 2019, see the work report series of the information disclosure column at www.xm.gov.cn Jiange Z, Report on the Work of the Shantou Government in 2019, see the work report series of the government affairs disclosure column at www.shantou.gov.cn Lucas RE Jr (1988) On the mechanics of economic development. J Monet Econ 22:3–42 Report on the Implementation of the Budget in 2017 and Draft Budget in 2018 of Hainan Province, Department of Finance of Hainan Province Report on the Implementation of the Budget in 2018 and Draft Budget in 2019 of Hainan Province, Department of Finance of Hainan Province Report on the Implementation of the Budget in 2017 and Draft Budget in 2018 of Shantou Municipality, Shantou Finance Bureau Report on the Implementation of the Budget in 2018 and Draft Budget in 2019 of Shantou Municipality, Shantou Finance Bureau Report on the Implementation of the Budget in 2017 and Draft Budget in 2018 of Shenzhen Municipality, Shenzhen Finance Bureau Report on the Implementation of the Budget in 2018 and Draft Budget in 2019 of Shenzhen Municipality, Shenzhen Finance Bureau Report on the Implementation of the Budget in 2017 and Draft Budget in 2018 of Xiamen Municipality, Xiamen Finance Bureau

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Report on the Implementation of the Budget in 2018 and Draft Budget in 2019 of Xiamen Municipality, Xiamen Finance Bureau Report on the Implementation of the Budget in 2017 and Draft Budget in 2018 of Zhuhai Municipality, Zhuhai Finance Bureau Report on the Implementation of the Budget in 2018 and Draft Budget in 2019 of Zhuhai Municipality, Zhuhai Finance Bureau Romer PM (1990) Endogenous technological change. J Polit Econ 98(5):S71–S102 Rugui C, Report on the Work of the Shenzhen Government in 2019, see the government affairs disclosure column at www.sz.gov.cn Statistical Bulletin on the National Economic and Social Development of Hainan Province in 2017, Hainan Provincial Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Hainan Province in 2018, Hainan Provincial Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2017, Shantou Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2018, Shantou Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Shenzhen Municipality in 2017, Shenzhen Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Shenzhen Municipality in 2018, Shenzhen Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Xiamen Municipality in 2017, Xiamen Municipal Bureau of Statistic Statistical Bulletin on the National Economic and Social Development of Xiamen Municipality in 2018, Xiamen Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Zhuhai Municipality in 2017, Zhuhai Municipal Bureau of Statistics Statistical Bulletin on the National Economic and Social Development of Zhuhai Municipality in 2018, Zhuhai Municipal Bureau of Statistics Xiaoming S, Report on the Work of the Hainan Provincial Government in 2019, see the work report series of the government work report column at www.hainan.gov.cn Zhang Y, Guo M (2018) Report on the innovation and development of China’s special economic zones. In: Annual Report on the development of China’s special economic zones. Social Sciences Academic Press (China), Beijing, 2019. Yisheng Y, Report on the Work of the Zhuhai Government in 2019, see the work report series of the government affairs disclosure column at www.zhuhai.gov.cn

Chapter 5

Report on the Development of Social Security in China’s Special Economic Zones Xingmin Gao, Feng Qiu, and Jinhong Xu

The 19th National Congress of the Communist Party of China opened a new prelude to national development in a new era, and the people-centered orientation of development has drawn a new era background for advancing the construction of the social security system. It enriches and deepens the connotation and significance of social security, which means that social security is not only a safety basis for people’s livelihood, but also a major institutional arrangement that meets the needs of urban and rural residents for a better life and maintains all people toward achieving common prosperity. Under the requirements and specific guidance of the developmental direction of the social security system in the report of the 19th National Congress of the Communist Party of China, the social security undertakings in the special economic zones have achieved rapid development. The population covered by endowment insurance and medical insurance has expanded rapidly, and the level of security has gradually improved. The system and regulations have been gradually improving, and the public service system has been initially established. At the same time, with the intensification of population aging, the pressure on the long-term balance and safe operation of social security funds is also increasing. The structural contradictions caused by supply-side structural reforms and industrial transformation and upgrading have become increasingly prominent. The systematicness, coordination, and fairness of the social security system and policies and regulations of the special economic zones need to be strengthened, the mobility and sustainability of social security are X. Gao (B) China Center for Special Economic Zone Research, Shenzhen University, Shenzhen, China e-mail: [email protected] F. Qiu Theoretical Economics, Shenzhen University, Shenzhen, China J. Xu Shenzhen-Shanwei Special Cooperation Zone Smart City Research Institute Co., Ltd., Shanwei, China © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_5

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challenged, and social security management capabilities and information construction also urgently need to be improved. How to further improve the social security system of the special economic zones so that it plays a leading role in reform and opening up, promotes the equalization of basic public services in an orderly manner, and promotes the efficient, coordinated, and sustainable development of social security has become an urgent problem to be solved in the development of the economic and social security of the special economic zones.

The Development of Social Security in the Special Economic Zones The Status of the Development of Social Insurance in the Special Economic Zones Shenzhen Social Insurance Participation As of December 2018, the total number of people participating in social insurance in Shenzhen was 60.9505 million, a month-on-month decrease of 50,100, or 0.1%, and a year-on-year increase of 2.1388 million, or 3.6%; in Shenzhen, there were 671,400 urban units with endowment insurance for employees, 670,200 units with unemployment insurance, and 672,000 units with work-related injury insurance (normal payment). The total number of people participating in endowment insurance was 11.5777 million, a month-on-month increase of 50,000, or 0.4%, and a year-onyear increase of 234,500, or 2.1%. Among them, the number of urban workers with basic endowment insurance was 11.2123 million (6.6841 million male, and 4.5282 million female). The number of people participating in endowment insurance for retired employees was 357,700, and that of urban residents was 7800. The awareness of endowment insurance has been improved overall; the total number of people participating in basic medical insurance was 14.6692 million, a month-on-month decrease of 13,800, or 0.1%, and a year-on-year increase of 708,100, or 3.8%, of which the first-level, second-level, and third-level medical insurance participants were 4.7847 million, 6.2857 million, and 3.5988 million; the number of people participating in unemployment insurance was 11.2736 million (6.61 million male, and 4.6636 million female), a month-on-month decrease of 29,500, or 0.3%, and a year-on-year increase of 378,700, or 3.5%; the number of people participating in maternity (including medical maternity) insurance was 12.0262 million, a monthon-month decrease of 28,700, or 0.2%, and a year-on-year increase of 420,500, or 3.6%, of which 11.4498 million employees participated in maternity insurance (the employers are responsible for paying for the provincial maternity insurance in accordance with the relevant provisions since March 2015), and 576,400 participated

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in the original maternity medical insurance; the number of people participating in work-related injury insurance was 11.4038 million, a month-on-month decrease of 28,100, or 0.2%, and a year-on-year increase of 397,000, or 3.6%. The total insurance coverage of the five major insurance types has shown a trend of month-on-month decline and a year-on-year increase.

Social Insurance Payment and Treatment Standards In 2018, the rate of contribution for the basic endowment insurance paid by employers for urban employees was 14% (13% for non-Shenzhen households), and the rate of individual contributions was 8%; the total wages of employees in the previous month were used as the payment base, and the maximum payment limit was 3* (the average monthly wage of full-caliber urban enterprises in the province in the last year) (22,440 yuan from January to June, and 25,044 yuan from July to December), the lower limit was the minimum wage (2130 yuan/month from January to July, and 2200 yuan/month from August to December), and the actual average monthly wage was 3705 yuan. The combined medical insurance for urban employees was based on the total monthly wages of employees. The rate of first-level contribution for basic medical insurance was 8.2% (basic medical insurance + local supplementary medical insurance), of which the rate of contribution for non-enterprise units was 6.2%, that of enterprise units was 5.2% and the rate of individual contributions was 2%; the monthly upper limit was 25,044 yuan, and the lower limit was 5009 yuan; the rate of second-level contributions for basic medical insurance was 0.8%, the rates of unit and individual contributions were 0.6% and 0.2% respectively; the rate of third-level contributions for basic medical insurance was 0.55%, the rates of unit and individual contributions were 0.45% and 0.1% respectively. From January to November 2018, unemployment insurance took the monthly minimum wage of the city as the standard for the base payment. The rate of contributions of employers was 1%, and the rate of individual contributions was 0.5%. Since December, the payment of unemployment insurance paid by employers has been further adjusted to 0.7%, and 0.3% for the rate of individual contributions. Since January 2018, the maternity insurance base payment was the total wages of employees in the previous month, the upper limit was 3* (the average monthly wage of on-the-job employees in Shenzhen in the previous year), and the lower limit was the minimum wage (2130 yuan/month from January to July, and 2200 yuan/month from August to December); employees did not need to pay, the employers were responsible for payment, and the rate was 0.45%. Employees did not need to pay for the work-related injury insurance, and the employers were responsible for payment. Taking into account the differences in categories of industries, eight benchmark contribution rates were implemented: 0.14%, 0.28%, 0.49%, 0.63%, 0.66%, 0.78%, 0.96%, and 1.14%. The situation of upward adjustment of social endowment insurance in Shenzhen in 2018 is as follows: the basic pension for enterprise retirees was increased by an average of 167 yuan/person to 3764 yuan/person/month; for those who belong to

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Shenzhen households but have belonged for fewer than 8 years, the basic endowment insurance was increased from 240 yuan/month to 280 yuan/month. For those who have belonged to Shenzhen households for 8 years, the basic endowment insurance was increased from 360 yuan/month to 420 yuan/month; in addition to government subsidies, the basic endowment insurance premiums with the standard of 120 yuan/person/month was paid by the government for the disadvantaged groups such as subsistence allowance residents, extremely poor residents, severely disabled residents, and mentally and intellectually disabled residents; if the residents participating in the basic endowment insurance die, a one-time funeral subsidy of 5000 yuan will be issued. Since July 1, 2018, the standard of the Shenzhen social insurance base payment has been the average monthly wage of on-the-job employees in the city last year, which was increased to 8348 yuan/month, an increase of 868 yuan compared with 2017. According to this standard, the upper limit of the base payment of the adjusted endowment insurance, maternity insurance, and work-related injury insurance was increased to 25,044 yuan. Since May 2018, the unemployment insurance benefits have been increased from 80% of the original minimum wage (2130 yuan/month) to 90%, and the monthly unemployment insurance benefits received by the unemployed workers have been increased from 1704 yuan/month to 1917 yuan/month; since August, due to the increase in the minimum wage standard (2230 yuan/month), the unemployment insurance benefits have been increased to 1980 yuan/month, and the number of people receiving unemployment insurance benefits in the city in 2018 reached 102,177. In 2018, there were 33,746 people covered by work-related injury insurance benefits in the city, of which 786 were disabled at levels 1–4, 19,815 were disabled at levels 5–10, and 7906 were below the disability level, and 532 died at work, and 4707 people supporting family members suffered from work-related injuries. The average one-time disability subsidy per person was 39,100 yuan, 3007.15 yuan per person per month for disability allowance, 4391.93 yuan per person per month for living care expenses, 1792.77 yuan per person per month for relatives’ pensions, and an average of 694,400 yuan per person for one-off work death subsidy. The maximum reimbursement limit for basic medical insurance in Shenzhen in 2018 increased to 601,000 yuan, an increase of 62,000 yuan from the previous medical insurance year; the limit for basic medical insurance pooling fund payment has been adjusted since July 1st, and for those who participated in basic medical insurance continuously for less than half a year, continuously for 6 months but for fewer than 12 months, 12 months but for fewer than 24 months, 24 months but for fewer than 36 months, 36 months but for fewer than 72 months, or more than 72 months, the payment limits of medical insurance for the overall fund were respectively 100,000 yuan, 200,000 yuan, 300,000 yuan, 400,000 yuan, 500,000 yuan, and 601,000 yuan; the payment limits of local supplementary medical insurance funds were 10,000 yuan, 50,000 yuan, 100,000 yuan, 150,000 yuan, 200,000 yuan, and 1 million yuan respectively.

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Income and Expenditure of the Social Insurance Fund In 2018, except for the medical and maternity insurance funds, the total income of other social insurance funds in Shenzhen totaled 132.2272 billion yuan, and the expenditure totaled 51.8973 billion yuan. The total fund balance at the end of the year reached 528.1646 billion yuan. The details are as follows: the income of the enterprise employee basic endowment insurance fund was 113.3103 billion yuan, the fund expenditure was 43.5755 billion yuan, and the year-end accumulated deposit balance of the fund was 468.5403 billion yuan; the income of the basic endowment insurance fund for urban residents was 35.7 million yuan, the fund expenditure was 37.3 million yuan, and the year-end accumulated deposit balance of fund was 35.3 million yuan; the revenue from the basic endowment insurance fund of government institutions was 8.4717 billion yuan, the fund expenditure was 1.7884 billion yuan, and the year-end accumulated deposit balance of the fund was 22.037 billion yuan; the income from the work-related injury insurance fund was 2.051 billion yuan, the fund expenditure was 1.8179 billion yuan, and the year-end accumulated deposit balance of the fund was 5.8048 billion yuan; the income of the unemployment insurance fund was 4.5045 billion yuan, the fund expenditure was 2.1906 billion yuan, and the year-end accumulated deposit balance of the fund was 20.8575 billion yuan.

Zhuhai Social Insurance Participation In 2018, the total number of people participating in social insurance in the city was 6.1436 million. The number of people participating in the basic endowment insurance for enterprise employees including retirees was 1.242 million. The number of urban and rural residents under basic endowment insurance was 92,500; the number of people participating in basic medical insurance was 1.9007 million. Among them, 1.0181 million were in the first-level of basic medical insurance, and 882,600 were in the second-level, including 993,300 males and 907,400 females; the number of people participating in unemployment insurance totaled 1.0469 million, including 579,900 males and 467,000 females. The number of people participating in workrelated injury insurance totaled 1.0656 million, including 593,200 males and 472,400 females. The total number of people participating in maternity insurance was 1.0677 million, including 594,600 males and 473,100 females. In 2018, a total of 75,000 units in Zhuhai participated in endowment insurance, unemployment insurance, workrelated injury insurance, and maternity insurance for employees of enterprises, and a total of 76,000 units participated in medical insurance for employees.

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Social Insurance Payment and Standards of Treatment In 2018, the basic endowment insurance for urban employees in Zhuhai was paid by the unit and the individual, and the rate of contribution of units of 13% was greater than the individual rate of 8%, and the rate of the freelancer’s contribution was calculated at 20%; the total wages of employees in the previous month was used as the base payment. The upper and lower limits were uniformly implemented according to the provincial standards. The upper limit was 18,213 yuan from January to June and the lower limit was 2906 yuan; the upper limit was 20,004 yuan from July to December and the lower limit was 3100 yuan. As of the end of 2018, the retirees in Zhuhai (participating in the basic endowment insurance for enterprise employees) reached 130,800, and the average monthly pension for retirees in 2018 was 2757 yuan per person if people with one-time contributions were included. The standards for basic endowment insurance payment for urban and rural residents were 60 yuan, 100 yuan, and 120 yuan per person per month. Among them, nearly 40,000 people met the conditions for receiving long-term benefits; the annual average monthly basic pension was 542 yuan per person, not counting the old people who received the new rural insurance allowance. As for the basic medical insurance for employees (including maternity insurance), the upper limit was 18,213 yuan from January to June, and the lower limit was 3643 yuan; the upper limit from July to December was based on the average monthly wage of on-the-job employees in the province in 2017 (6668 yuan/month) multiplying by 3, which was 20,004 yuan, and the lower limit was based on 60% of the average monthly wage of on-the-job employees in the province in 2017 (6668 yuan/month), which was 4001 yuan. The rate of contributions for first-level basic medical insurance (including maternity insurance) was 7.5%, of which the rate of contributions for enterprise units was 6% (including 0.5% for maternity insurance), the rate of individual contributions was 1.5%, and the rate of contributions for flexible employees was 7%; second-level basic medical insurance was paid by the unit at a rate of 2.5% (including 0.5% for maternity insurance), and individuals did not need to pay, and the rate of contributions for flexible employees was 2%. A total of 3.9773 million people were covered by basic medical insurance benefits, and supplementary medical insurance was allocated at 86.22 million yuan; among them, 14,277 people applied for supplementary medical insurance benefits, and treatment payments were 39.4 million yuan. A total of 80,800 people were covered by maternity insurance benefits. Among them, the medical expense for each childbirth was 4924 yuan per person, the childbirth allowance was 11,500 yuan per person, the family planning expense was 651 yuan per person, and the family planning allowance was 1029 yuan per person. The average funding standard of second-level basic medical insurance (covering urban and rural residents, students and minors) was 759 yuan/person·year, of which 209 yuan was paid by individuals and 550 yuan was provided from financial subsidies at all levels. In 2018, the standard for unemployment insurance benefits was 1548 yuan/month, and 12,200 people received the benefits. From January to June 2018, unemployment insurance was based on the monthly minimum wage in the city, with an upper limit of 18,732 yuan and a lower limit of 1650 yuan; from July to December, the upper

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limit was based on 3 times the average monthly wage of on-the-job employees in the previous year (calculated on the basis of a 2017 average monthly wage of 6751 yuan for on-the-job employees in the city), which was 20,253 yuan, and the lower limit was in accordance with the standard minimum wage (the standard minimum wage has been raised to 1720 yuan/month since July 1, 2018). The rate of contributions of employer units was 0.8%, and the rate of individual contributions was 0.2%. From July to December, the rate of unemployment insurance contributions of employer units was further adjusted to 0.64%, and the rate of individual contributions remained unchanged. Work-related injury insurance premiums were paid by employer units based on the total wages of the employees, and the lower limit was in accordance with the standard minimum wage in the city (1650 yuan/month from January to June, and 1720 yuan per month from July to December); the payment rate was divided into eight levels according to the industry category as 0.10%, 0.15%, 0.20%, 0.30%, 0.40%, 0.50%, 0.55%, and 0.60%, with an average payment rate of 0.19%. There were 6907 people covered by work-related injury insurance benefits in the city, of which 116 were disabled at levels 1–4 and 2936 were disabled at levels 5–10. The numbers of people receiving disability allowance and living care expenses were 116 and 53. There were 63 people who died at work, and 617 people to support family members who suffered from work-related injuries. The average one-time disability subsidy was 34,500 yuan per person, and the one-off work death subsidy was 727,920 yuan per person. The monthly disability allowance, living care expenses, and relatives’ pension were 3183 yuan, 2266 yuan, and 1426 yuan respectively. The work-related injury insurance fund was paid for 59 people in advance at a cost of 1.27 million yuan.

Income and Expenditure of the Social Insurance Fund In 2018, the income of the social insurance fund of Zhuhai was 20.2966 billion yuan, the expenditure was 13.73932 billion yuan, and the current balance was 6.55728 billion yuan. The income of the social insurance fund of Zhuhai exceeded expenditures. Among them, the total income of the basic endowment insurance fund for enterprise employees was 14.31292 billion yuan, the total fund expenditure was 8.43374 billion yuan, and the current balance was 5.87918 billion yuan; the income of the basic endowment insurance fund for urban and rural residents was 361.45 million yuan, the fund expenditure was 243.51 million yuan, and the cumulative balance was 1.0184 billion yuan; the total income of the basic medical insurance fund was 4.8754 billion yuan, the total fund expenditure was 4.53534 billion yuan, and the current balance was 340.06 million yuan; the income of the work-related injury insurance fund was 229.41 million yuan, the fund expenditure was 225.54 million yuan, and the current balance was 3.87 million yuan; the income of the unemployment insurance fund was 517.42 million yuan, the fund expenditure was 301.19 million yuan, and the current balance was 216.23 million yuan.

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Xiamen Social Insurance Participation In 2018, the number of people participating in basic endowment insurance, basic medical insurance, maternity insurance, work-related injury insurance, and unemployment insurance in Xiamen reached respectively 2.9588 million (including 2.586741 million covered by enterprise endowment insurance, 278,197 by endowment insurance for urban and rural residents, and 93,832 by government and public institution endowment insurance), 3.9762 million, 2.137 million, 2.252 million (9295 people in high-risk industries), and 2.245 million, an increase of 8.1%, 4.1%, 6.7%, 6.6%, and 6.4% respectively over the end of the previous year. Among them, the number of migrant workers participating in basic endowment insurance, basic medical insurance, maternity insurance, work-related injury insurance, and unemployment insurance reached 1.4268 million, 1.425 million, 1.42 million, 1.4344 million, and 1.422 million, an increase of 6.7%, 6.6%, 6.5%, 6.4%, and 6.5% respectively.

Social Insurance Payment and Standards of Treatment In 2018, the monthly social insurance payment base for enterprise-insured persons in the city (including on-the-job employees in enterprises, employees in self-employed businesses, and flexible employees) was 2747 yuan per person, of which the payment for registered permanent residents in the city was 4603 yuan. The basic endowment insurance payment base was in accordance with the average monthly wage of the registered employees in the previous year in the city. The upper limit was 300% (18,864 yuan/month) of the average wage of on-the-job employees in urban nonprivate units in Xiamen in 2017. The lower limit was based on the standard minimum wage in Xiamen (1700 yuan/month); the payment base for migrant workers was in accordance with the standard minimum wage in Xiamen (1700 yuan/month). The payment rate was 12% for enterprises and 8% for individuals. The basic medical insurance payment base was based on the average monthly wage of registered employees in the previous year in Xiamen. The upper limit was 300% (18,864 yuan/month) of the average wage of on-the-job employees in urban non-private units in Xiamen in 2017. The lower limit was based on 60% (3772.8 yuan/month) of the average wage of on-the-job employees in urban non-private units in Xiamen in 2017, with the employee enterprises paying 6%, and individuals 2%; the payment base for migrant workers was based on 60% (3772.8 yuan/month) of the average wage of on-the-job employees in urban non-private units in Xiamen in 2017, with the employee enterprises paying 3%, and individuals 2%. The payment base for unemployment insurance was based on the average monthly wage of the registered employees in the city in the previous year. The lower limit was based on the standard minimum wage in Xiamen (1700 yuan/month), and the upper limit was not required, with the employee enterprises paying 0.5%, and individuals

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paying 0.5%; the payment base for migrant workers was based on the standard minimum wage in Xiamen (1700 yuan/month), with the employee enterprises paying 0.5%, and individuals not paying. The payment base for maternity insurance was based on the average monthly wage of the previous year. The upper limit was 300% (18,864 yuan/month) of the average wage of on-the-job employees in urban non-private units in Xiamen in 2017, and the lower limit was based on 60% (3772.8 yuan/month) of the average wage of onthe-job employees in urban non-private units in Xiamen in 2017, with the employee enterprises paying 0.7%, and individuals not paying. The payment base for work-related injury insurance was based on the average monthly wage of enterprise employees in the previous year, and the lower limit was based on the standard minimum wage in Xiamen (1700 yuan/month); the payment for construction enterprises in construction projects must comply with the Measures on Enterprise Insurance Participation for Migrant Workers in Construction, Mining and Stone Processing Enterprises, and no matter what kind of occupation, individuals were not required to pay. In 2018, the basic pension per capita for urban and rural residents in Xiamen was 295 yuan, the average monthly pension for retired employees of enterprises was 3526 yuan, and the monthly pension per capita for land-expropriated persons was 1570 yuan. In the whole year, a total of 317 million yuan of unemployment insurance benefits were distributed to 36,200 unemployed people in Xiamen. As from July 1, 2018, insured male employees who performed family planning operations could get maternity allowances in accordance with the provisions of the new policy. After the December 2018 adjustment of the standards for work-related injury compensation, the additional disability allowances for disabled employees at all levels were: 468 yuan (person·month) for Level 1, 442 yuan (person·month) for Level 2, 416 yuan (person·month) for Level 3, 390 yuan (person·month) for Level 4, 364 yuan (person·month) for Level 5, and 312 yuan (person·month) for Level 6; the minimum amount of disability allowance from Level 1 to Level 6 was respectively 3396 yuan, 3207 yuan, 3019 yuan, 2830 yuan, 2641 yuan, and 2264 yuan; for cases involving living care expenses, such as those who cannot take care of themselves at all, there was an additional 260 yuan (person·month); for those who cannot take care of themselves most of the time, there was an additional 208 yuan (person·month); for those who cannot take care of themselves part of the time, there was an additional 156 yuan (person·month); for those who get pension to support family members, the additional amount would be adjusted according to the object of support: for spouses, there was an additional 208 yuan (person·month); for other relatives, there was additional 156 yuan (person·month). If these two types of support objects were widowed elderly or orphans, an additional 10% would be distributed on the basis of the corresponding standard.

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Income and Expenditure of the Social Insurance Fund As of the end of 2018, the cumulative balance of the five social insurance funds in Xiamen was approximately 94.1 billion yuan. Except for maternity insurance, the total fund income of the other four social insurances was 22.193 billion yuan, the fund expenditure was 16.757 billion yuan, and the cumulative balance of the three funds of basic endowment insurance, work-related injury insurance, and unemployment insurance has reached 71.264 billion yuan over the years. Among them, the income of the endowment insurance fund was 21.0226782 billion yuan, and the fund expenditure was 15.2963683 billion yuan; the income of the unemployment insurance fund was 822.2599 million yuan, and the fund expenditure was 962.4233 million yuan; the income of the work-related injury insurance fund was 348.3544 million yuan, and the fund expenditure was 497.852 million yuan; the total income of the medical insurance and maternity insurance fund was 11.485 billion yuan, and the fund expenditure was 8.726 billion yuan. The cumulative balance of these two types of social insurance funds over the years was 22.86 billion yuan.

Shantou Social Insurance Participation As of December 31, 2018, the total number of people participating in social insurance in the city was 5.298 million, a year-on-year increase of 0.9%. The number of people participating in basic endowment insurance was 3.238 million, an increase of 0.9%. Among them, 971,402 people participated in enterprise endowment insurance, 98,249 people participated in government and public institution endowment insurance, and 2.122283 million people participated in endowment insurance for urban and rural residents. The number of people participating in medical insurance was 5.0221 million, which was the same as the previous year. Among them, 569,921 people participated in employee medical insurance, and 4.452173 million people participated in medical insurance for urban and rural residents. The number of unemployment insurance participants reached 859,000, a year-on-year increase of 7.4 percentage points. The number of participants in work-related injury insurance was 875,300, a year-on-year increase of 11.9 percentage points. The number of maternity insurance participants reached 654,400, an increase of 1.9%.

Social Insurance Payment and Standards of Treatment Since New Year’s Day in 2018, the basic pension of the basic endowment insurance for urban and rural residents in Shantou has been adjusted from 110 yuan (person·month) to 120 yuan (person·month). As of December 31, 2018, the average monthly pension for enterprise retirees was 2180 yuan, an increase of 111 yuan compared with the same period of the previous year. For employees participating in enterprise basic

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endowment insurance, basic medical insurance, work-related injury insurance, and maternity insurance, the payment base was based on the 2017 average annual wage of on-the-job employees in urban non-private units in Guangdong (80,020 yuan) and the 2017 average monthly wage of full-caliber on-the-job employees in Shantou (4732 yuan). The lower limit of the payment base was 60% (2839 yuan) of the average monthly wage of full-caliber on-the-job employees in Shantou in 2017 (4732 yuan), and the upper limit was 300% (20,004 yuan) of the 2017 average annual wage of on-the-job employees in urban non-private units in Guangdong (80,020 yuan). In terms of rate of contributions, the rate of the endowment insurance contributions for enterprises was 15%, 8% for individuals, and 20% for individual industrial and commercial households and flexible employees; the rate of contributions of medical insurance for enterprises was 6% and 2% for individuals; the work-related injury insurance was paid by the enterprise according to the industry, and the average benchmark rate of work-related injury insurance was 0.5%, and individuals did not need to pay; the rate of contributions of maternity insurance for enterprises was 1%, and individuals did not need to pay. For employees participating in enterprise unemployment insurance, the payment base was in accordance with the average annual wage of on-the-job employees in urban non-private units in Guangdong (80,020 yuan) and the monthly minimum wage of enterprise employees in Shantou in 2017 (1550 yuan). The lower limit of the payment base was in accordance with the monthly minimum wage of enterprise employees in Shantou (1550 yuan), and the upper limit was 300% (20,004 yuan) of the average annual wage of on-the-job employees in urban non-private units in Guangdong in 2017 (80,020 yuan). The rate of contributions for enterprises was 1.5% and 0.5% for the individuals. After July, it was further adjusted to 0.64% for enterprises, and 0.2% for the individuals.

Income and Expenditure of the Social Insurance Fund In 2018, the income of the social insurance fund in the city was ***, and the fund expenditure was ***. Among them, the income of the enterprise endowment insurance fund was 5.31804 billion yuan, and the expenditure was 6.58809 billion yuan, with the gap between revenue and expenditure being 1.27005 billion yuan; the income of the government and public institution endowment insurance fund was 2.12922 billion yuan, and the expenditure was 1.83491 billion yuan, with a balance of 294.31 million yuan; the income of the urban and rural residents endowment insurance fund was 1.12051 billion yuan, and the expenditure was 1.02744 billion yuan, with a balance of 93.07 million yuan; the income of the employee medical insurance fund was 1.68636 billion yuan, and the expenditure was 2.55683 billion yuan, with the gap between revenue and expenditure being 870.47 million yuan; the income of the urban and rural residents medical insurance fund was 3.23954 billion yuan, and the expenditure was 2.73528 billion yuan, with a balance of 504.26 million yuan; the income of the unemployment insurance fund was 282.11 million yuan, the expenditure was 91.91 million yuan, with a balance of 190.2 million yuan; the income of the

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work-related injury insurance fund was 97.65 million yuan, and the expenditure was 53.57 million yuan, with a balance of 44.08 million yuan; the income of the maternity insurance fund was 223.2 million yuan, the expenditure was 215.72 million yuan, with a balance of 7.48 million yuan.

Hainan Province Social Insurance Participation In 2018, the number of people participating in the basic endowment insurance for employees in urban enterprises in Hainan Province was 2.5796 million, a year-onyear increase of 7.1%. Among them, there were 1.8747 million employees and 704,900 retirees, and the number of retirees increased by 16,000 over the end of the previous year; the number of urban and rural residents participating in basic endowment insurance was 2.9822 million, a year-on-year increase of 123,200. The number of people participating in the urban basic medical insurance was 4.4044 million, of which 2.2572 million were participating in the basic medical insurance for urban employees (including 1.6283 million employees and 627,800 retirees), an increase of 161,600 over the end of the previous year, and a year-on-year increase of 7.7%; the number of urban residents with basic medical insurance was 2.1472 million. The number of people participating in work-related injury insurance was 1.529 million (including 102,100 participating migrant workers), an increase of 115,000 over the end of the previous year. The number of maternity insurance participants reached 1.5262 million, a year-on-year increase of 123,500. The number of people participating in unemployment insurance was 1.7344 million.

Social Insurance Payment and Standards of Treatment Since July 2018, the social insurance payment base has been determined based on the total actual average monthly wage of employees in the previous year (the average monthly wage of on-the-job employees in the province in 2017 was 5755 yuan), for those whose wage was 300% higher than the average monthly wage of on-the-job employees in the province in the previous year (hereinafter referred to as “the average social wage in Hainan Province last year”), the payment base must be assessed based on 300% (17,265 yuan) of the average social wage in Hainan last year; for those less than 60% of the average social wage in Hainan last year, it must be assessed based on 60% (3453 yuan) of the average social wage in Hainan Province last year. In terms of the rate of contributions, the rate of basic endowment insurance for the unit was divided into 19%, 20%, etc. according to the nature of the unit, and the rate of individual contributions was 8%; the rate of individual contributions for flexible employees was 20%. In 2018, the basic pension for enterprise-insured retirees was adjusted to 2237 yuan (person·month); the pension for urban and rural residents was adjusted to 196.10 yuan (person·month). Among them, the monthly basic pension

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per capita amounted to 181.60 yuan (263 yuan per month in Sanya, 233 yuan per month in Lingshui County, and 178 yuan per month in other cities and counties). The rate of contributions of basic medical insurance was 8% for the unit and 2% for the individual; the payment base for flexible employees was the average monthly wage of on-the-job employees (5755 yuan), and the rate of individual contributions was 6%. As of the end of 2018, the number of employees receiving hospitalization reimbursement for basic medical insurance reached 321,200 person-times, and 864,900 person-times of outpatient special diseases; the overall fund payment for hospitalization expenses was 9603 yuan/time, a decrease of 93.6 yuan from the previous year, and the proportion of fund payments for hospitalization expenses within the scope of the policy was 79.2%. The total number of people receiving benefits from the urban basic medical insurance for hospitalization was 196,200 person-times, and the total number of people receiving benefits for outpatient special diseases was 168,900 person-times. The overall fund payment for hospitalization expenses was 5482.4 yuan/time, a decrease of 62 yuan from the previous year. The proportion of fund payments for hospitalization expenses within the scope of the policy was 63.69%. The rate of work-related injury insurance was mainly divided into 0.2%, 0.4%, 0.7%, 0.8%, 0.9%, 1.0%, 1.2%, 1.5% and other rates according to the rates of industry differential and intra-industry rates. Individuals did not need to pay. As from May 1, 2018, the rate of work-related injury insurance was reduced by 50% based on the employer’s current rate. In 2018, the number of people receiving work-related injury insurance benefits in the province was 4122. Among them, the living care expense was 2342 yuan/person-time, disability allowance was 2566 yuan/persontime, and pension to support family members was 1851.89 yuan/person-time. The rate of contributions of unemployment insurance was 0.5% for the unit and 0.5% for the individual. The rate of contributions of maternity insurance was 0.5% for the unit, and individuals did not need to pay. There were 107,671 people in the province who received various maternity insurance benefits, an increase of 20,000 people over the previous year; the per capita medical treatment for childbirth was 2650 yuan, a decrease of 347 yuan over the previous year.

Income and Expenditure of the Social Insurance Fund As of the end of 2018, the total assets of the five social insurance funds in Hainan Province amounted to 47.033 billion yuan. Among them, the income of the basic endowment insurance fund for urban employees was 32.607 billion yuan, an increase of 5.495 billion yuan over the previous year, and the fund expenditure was 26.784 billion yuan, an increase of 3.588 billion yuan over the previous year. The cumulative fund balance at the end of the year was 23.463 billion yuan, an increase of 6.113 billion yuan over the previous year. The income of the basic endowment insurance fund for urban and rural residents was 3.544 billion yuan, an increase of 756 million yuan over the previous year, and the fund expenditure was 1.806 billion yuan, an

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increase of 439 million yuan over the previous year. The cumulative fund balance at the end of the year was 8.254 billion yuan. The income of the basic medical insurance fund for employees was 7.887 billion yuan, an increase of 911 million yuan over the previous year, and the fund expenditure was 5.213 billion yuan, an increase of 266 million yuan over the previous year; the income of the basic medical insurance fund for residents was 1.388 billion yuan, a year-on-year increase of 37 million yuan, and the fund expenditure was 1.269 billion yuan, an increase of 166 million yuan over the previous year; the cumulative fund balance at the end of the year was 1.68 billion yuan, an increase of 119 million yuan over the previous year. The income of the work-related injury insurance fund was 344 million yuan, a decrease of 166 million yuan from the previous year, and the fund expenditure was 172 million yuan, an increase of 11 million yuan over the previous year; the cumulative fund balance at the end of the year was 1.814 billion yuan, and the reserve fund balance was 223 million yuan. The income of the maternity insurance fund was 432 million yuan, an increase of 86 million yuan over the previous year, and the fund expenditure was 524 million yuan, an increase of 129 million yuan over the previous year; the cumulative fund balance at the end of the year was 394 million yuan, a decrease of 92 million yuan from the previous year.

Statue of the Development of Social Assistance and Social Welfare in the Special Economic Zones Shenzhen As of the end of 2018, the total expenditure on social services in Shenzhen was 2.74465 billion yuan, of which the expenditure on social welfare was 805.23 million yuan, the expenditure on social assistance was 576.31 million yuan, the expenditure on urban subsistence allowance was 52.416 million yuan, the expenditure on direct medical assistance was 6.335 million yuan, and the expenditure on natural disaster life assistance was 424,000 yuan. There were 27 service institutions (excluding nursing homes) for the elderly and the disabled with 10,172 beds in Shenzhen; 1 service institution for the mentally handicapped and mentally ill with 64 beds; and 9 child adoption assistance service institutions with 1783 beds. In terms of social assistance, the number of people living under the urban subsistence allowance was 4153, the number of urban households on subsistence allowance was 1861, the number of people receiving temporary assistance was 1535, and the total number of people receiving assistance (including at and outside the station) was 19,040. The Shenzhen Charity Federation has received a total of nearly 3 billion yuan in donations, organized more than 3200 various charity activities, and benefited more than 1 million people in need. Among them, the Shenzhen Builders Care Fund has aided more than 18,500 people with serious illnesses and their children in the 11 years of its operations, and the accumulated funding has exceeded 192 million yuan.

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Zhuhai Since July 2018, the standard minimum living security for urban and rural residents in Zhuhai has been adjusted from 896 yuan/person/month to 980 yuan/person/month, and the growth rate was 9.4%. The basic living standard of the extremely poor has been increased from 1434 yuan/person/month to 1568 yuan/person/month, an increase of 9.4%. Besides, 3600 yuan/year was added for inpatient assistance and outpatient services, as well as assistance programs such as university tuition subsidies and living subsidies. The subsidy for low-income families was increased from 50 yuan/person/month to 580 yuan/person/month. The upper limit of the vocational training subsidy for the disabled was raised to 5000 yuan, and a monthly job subsidy of 300–500 yuan was granted to both the disabled and the placement enterprises. The standard living allowances for some preferential treatment subjects such as the disabled (including disabled soldiers and disabled people’s police, etc.) was increased by 10% over the current basis. The standard living allowance for demobilized soldiers in the township was increased by 1200 yuan/person compared with last year, and that for the elderly children of martyrs was increased by 600 yuan/person compared with last year. The standard living allowance for families who lose only one child was 1000 yuan/month. For parents only with children with disabilities, the living allowance was granted according to disability levels, including 700 yuan/person/month, 600 yuan/person/month, and 500 yuan/person/month. A total of 29 community elderly service stations (centers) were newly added (renovated) in Zhuhai; the basic living standard of registered orphans was adjusted to 1710 yuan/month, and the subsidy for severely disabled care was adjusted to 2520 yuan/year/person; the welfare lottery sales revenue in Zhuhai was 674 million yuan, and 203.7 million yuan was raised for the public welfare fund.

Xiamen In 2018, the total amount of subsistence allowances in Xiamen was nearly 90 million yuan, of which the urban and rural subsistence allowances were 62.1474 million yuan and 27.4117 million yuan respectively. There were 3402 people receiving temporary relief funds, totaling 7,166,700 yuan, and 3562 vagrants and beggars were helped, 98 of whom were minors. A total of 113.8 million yuan was distributed to 748,400 people receiving medical assistance funds. There were 38 elderly care service institutions, including 6 public elderly care institutions and 32 private elderly care institutions. Among the 9707 beds in the institutions, there were 1848 beds in public elderly care institutions and more than 7800 beds in private elderly care institutions; there were more than 700 designated medical insurance medical institutions in Xiamen, and more than 1260 designated medical insurance retail pharmacies. There were 22 elderly care service clinic counties and 297 health clinics that were included in the management of medical insurance fixed-point services; the number of communities with professional elderly care service organizations reached 200; 3 smart elderly care

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demonstration enterprises were cultivated, and 15 smart elderly care demonstration communities were built.

Shantou In 2018, Shantou spent 381 million yuan on minimum living security funds, which was the same as the previous year; 96,500 people received minimum living security funds, a decrease of 19.2%; the number of people assisted by relief stations was 2974, a decrease of 39.0%. By the end of the year, a total of 655 people had been placed in 11 social welfare homes; and a total of 185 people had been placed in 40 urban and village-run nursing homes.

Hainan Province In 2018, there were 45,600 urban residents in the province with a minimum living allowance, a year-on-year decrease of 27.7%; the number of rural residents with minimum living allowance was 149,200, a year-on-year decrease of 17.8 percentage points. There were 23,900 people in rural households enjoying the five guarantees, a year-on-year decrease of 9.0%. The scale of child welfare has increased a little, and the number of beds in relevant welfare institutions has increased by 16% to 626. Disaster relief funds invested a total of 13 million yuan, a year-on-year decrease of 74%. The number of rescued victims reached 116,600, a year-on-year decrease of 83%. A total of 1.418 billion yuan in welfare lottery was sold, a year-on-year decrease of 7.7 percentage points; 346 million yuan were raised for the welfare lottery charity fund, a year-on-year decrease of 7.2 percentage points. 2669 poor households with registered cards met the conditions and were included in the scope of the minimum living allowance (extremely poor), with a total of 7764 people; 8389 households with minimum living allowance (extremely poor) were included in the registered poor households with 19,843 people. Poor people aged 60 and above could directly receive the basic pension benefits for urban and rural residents without payment, and people living on subsistence allowances and the five-guarantee households got paid for the insurance in full at the lowest level.

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Achievements in the Development of Social Security in the Special Economic Zones Achievements in the Development of Social Insurance in the Special Economic Zones Shenzhen Continue to Promote the Universal Insurance Participation Plan and Build a Multi-level Endowment Insurance System According to the targets set in the “Thirteenth Five-Year Plan” for the development of human resources and social security in Shenzhen, by 2020, the participation rates of basic endowment insurance and urban and rural medical insurance for registered permanent residents in this city will reach 90% and 95% respectively, and the rate of card coverage of social security card holders will reach more than 90%. At present, the total number of people participating in the insurance has increased by 55.4% in the five years from 2014 to 2018. The basic endowment insurance and medical insurance in Shenzhen have basically achieved full coverage, and the level of pension and level of health care rank among the top in China. In accordance with the relevant policies of endowment insurance in Guangdong Province, the municipal social security department actively and steadily keeps doing a good job in insurance participation for key groups such as small and medium-sized enterprises, new business types, and flexible household registration workers on the basis of consolidating the coverage of the social security system, adjusts and improves basic pension standards of basic endowment insurance and other benefits, and steadily improves the level of social security. At the same time, the municipal social security department steadily advances the reform of the endowment insurance system for government agencies and institutions, formulates the measures for the transfer and continuation of insurance for government agencies and institutions in Shenzhen, and the implementation rules for occupational annuities, and makes a smooth transition between the old and new systems.

Deepen the Reform of the System of Medical Insurance and Advance the Reform of the Management of the Medical Insurance Fund First of all, Shenzhen improved social medical insurance, added supplementary medical insurance methods for major and critical diseases, gradually included cochlear implants, biological products for vaccination, etc. into the scope of medical insurance payment, and included tuberculosis (including multidrug-resistant tuberculosis) specialist outpatient treatments in the medical insurance outpatient services. And Shenzhen continued to add items to the medical insurance, work-related injury

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insurance, and maternity insurance drug catalogs to improve the level of medical insurance benefits. Second, the Payment Method for Social Medical Insurance Based on Diagnosis-related Groups in Shenzhen (Trial) was formulated to implement pilot reform of payment for hospitalization based on diagnosis-related groups (DRGs) in some public hospitals and provide experience for the reform of national medical insurance payment methods. Third, Shenzhen continued to promote the reform of the method of the management of the medical insurance fund of “management of total amount and retention for surplus” combined with the hierarchical diagnosis and treatment system in the primary medical group. Fourth, Shenzhen promoted intelligent monitoring of medical insurance, having covered all designated medical institutions by the end of 2018.

Implement the “City-Wide Service” of Social Security Management Services, and Build a Standardized and Efficient Management Service Pattern Based on the experience of pilot areas such as the Talent Park, Futian, Baoan, and Dapeng, in 2018, Shenzhen accelerated the reform of the public service model of “City-wide Service” that was first explored in 2014, and promoted the human resources and social security services to be handled with mobile devices, and built the “Human Resources and Social Security Service in Hand”. In terms of broadening social insurance service channels, in addition to social resources such as 12,333 service call and Safe City One Account software, more human resources and social security services have been stationed in the business sections of Alipay or WeChat “City Services” so that citizens can directly handle business on their mobile devices; Shenzhen strengthened the construction of the mobile version of the portal website of the Municipal Human Resources and Social Security Bureau to gradually realize the “full coverage” of various businesses or functions. In addition, Shenzhen actively opened up channels for cross-certification with third-party real-name authentication platforms, and strived to achieve “password-free inquiries”; Shenzhen implemented the “human resources and society security map”, which could provide a series of services including searching the nearest service location and route navigation of the human resources and society security system on both PC and mobile terminals; Shenzhen improved services including paperless number-taking appointments, and checking the status of real-time queuing numbers and service guides to maximize the saving of waiting time for citizens. As of the end of 2018, Shenzhen had implemented the national General Provisions of Social Insurance Services, the Requirements for Facilities and Equipment of Social Security Service Centers, and the Social Insurance Visual Identification System, and had built 30 standard service halls, accounting for 86% of all service halls; 36 social insurance agencies, including 1 at the municipal level and 11 at the district-level; and about 1300 social security financial cooperation service points. Shenzhen is a pioneer in the field of “Internet + Medical Insurance Payment”. Since June 2016, it has cooperated with 5 payment platforms (including Alipay, WeChat, Ping An Insurance, China Construction Bank, and China UnionPay) to carry

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out the pilot work for medical insurance mobile payment. At present, 50 hospitals and nearly 500 pharmacies in Shenzhen provide WeChat medical insurance payment services. More than 1.6 million people have successfully tried the card for medical insurance mobile payment, and the total transaction amount has exceeded 84 million yuan. At the same time, Shenzhen was the first to start issuing WeChat electronic social security cards for children in China. People can register and pay for their children through WeChat medical insurance, avoiding the trouble of waiting in line.

Zhuhai Establish a Mechanism for Determining and Adjusting the Basic Endowment Insurance Benefits for Urban and Rural Residents In January 2018, Zhuhai issued the Guiding Opinions on Establishing a Mechanism for the Determination of Basic Endowment Insurance Benefits for Urban and Rural Residents and a Normal Adjustment Mechanism for Basic Pensions to further clarify basic pensions and personal account pensions. According to the relevant regulations of the central government in determining the minimum national basic pension standard, the local government will give certain policy preference to urban and rural residents over 65 years of age (including 65 years old); for those with long-term payment and longer payment periods than the minimum standard, the basic pension for the number of years shall be appropriately issued and added; establish a normal adjustment mechanism for basic pensions by referring to social security standard adjustment indicators such as income growth of urban and rural residents, price changes, and basic endowment insurance for employees; and timely report to the CPC Central Committee and the State Council to determine the minimum standard for basic pensions and a standard adjustment plan for individual payment levels.

Further Improve Basic Medical Insurance Benefits and Mechanisms The Zhuhai Municipal Human Resources and Social Security Bureau successively issued the Notice on Improving the Management of Family Beds Covered by Basic Medical Insurance, the Notice on Several Issues about Basic Medical Insurance Benefits and Management, the Notice on Relevant Issues about Adjusting Supplementary Medical Insurance Benefits in Zhuhai City, and the Notice on Adjusting the Financial Subsidy Standards for Urban and Rural Residents, Students, and Minors Who Participate in the Second-level Basic Medical Insurance and other detailed rules, added outpatient service diseases such as “lung transplant complications”, “heart transplant complications”, and “child autism”; as from June 2018, for flexible employees who participate in the first-level medical insurance, the subsidy standard will be calculated based on 5.5% of the unit payment; as from July 1st, for urban and rural residents, students and minors participating in the second-level medical insurance, the subsidy standard will be increased from 510 yuan per person per year

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(including 25 yuan for outpatient overall planning) to 550 yuan per person per year; 17 anti-cancer drugs were included in the basic medical insurance, work-related injury insurance and maternity insurance drug catalogs; records for medical treatment in different places were improved in terms of implementation standards and procedures; the Health and Family Planning Bureau, the Public Security Bureau and the Food and Drug Administration were jointly connected in order to launch a special campaign against medical security fund fraud in Zhuhai from September to December, inspecting designated medical institutions, designated retail pharmacies and participants, and giving full play to the protective role of medical insurance.

Establish Standardized Measures for Enterprise Annuity Management In order to promote the development of enterprise annuities, standardize the management of enterprise annuities, and better guarantee the life of employees after retirement, on February 1, 2018, the Ministry of Human Resources and Social Security and the Ministry of Finance jointly issued the Measures for Enterprise Annuities, which clarified the standards of implementation and detailed rules about the enterprise annuity management mode, establishment conditions, and degree, source of funds and scale of financing, distribution ratio, ownership of rights and interests, and methods of receiving. In May of the same year, the Zhuhai Municipal Human Resources and Social Security Bureau issued the Notice on Implementing Relevant Issues of the “Measures for Enterprise Annuities”. First, the upper limit of the fundraising scale was lowered, and corporate payment was reduced to no more than 8% of the total annual wage, and the sum of the corporate and employee payments was reduced to no more than 12% of the total annual wage; second, the gap in the distribution of corporate contributions was limited, and the maximum amount of current payment for the employee’s personal account was limited to 5 times the average; third, the conditions for receiving benefits were appropriately relaxed, and employees who completely lost working ability can receive enterprise annuities; lastly, the way of receiving benefits was improved, and employees who meet the requirements can receive enterprise annuities on a monthly, partial or lump-sum basis, or purchase commercial endowment insurance. At present, more than 200 enterprises (groups) in Zhuhai have established enterprise annuity plans.

Xiamen Implement the Enterprise Annuity Plan In order to implement the Measures for Enterprise Annuities issued by the Ministry of Human Resources and Social Security, the Xiamen Municipal Human Resources and Social Security Bureau has successively issued a series of notices to encourage eligible enterprises to establish enterprise annuities on the basis of participating in the basic endowment insurance for enterprise employees so that it helps to guarantee the

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retirement benefits of these employees, promote the development of the enterprise annuity in Xiamen, and continuously improve the multi-level endowment insurance system in Xiamen. According to the regulations, the “proportion and method of fund distribution” and “equity ownership” have been added, and revised and implemented in accordance with the rules and regulations on the withdrawal ratio of the enterprise annuity, the payment limit, the gap between the maximum amount credited to the personal account and the average amount, the ownership of investment income, and the receipt of the enterprise annuity. Meanwhile, since June 1, 2018, the registration and filing matters of enterprise annuity plans and enterprise annuity fund management contracts have been handled uniformly by Xiamen Social Insurance Management Center under the entrust of the Xiamen Municipal Human Resources and Social Security Bureau so as to standardize the handling process.

Improve the Regulations on Work-Related Injury Insurance Benefits In order to protect the legitimate rights and interests of employers and work-injured employees, the Xiamen Municipal Human Resources and Social Security Bureau formulated the Measures for the Management of Work-related Injury Insurance Benefits in Xiamen in September 2018. The Measures further supplemented and refined the existing system of work-related injury insurance benefits, which is specifically reflected in the following aspects: in rescue and first aid, drugs and diagnosis and treatment items outside the catalog can be used according to regulations; the fixed amount of food subsidy standards for the hospitalization of work-injured employees is increased to 50 yuan, and the standard of transportation, boarding and lodging fees required for transferring outside the hospital while waiting for hospitalization is clarified to be 350 yuan per day; the treatment method for overseas work-related injury medical expenses is clarified that when the work-related injury insurance fund is used to pay, the medical expenses shall be converted into RMB, and the maximum payment at the end of the medical treatment of work-injured employees shall not exceed 3 times the medical expenses per capita in Xiamen for work-related injuries in the previous year; the rules of treatment when the reexamination appraisal conclusion changes are clarified; special protection shall be given to work-injured employees with occupational diseases according to the policies; the measures are made clear regarding the approval of pensions for dependent relatives in cases where close relatives of employees have already got relevant social endowment insurance benefits due to work-related deaths; the rules for handling abnormal conditions of insurance participation are clarified; and the conditions for access for medical institutions in work-related injury insurance agreements are redefined.

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Basically Realize the “All-in-One Card” Service of Social Security Cards According to the Opinions on Accelerating the Application of Social Security Cards issued by the Ministry of Human Resources and Social Security, the Xiamen Municipal Human Resources and Social Security Bureau continues to promote the horizontal and vertical data management of social security business card information, and builds a safe and efficient human resources and social security cloud service platform, having basically realized that the social security card can provide “All-in-One Card” services for different businesses in different regions. In addition to the basic functions of medical settlement and information services concerning local and remote medical insurance, work-related injury insurance, and maternity insurance, the residents can also directly apply for social insurance payment, personnel examination payment, regular and one-time benefits of various social insurances, reimbursement expenses, subsidies for employment supporting policies, wages for migrant workers in key industries (enterprises), and other services through the bank account of the social security card. In the business field of the electronic social security card, Xiamen, as the first batch of pilot cities, is also steadily innovating. At present, it has achieved the family doctor contract services on WeChat. While opening up the medical link, it is also constantly expanding the scope of services.

Shantou Improve the Basic Medical Insurance System for Urban Employees In April 2018, the Shantou Municipal Government issued the Notice on Further Improving the Basic Medical Insurance System for Employees in Shantou, which further clarified the following items: first of all, the corresponding payment base and upper and lower limits shall be formulated according to the different circumstances of the employers who participate in comprehensive medical insurance and hospitalization medical insurance, as well as other flexible employees who participate in the endowment insurance in Shantou or have received the benefits of the endowment insurance; second, regarding payment after retirement, the payment form and proportion shall be stipulated in accordance with the number of years for cumulative payment of employee medical insurance; third, regarding the basic medical insurance treatment, the payment treatment of the insured person who makes a supplementary payment for the basic medical insurance premium shall be specified in detail according to the specific situation.

Standardize the Basic Endowment Insurance Participation and Payment Policies for Enterprise Employees According to relevant regulations, the participation and payment of basic endowment insurance for enterprise employees was further standardized, including: non-eligible

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persons who exceed the legal retirement age cannot take a one-time payment to be included in the scope of basic endowment insurance for employees; unless there are circumstances that comply with national regulations, urban self-employed industrial and commercial households and urban and rural flexible employees are not allowed to pay the premiums that were interrupted after participating in the insurance; abolishing Paragraph 1 of Article 3 in the Regulations on Improving the Participation of Flexible Employees in the Basic Endowment Insurance for Enterprise Employees, that is, “if there is a period of non-insurance payment from the month when the male reaches 45 years of age and the female reaches 40 years of age to the month when this notice is implemented, and who have not received basic pensions for enterprise employees, the employees with registered households in Guangdong Province can apply to the social insurance agency in the place of residence for payment of the non-insured period in a lump sum”; and being prepared in document review for the transfer and renewal of endowment insurance relations for migrant workers across provinces and cities.

Expand the Category of the Unemployment Insurance Fund According to the Notice of the Human Resources and Social Security Department of Guangdong Province and the Department of Finance of Guangdong Province on Issues Concerning Unemployment Insurance Supporting Insured Employees to Improve Their Professional Skills issued by the Human Resources and Social Security Department of Guangdong Province, the Shantou Municipal Human Resources and Social Security Bureau has further implemented it and included skill enhancement subsidy in the unemployment insurance fund category, clarified the application conditions, application material requirements, review procedures, subsidy standards, fund use and non-approval circumstances to ensure that unemployment insurance funds are used to improve the skills of insured employees, improved service quality and efficiency, and carried out strict financial management and capital supervision, so as to reduce unemployment from the source, stabilize employment, guide employees to improve their professional skills and career conversion capabilities, and provide strong talent support for industrial transformation and upgrading.

Hainan Province Improve the Regulations on the Settlement of Medical Expenses for Maternity Insurance In January 2018, in order to guarantee the legal rights and interests of the insured persons, the Human Resources and Social Security Department of Hainan Province and the Department of Finance of Hainan Province issued the Interim Measures for the Settlement of Medical Expenses for Maternity Insurance in Hainan Province, which further improved some maternity insurance benefits through the following

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provisions: during pregnancy, the insured person will be paid with a fixed amount of 100 yuan for the prenatal inspection fee for each month of normal payment of maternity insurance premiums, up to a maximum of 1000 yuan; if there are multiple births, for each additional baby, 500 yuan will be increased on the basis of the original payment standard; if there is at the same time cesarean section, tubal ligation, and uterine myomectomy, the standard quota will be increased by 500 yuan/case respectively; if ovarian cystectomy is performed, the standard quota will be increased by 500 yuan/side; if multiple family planning operations are performed at the same time, the standard quota will be cumulatively calculated; whether in a designated medical institution or not, if the insured person has complications during pregnancy, childbirth, or puerperium, the service items will be reviewed and reimbursed for payment according to the facts. In addition, employees or unemployed spouses of employees who have applied for payment but have not yet paid maternity insurance premiums in the month of childbirth can receive maternity insurance benefits corresponding to normal payment after paying the relevant maternity insurance premiums and late fees in the following month in accordance with regulations.

Promote the Construction of Social Security Information Hainan launched the issuance and application for the third-generation social security card in 2018, and carried out electronic card pilot work, striving to basically establish the “All-in-One Card” model of service management of the social security card in Hainan Province by the end of 2020, and realize the application of the social security card in various government public service fields. At the same time, Hainan strengthened the business linkage and data sharing between the ministries and provinces, carried out the “Internet + Human Resources and Social Security” application, improved the unified 12333 consulting service platform, and the construction of the unified online business hall and human resources and social security service APP over the whole province to integrate social security inquiries, social security business card services, medical insurance services, recruitment and employment, survival certification and other convenient services, so as to create a “Smart Hainan Human Resources and Social Security” handheld convenient service platform. At present, the access department includes 12 units including the Department of Human Resources and Social Security of Hainan Province and the Industrial and Commercial Administration Bureau of Hainan Province, and the asset information data covers more than 20 items such as social security, vehicles, deposits, and provident funds. All cities and counties in Hainan Province can check through the information verification platform to conduct verification, and obtain the verification results in a short time with a verification report that is automatically generated. According to statistics, as of June 2018, a total of 174,000 verification applications for social assistance have been checked, and a total of 32,000 early warning messages have been completed.

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Be Prepared to Deal with the Transfer and Continuation of Social Security for Introduced Talents In order to thoroughly implement the spirit expressed in General Secretary Xi Jinping’s speech at the 30th anniversary celebrating the establishment of the Hainan Special Economic Zone, the Ministry of Human Resources and Social Security issued the Implementation Opinions on Supporting the Human Resources and Social Security Undertakings of Hainan for the Comprehensive Deepening of the Reform and Opening-up. In the paper, three aspects of employment and entrepreneurship, social security, and talent issues are put forward with overall requirements and key tasks in support of the comprehensive reform and opening-up of human resources and social security in Hainan Province. In order to explore a new model of economic development, Hainan has carried out a pilot reform of international talent management, successively promulgated supporting documents such as the talent settlement policy and the method of implementation for the employment placement of spouses of high-level talents, established an employment and social security service platform, and properly resolved relevant social security issues related to introduced talents including improving the endowment insurance system, the unemployment insurance system, the work-related injury insurance system and strengthening the supervision of social security funds.

Achievements in the Development of Social Assistance and Social Welfare in the Special Economic Zones Shenzhen In order to implement the spirit of the 19th National Congress of the Communist Party of China, the current social assistance system of Shenzhen is based on the subsistence allowance system, supplemented by special assistance services covering all kinds of people in need, such as those in extreme poverty and those affected by disasters, and supplemented by temporary assistance and mutual social assistance. In addition, Shenzhen established the first domestic catastrophe insurance system, the moderately inclusive basic living security system for children in distress, and other relief projects, ranking at the forefront of large and medium-sized cities in China in terms of the form, scope, and standard of the project. Those projects maximized the “protective bottom line and emergency relief” function of social assistance, so that more people can get fair benefits from the achievements of economic development. In 2018, the Shenzhen Municipal Human Resources and Social Security Bureau successively issued relevant regulations to further improve the comprehensive assistance system, including the subsistence allowance recipients, the extremely poor, the severely disabled, and the mentally and intellectually disabled groups in the city’s basic endowment insurance for poverty alleviation. The local municipality and

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district finances paid those participating in the residents’ basic endowment insurance for full insurance premiums in accordance with the minimum payment standards, and the municipality and district finances each bear half of the expenses. At the same time, in conjunction with the promotion of the construction of “Smart Civil Administration”, Shenzhen focused on improving the level of precision assistance, promoted the refined management of social assistance and precise service; concentrated on solving the problem of the shortage of service facilities in the field of social assistance, and on promoting the implementation of the “9+3” major public facilities plan of civil affairs. Three district-level (Longhua, Pingshan, Guangming) rescue stations were newly added, and two district-level (Bao’an, Longgang) rescue stations were upgraded. The renovation and expansion project of municipal rescue stations and the construction of the municipal social assistance resettlement institute started successively, which continuously improves the rescue capacity of Shenzhen. In addition, Shenzhen has many innovative measures in the social assistance work that are at the forefront of the country: First, the well-known large-scale public welfare brand “Love Welfare—Funding Shenzhen Builders to Return Home during the Spring Festival” activity has been carried out for 12 consecutive sessions. More than 26.5 million yuan were invested in the welfare fund, and a total of more than 48,500 builders in Shenzhen were funded; second, the “charity supermarket” in Lianhua Sub-district, Futian District was jointly donated by the Welfare Charity Fund, caring enterprises and the masses, so that the people in need only need to spend 30 yuan/month on daily necessities which are worth about 5 times the value; the basic free funeral service project “Lotus Pond Project”, initiated by social charity forces with the largest number of service forms and the highest amount in China, ensures the special needs of the extremely poor. Through the “four-ring linkage” of assistance, employment, insurance, and charity, Shenzhen has continuously improved its comprehensive assistance system to satisfy the people’s growing needs for a better life and has promoted social fairness and justice.

Zhuhai In 2018, Zhuhai achieved new improvements in social assistance and in the protection of the people’s livelihood. It has continuously promoted the construction of community elderly care facilities, with 10 pilot projects selected to carry out community home-based elderly care catering services to provide centralized lunch and meal delivery services for the elderly and to explore and advance the construction of canteens for the elderly; Zhuhai strengthened the classification and protection of children in distress, improved the implementation of guarantee policies, and promoted their healthy growth; Zhuhai expanded the scope of social assistance for traffic accidents. For Hong Kong and Macao residents in any traffic accidents in Zhuhai as victims who meet the conditions for assistance, the Zhuhai Road Traffic Accident Social Relief Fund can advance funeral expenses, part or all of rescue costs, and help families in severe financial difficulties due to traffic accidents; Zhuhai strengthened the supervision of the issuance and sales of welfare lottery tickets and the use of

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public welfare funds, and increased the contribution of welfare lottery charity funds to support for the development of charities. Regarding policies and regulations, Zhuhai improved the working mechanism of the “Three Social Linkages” to promote the standardized development of social organizations. First, the Measures for Information Disclosure of Charitable Organizations will be implemented on September 1, 2018 to safeguard the public’s right to know, protect the legitimate rights and interests of participants in various charitable activities, and promote the standardized development of charities; second, in accordance with the “Internet + Civil Affairs Service” Action Plan, Zhuhai formulated the “Internet + Social Organization (Social Work and Volunteer Service)” Action Plan (2018–2020) to promote the in-depth and efficient application of “Internet+” technology in social organizations, social work, voluntary services, charity fundraising, and other fields.

Xiamen At present, Xiamen has established an “8+N” assistance system for the needy people based on the subsistence allowance system, supplemented by a special relief system, including preferential treatment and compensation for key entitled groups and care and protection for rural left-behind children and children in difficult situations, two subsidies for the disabled, and the participation of social forces. In 2018, Xiamen continued to promote the elderly care service projects, including the new construction of the Ailu Elderly Care Center of the Municipal Charity Federation, the renovation and expansion project of the Love Nursing Home of the Municipal Elderly Foundation, and the new construction of the Huli District Social Welfare Center. The annual construction of 30 “Rural Happiness Home” projects and 9 “Community Elderly Day Care Center” projects were successfully carried out. Xiamen strengthened the construction of public pension institutions, improved community home-based elderly care services, and actively developed smart elderly care services. Priority was given to supporting the needy elderly in extreme poverty, those with economic difficulties, those from special family planning families, and those who have made special contributions; Xiamen promulgated the Measures for Medical Assistance of Xiamen City, and combined the old measures with the Subsidy Measures for Basic Medical Insurance Participants’ Self-Paying Difficulty of Medical Expenses of Xiamen City, which further integrated and expanded the scope of protection subjects, complemented the shortcomings of the multi-level medical security system, and reduced the financial burden of the insured people; Xiamen successively revised and promulgated a number of social assistance regulations and policy documents to make the assistance measures more standardized, with the scope of assistance expanded to urban and rural areas, so that more people in need have equal access to social assistance. The main body of assistance includes government and social forces. The scope of assistance is continuously being expanded, the verification system is more complete, the identification is more accurate, and the management is more stringent.

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At the same time, in order to accelerate the informatization of social assistance work and improve the level of the management of the information of assistance work such as subsistence allowances, Xiamen built a social assistance service platform with the “national subsistence allowance system” and the “national basic information verification platform” as the core, and created and applied a new model of “Internet + Social Assistance” by docking with “iXiamen”, making it more convenient to apply for social assistance. In response to the weak link in meeting the needs of the disabled, based on the registration for the severely disabled living under the poverty line, the government, through leading social organizations and purchasing services, developed public welfare posts in the care and maintenance category at the village level, and gave priority to relatives from poor families with disabilities who are able to take care of them so as to increase their family income while addressing the urgent needs of the disabled. In December of the same year, Xiamen issued a three-year action plan (2018– 2020) for winning the tough battle against poverty in the civil affairs field to implement the following tasks: further coordinate the development of urban and rural social assistance, expand the scope of social assistance, and achieve the integration of urban and rural social assistance systems; update the urban criteria for checking the economic status of households applying for social assistance and revise the opinions and measures for the implementation of the subsistence allowance to ensure that the subsistence allowance policy reaches a wide range of coverage and popularization for disadvantaged groups. It is planned that by 2020, a working mechanism and a regular visit system for care services for left-behind elders in rural areas will be fully established, and the rate of coverage of elderly care facilities such as rural happiness homes will reach 100%. At the same time, a mechanism for the dynamic monitoring of rural left-behind children from poor families will be established to implement guardianship.

Shantou In July 2018, Shantou pioneered the first comprehensive management insurance “Longhu Model” in the PICC Property Insurance System of Guangdong Province. The project was uniformly insured by the government and operated by a professional insurance company, providing important supplements of serious illness medical expenses, higher education subsidies, and housing safety guarantee costs for the registered poor people in Shantou, so that the insured people in need can receive the dual protection of government relief and poverty alleviation insurance, in order to help solve the problems of causing poverty and returning to poverty that poor people face in the process of poverty alleviation due to illness, schooling, and disasters. After the implementation of the project, the serious illness medical insurance greatly reduced the hospitalization expenses of the registered poor people and raised the rate of comprehensive reimbursement for the hospitalization expenses of the needy people to more than 90%. In September, the Shantou Municipal Human Resources and Social Security Bureau, in conjunction with the Civil Affairs Bureau, the Finance Bureau,

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the Development and Reform Bureau, the Health and Family Planning Bureau, and the Insurance Regulatory Bureau, issued the Measures for the Implementation of Medical Assistance for the People in Difficulties to provide appropriate subsidy assistance and reductions or exemptions to those insured for individual payment. This further protected the basic medical rights and interests of the people in need, and promoted the coordinated urban and rural development of the medical assistance system. Meanwhile, Shantou strengthened the effective connection of various basic and supplementary medical insurance systems with commercial insurance, charity and other institutions to realize the joint force and efficient linkage of government assistance and social forces. Moreover, Shantou has successively introduced a number of related policies to strengthen departmental responsibilities, improve coordination mechanisms, fill up the shortcomings of assistance, and achieve precise assistance. A number of assistance tasks have been carried out: in terms of charity and support for the army, the “Caring for Soldiers’ Families in Difficulties and the activity of the Lottery Charity·Targeted Educational Assistance” have effectively helped the troops stationed in Shantou, retired soldiers and poor people to solve practical difficulties, and has integrated the power of social charity to supplement the government’s special care work; in terms of educational assistance from the welfare lottery, Shantou has carried out educational assistance activities for 13 consecutive years with a total of 6.8 million yuan invested in the welfare lottery charity fund. A total of more than 2350 children from impoverished families were funded and continued to get more education. In 2018, the “Lottery Charity·Targeted Educational Assistance” activity arranged 600,000 yuan (including 60,000 yuan to support the Old Urban District Construction and Promotion Association to carry out educational assistance activities) from the municipal welfare lottery charity fund to subsidize 108 needy students in Shantou, with 5000 yuan for each student; in terms of assistance for vagrants, the management of assistance to vagrants in Shantou has been improving steadily, and there were more than 12,000 vagrants and beggars being rescued in the past 3 years.

Hainan In 2018, the Department of Civil Affairs of Hainan Province successively carried out various measures to further weave and strengthen the security net for people’s livelihood: First, Hainan increased efforts to improve the conditions of support for the people in need, and allocated subsidies of 31.44 million yuan from the Central Welfare Lottery Charity Fund throughout the year. A total of 920 million yuan for subsistence allowances and special hardship relief funds have been allocated, and the infrastructure of 36 service agencies to support extremely poor people in 16 cities and counties has been effectively improved; second, Hainan launched a three-year implementation plan of the civil affairs system for poverty alleviation and selected 30,000 cadres to serve as assistance contacts in rural areas for the recipients of subsistence allowance and extremely poor people, so as to ensure the full implementation of the provincial special governance work for rural subsistence allowances; third, Hainan

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issued measures for the identification of the income and property status of urban and rural families who apply for subsistence allowances, and added and revised the rules and methods for the implementation of special assistance toward urban and rural low-income families; fourth, Hainan improved the poverty alleviation and development big data and social assistance information management platform, established an information verification platform for 14 departments and the three-level affairs of the province, city, and county, and at the same time smoothly connected with the people-benefit “All-in-One Card” system supported by the provincial finance, so as to realize information interconnection and interoperability of the rural subsistence allowance recipients and the extremely poor in Hainan Province. In 2018, in order to expand the diversification of projects and promote the growth of charitable funds, the Hainan Charity Federation successively carried out the following projects: First, the “Tencent 99 Charity Day” network fundraising activity. Large-scale enterprises were introduced to develop naming sponsorship funds so as to promote targeted donations with large-scale projects; second, the Hainan Charity Federation cooperated with the Hainan area of the Country Garden Group and the Hainan Branch of the China Construction Bank in raising funds for major projects such as industrial poverty alleviation and dilapidated house renovation, and in promoting the implementation of Party committee and government’s priorities in poverty alleviation and in the construction of a beautiful countryside; third, four medical assistance projects including the “Journey of Compassion” and “Care for You Action” have been carried out to ensure the combination of “medical prevention and treatment”; fourth, diversified projects regarding educational assistance have been carried out to improve the conditions of schools in impoverished areas and subsidize poor students to get education smoothly; fifth, the launch of “Kindness and Love for Households in Need”, Assistance and Care for Soldiers’ Families, “Elderly Canteen” and other projects were supported by all levels of party committees and governments and all walks of life. In 2018, a total of 37 charity projects were implemented, benefiting 150,000 people. The total amount of charitable funds and materials raised was 131,152,900 yuan, a year-on-year increase of 9%, and the total expenditure on charitable funds and materials was 129.027 million yuan, a year-on-year increase of 6.3%, which led to great social benefits.

Realistic Difficulties in the Development of Social Security in the Special Economic Zones The Medical Security System Still Needs to Be Further Improved In March 2018, the National People’s Congress established the National Healthcare Security Administration after examining and approving the State Council’s institutional reform plan. After the adjustment, the previously dispersed healthcare security

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responsibilities have been unified and integrated, including responsibilities for the basic medical insurance and maternity insurance for urban employees and urban residents of the Ministry of Human Resources and Social Security, the new rural cooperative medical system of the National Health and Family Planning Commission, the medical assistance of the Ministry of Civil Affairs, and the price management of drugs and medical services of the National Development and Reform Commission. This change, based on the original financing and payment functions, regulates and supervises the diagnosis and treatment behavior, service quality, and use of medical insurance funds of hospitals and medical staff through medical insurance policies, negotiation agencies, price mechanisms, payment mechanisms, informatization tools, and other mechanisms. This adjustment focuses on the shortcomings of the multi-level medical security system, the independence of the third-party purchasing mechanism, and the alienation of the decision-making mechanism to ensure that the role of healthcare security is well played and the effectiveness of public services is achieved. Although the current top-level design of the medical security system has begun to take shape, the advancement of this system still needs to be implemented. As of the end of December, the special economic zones had not yet established a municipal healthcare security bureau. In addition, the medical security system of the special economic zones still shows the following problems: First, although the level of medical insurance in the major special zones is in the forefront of major cities in the country, compared with other social insurances, the rate of participation still needs to be improved. Medical insurance mainly covers the employees of state-owned enterprises, public institutions and some enterprises, and the rate of participation of flexible employees, disadvantaged groups, farmers, and other specific groups is relatively low, which does not really play a role as the bottom line in comprehensive protection; second, the original functions of price management and procurement of drug and medical services, and those of payment and cost management in designated medical institutions are relatively scattered. To ensure that the coordination between medical insurance, medical treatment and medicines is promoted after the establishment of the healthcare security bureau, a unified medical service and medicine management regulation and procedure should be formulated to continue to promote the connection of medical insurance, medical treatment and medicines in terms of integrity, systematicness and coordination; third, the structure of the system still needs to be optimized, the hierarchy of medical security is single, and the responsibilities of different entities need to be further divided rationally through a multi-level structure with the functions of meeting the medical needs to cope with basic diseases and of providing more convenient and efficient medical services; fourth, there are some problems with the medical insurance fund, such as inadequate legal construction, irregular operationings, backward informatization and inadequate intelligent supervision, which shows urgent needs for legislation and law enforcement as well as the formulation of supporting policies; fifth, under the social problem of the accelerated population aging, the medical security system lacks the function of self-adjustment to keep pace with the times, and the security system for specific groups has not been truly implemented to cover members of those groups.

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The Social Security Funds Need to Be Further Supervised Social security funds are the “protective bottom line” of people’s livelihood. With the slowdown in economic growth and the intensification of population aging, the pressure on the long-term balance and safe operationing of social security funds is increasing. The supervision of social security funds is to ensure the safety of people’s protective bottom line, and to find ways to maintain and increase the value of the funds, realize the sustainable development of the funds. Firmly holding this bottom line ensures that the people will “have access to medical services, elderly care and social assistance”. The prevention of risks must be strengthened, the shortcomings must be made up for, and the loopholes must be fixed. “Weaving the dense network” is helpful to maintain the safe and effective operationing of funds, and guarantee the safety of people’s life and property; it is necessary to establish a sound regulatory system, expand the scope of regulation by “establishing a mechanism”, innovate regulatory models, and strengthen regulatory forces, so as to form a high-quality and efficient regulatory mechanism in all fields and throughout the whole process. With the rapid growth in the coverage and scale of various social security funds in the special economic zones, the risk points of management have also increased accordingly. The current supervision of social security funds in the special economic zones reflects the following challenges: First of all, the mechanism is not sound. The premium collection departments have not formed a joint force, the premium verification and collection process is not scientific, and the collection efficiency and service management level are low. Second, the construction of informatization needs to be improved. The construction of the informatization of social security fund management is lagging behind, the foundation is weak, and the phenomenon of isolated information islands exists. Third, supervision of funds is becoming more and more difficult. With the continuous increase in the number of designated medical institutions, designated retail pharmacies, and designated tertiary hospitals, and their access to the network, the medical treatment in different places across provinces is becoming more and more convenient, but objectively, it has added links and chains of medical insurance fund supervision, as well as risks, and the difficulty in supervision has increased, too. Fourth, the legislative and enforcement efforts are insufficient. The number of social security fund cases and the amount involved cannot be underestimated. Fund security is an important challenge facing us. Operations such as false claims of death for pensions, repeated claims, and early retirement in violation of regulations have emerged one after another, and the effectiveness of supervision still needs to be strengthened. In the future, if investment in occupational annuity funds is initiated and the scale of investment in basic pension funds is expanded, the task of supervision of social security funds will become more and more arduous, and the need for the construction of social security fund regulatory agencies and professional teams is imminent.

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The Social Security Policy and Regulation System Urgently Needs to Be Improved Compared with the national overall planning requirements, the systematicness, coordination, and fairness of social security policies and regulations are obviously insufficient. Since China’s reform strategy in the past 40 years has been “bottom-up”, it is normal to replace the original arrangements with reforms, rather than turning to legislation to establish a new system. This is an important reason for the low level of the rule of law in the current social security system. At present, the laws related to social security are just the Social Insurance Law, the Soldiers Insurance Law, and the Charity Law. The administrative regulations include the Regulations on Unemployment Insurance, the Interim Regulations on the Collection of Social Insurance Premiums, the Regulations on Work-related Injury Insurance, etc., as well as related administrative regulatory documents, departmental rules, local government rules, and judicial interpretations; except for the Law of the People’s Republic of China on the Protection of the Rights and Interests of Women, the Law on the Protection of Minors, the Law on the Protection of the Handicapped and other laws for specific groups in the scope of social assistance and social welfare, and policies and regulations including the Regulations on the Minimum Living Guarantee for Urban Residents, the Opinions on the Implementation of Rural Medical Assistance, and the Measures for the Management of Relief for Urban Vagrants and Beggars, there are no other systematic laws or regulations. Meanwhile, since local legislation is scattered, there are still dilemmas in practice without laws to rely on. Furthermore, although there are laws to follow, some laws and regulations are too strong in principle and weak in operations, and the operation of the system lacks an authoritative and effective basis for implementation, the masses are prone to disputes. In dispute arbitration or litigation, due to the lag in legislation, arbitration institutions and people’s courts cannot make judgments based on special social security laws, but mainly based on labor law, civil law, or other relevant legal judgments, which to a certain extent negatively affects the pertinence of law enforcement and the credibility of the social security system. This creates uncertainty about the protection of the people’s rights and interests and their expectations regarding social security.

The Development of Social Assistance and Public Services Is Lagging Behind The report of the 19th National Congress of the Communist Party of China clearly requires the realization of the minimum living security system and social assistance system as soon as possible, and promotes the comprehensive development of various social welfare undertakings. As the last link in the social security system, social assistance is the “protective bottom line” of people’s livelihood. At present, relying on the national “8+1” social assistance system, major special zones have established

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relatively complete systems of social assistance, but there are still the following problems: (1) The level of social assistance is relatively low, the standard setting is generally low, the mechanism for the adjustment of treatments is not scientifically sufficient, and different regions reflect large differences, such as disaster relief, the scope and standards of relief for different disaster types are different; there are system or policy divisions in the elderly welfare, child welfare and related services, and different household registrations and different classes of people receive different protection treatments. Various circumstances make it impossible for social assistance to give full play to its role of a “protective bottom line”. (2) There are problems of government administrative monopoly, out of the market, and social participation. And there are situations where the functions of the three overlap, confront, and have difficulty in joining up. (3) The recipients of social assistance are not accurately identified, leading to a lack or imbalance of assistance. (4) The supply of public services is still inadequate. Traditional social assistance focuses on cash assistance and in-kind assistance, which lacks diversity and selectivity, and cannot meet the actual needs of the recipients. (5) The standardization of the management of social assistance needs to be strengthened. The effectiveness and accuracy of identification, collection of information, and verification mechanisms are with certain limitations and hysteresis quality. Improving the level of targeted governance of social assistance is helpful in advancing the underpinning guarantees for the disadvantaged in society, resolving unbalanced and inadequate basic social contradictions, and making effective use of social assistance resources, promoting social equity, and maintaining social justice.

The Relationship Between Commercial Insurance and Social Security Is Not Clear The multi-level social security system, including commercial insurance and charitable undertakings, is essentially reshaping the mechanism for the sharing of the responsibility of social security, which can better adapt to the requirements of an aging population, rationalization of responsibility sharing, and sustainable system development. Since the 1990s, the State has put forward the goal of multi-level social security development, but for more than 30 years, the government has still led the social security situation. The policy of an insurance mechanism and a professional welfare mechanism, and the marketization of the personal insurance mechanism did not get the due development. The commercial insurance business in China restarted in 1984, and its development was basically synchronized with the development of basic medical insurance such as employee medical insurance. In 2008, the launch of the new medical reform prompted commercial health insurance to boldly carry out trials of critical illness insurance, tax-preferential health insurance, and long-term care insurance, which led to the rapid development of commercial health insurance. The continuous and rapid development of commercial insurance in terms of business scale has made it an important supplement to the basic medical insurance system,

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which is the supplement to the capacity for guarantee and the scope of the basic medical insurance system, the extension of services, and the strengthening of risk control. However, at the same time, it should be noted that the mechanism of “social and commercial cooperation” still reflects challenges in the following aspects: (1) The boundary and positioning of the basic medical insurance system and commercial health insurance products, commercial insurance institutions and social security agencies are obscure. And the space for the development of each is not clear. The entrusted commercial insurance agencies often encounter the dilemma of higher administrative expenses and coordination costs due to repeated communication and cooperation between the two parties. In addition, each party promotes its own advantages, and both parties regard each other as a competitive substitute and opponent, rather than a collaborator. (2) The mechanism of joint construction, joint governance, and sharing of the multi-level medical security system is to be improved, and there are still no feasible and practical measures in terms of information interconnection, data exchange, cooperation, and mutual trust. (3) The government’s adjustments in policy did not provide space for commercial insurance companies. The lack of stable development expectations for commercial insurance (especially critical illness insurance) led to policy-related losses. In 2017, 70% of the agency companies that deal with critical illness insurance business in 64% of the business regions experienced a loss, with a total amount of 1.51 billion yuan. The result neither reflected the professional advantages of commercial insurance, nor did it fully meet the needs of the people’s livelihood regarding social security.

There Are Still Some Limitations in the Construction of Social Security Information Under the new normal of the economy, the informatization of social security is an inevitable trend, and it is an inherent requirement for scientific decision-making, precise management, and human-oriented service. At present, all major special economic zones have carried out the “Internet + Human Resources and Social Security” business and have made certain achievements. Under the guidance of the “Internet + Human Resources and Social Security” Action Plan 2020, Shenzhen has successively carried out pilot operations of a medical insurance payment platform, hospital mobile payment, and pharmacy mobile payment, established the social unified user management platform SUUM that provides access to all public service systems of the Municipal Human Resources and Social Security Bureau, and has built a master data management system that supports one-click handling of social security services and city-wide operations. In 2018, Shenzhen accelerated the construction of informatization, and its method of “facial swiping” to get a pension was the first in China, and the volume of “facial swiping” online authentication business reached 32,507. The Zhuhai Municipal Human Resources and Social Security Bureau cooperated with the “Nanfang Plus” APP to open the “Window of Human

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Resources and Social Security” column, and set up online human resources and social security business channels such as online service platforms and the “Zhuhai Social Security Citizen Card” WeChat official account. Xiamen used modern technology to promote the construction of a 15-min convenient service circle, full network office, data center, and sharing mechanism. The Shantou Municipal Human Resources and Social Security Bureau has launched the two-dimensional code service guide for human resources and social security window business, which has comprehensively improved the efficiency of the service of the human resources and social security department. Hainan Province broke through the data barriers among departments, supported the integration of various social security information systems into the Hainan government service network system, designed APPs, unified the services of provincial online business halls and human resources and social security department, and upgraded and improved the provincial unified 12333 consulting service platform. At the same time, there are still certain limitations in the construction of social security information, for example, the investment in information construction is insufficient, especially the subsequent costs of system maintenance; the adaptive ability of th information system to policy adjustments is weak; the connectivity and security of data exchange and sharing have not been guaranteed either vertically (provinces and cities and business departments networking) or horizontally (medical and pharmaceutical institutions, financial institutions); the channels and scenarios for Internet + social security service need to be expanded; network security still faces a certain degree of threats, the consciousness of risk prevention needs to be improved, and so on.

Policy Suggestions for Promoting the Development of Social Security in the Special Economic Zones Promote the Linkage of “Medical Insurance, Medical Treatment and Medicines” and Strengthen Medical Security The establishment of the Healthcare Security Bureau has enriched the connotation of medical security management and services, and strengthened the status of medical security in the medical system. To deepen the reform of medical security under this top-level design, the first thing is to straighten out the management system to organically integrate the three medical insurance systems in the same management organization, avoid the problems of multiple “officiousness” management and independent governance, and strengthen the optimization of the allocation of medical insurance resources. Second, it is required to promote the Linkage of “Medical Insurance, Medical Treatment and Medicines” to form and improve medical insurance payment standards and negotiation mechanisms; play the role of economic leverage of medical insurance to guide participants to seek medical treatment; improve the catalog of medical insurance drugs and medical service items, and play the preventive

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and healthcare function of medical insurance; explore and establish the mechanism of “total control, balance reward” in medical insurance payment, and encourage medical institutions to promote hierarchical diagnosis and treatment. Third, a multilevel medical security system is to be built. There is a need to improve the medical insurance financing and reimbursement adjustment mechanism, crack the “poverty caused by illness” aspect, explore and improve cooperation with commercial insurance institutions, improve the supplementary medical insurance methods for major and critical diseases, and steadily improve the medical insurance management level and service quality. Fourth, provide actuarial calculations for medical insurance funds and data decision support through quantitative tools such as fund risk analysis and forecasting models. Fifth, increase or adjust statutory protection items depending on the time, such as exploring the establishment of a long-term care insurance system in the context of population aging, gradually incorporating services such as hospice care and rehabilitation care that meet the requirements into the scope of social medical insurance payment, and adjusting population policies to incorporate the birth allowance or child allowance system, etc.

Establish and Improve the Internal Control System and Strengthen the Supervision of Social Security Funds Social security is the focus of the social security system. Whether the social security fund is safe and sustainable determines whether the social security business can develop healthily, and directly affects the well-being of the people. Only by properly supervising the social security fund can the efficiency of fund use be improved and its positive role in protecting people’s livelihood be brought into play. The governments of the special economic zones should strengthen the management of the social security fund through the following four points: First, strictly control the revenue and expenditure of the social security fund, improve the system and mechanism for the management of the revenue and expenditure, including the collection mechanism, the social security service system, the medical insurance management system and other internal control systems. Improve a more stable mechanism for the adjustment of social security benefits, take multiple measures to strengthen the supervision of social security funds, and investigate hidden risks and management loopholes. Second, speed up the construction of social security fund management information, strengthen the application and analysis of social security big data, establish a system platform for information on the management of social security funds in order to achieve information sharing, and change the current status of a weak foundation for social security fund management information construction. Third, improve the offsite supervision system, check the early warning information of the system in time, and ensure the safety of the fund. At last, strengthen judicial linkage, increase the investigation and punishment of illegal activities such as insurance fund fraud, and jointly establish case communication and information sharing mechanisms, pre-case

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joint handling mechanisms, case transfer mechanisms, counterpart contact mechanisms, and a mechanism for the linkage of social security anti-fraud long-term effectiveness with law enforcement agencies to intensify the crackdown on social security violations. In the future, in order to ensure the safety and integrity of funds, a comprehensive fund supervision system of administrative supervision, people’s congress supervision, and social supervision will be established in accordance with laws and regulations to consolidate social security fund management responsibilities, strengthen the supervision of social security funds, regulate social security fund management behavior, and protect the legal rights and interests of the insured people.

Speed Up the Improvement of the Social Security Policy and Regulation System, and Create a Good Legal Environment To speed up the improvement of human resources and social security policies and regulations, the government should start from the following aspects: (1) Give play to the leading and promoting role of legislation, and ensure that legislation is aligned with reform decisions. Evaluate the legislation related to social security laws and regulations, start the establishment, modification, and abolishment of laws and regulations in a timely manner based on the results, and strengthen the timeliness, systematicness, pertinence, and effectiveness of the legislation. Only when the “three systems” of administrative system, mechanism system, and legal system are sound and perfect can the government create a good legal environment for human resources and social security and ensure the smooth progress of social security undertakings. (2) Enhance social participation in legislation, build a government-led platform and mechanism for all parties to participate in social security legislation in an orderly manner, and establish and improve a feedback mechanism on public comments on draft laws and regulations and the adoption of public opinions. (3) Enhance the scientific nature of social security decision-making. Define the scope of major decisionmaking matters and related powers, and reasonably carry out necessary procedures such as public participation, expert argumentation, risk assessment, and collective discussion; strengthen the legality review of major social security decisions, and strengthen the scientificity, legitimacy, and openness of decision-making; carry out social security legal counsel and expert consultation and argumentation, give respect to lawyers and experts and absorb their opinions logically. (4) Promote the standardization of the entire application process for administrative powers and responsibilities. Focusing on serving the enterprise and the people, and adhering to the principles of openness, transparency, convenience and efficiency, the acceptance, review, approval, and completion of administrative matters must be legal, efficient, responsible, and clean.

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Encourage Social Participation to Expand the Coverage of Social Assistance and Promote the Construction of a System for Social Assistance Improving the system of the governance of social assistance and enhancing the capacity for social assistance governance are the keys to advancing the development of social assistance in major special economic zones. (1) Under the State’s overall planning, improve the comprehensive social assistance system centered on the subsistence allowance system as soon as possible, including but not limited to implementing certain income exemptions to motivate subsistence allowance recipients to increase income and improve life through hard work; the family budget survey system must ensure that eligible subjects are included in the assistance system; the subsistence allowances and poverty alleviation should be connected in an orderly manner, so that all urban and rural residents below the poverty line and in need of emergency assistance are included. A system for social welfare and related services for the elderly, children, and the disabled should guarantee all the necessary parties, and truly protect the bottom line of the livelihood of the low-income disadvantaged groups. (2) Give full play to the power of the government, market, and society to join the social assistance governance system together. Encourage various social organizations to participate in social assistance, vigorously develop philanthropy, use the resources raised by philanthropy to make up for the lack of government social assistance resources, improve the service to meet the individual needs of the needy, and become the best supplement to the government subsidies for the society. (3) Comprehensively make use of big data, the Internet, and other information tools. For example, Shenzhen uses “Internet+”, face ID, fingerprint ID, DNA comparison, data mining, and other technologies in the rescue work of vagrants and beggars to crack bottlenecks such as professional begging, repeated assistance, and long-term retention of aided recipients; the Department of Civil Affairs of Hainan Province has innovated rescue management methods, and established a long-term mechanism for the sharing of information with 14 departments to achieve rapid multi-departmental verification of the economic status of social assistance families in the province; truly reduce the cost for identification, improve the accuracy of identification, and reduce the problems of “golden bowl” and “cliff effect” caused by project superposition. (4) Give consideration to cash, in-kind objects and services, encourage social work agencies to participate in service provision through government purchases of services and other forms, and improve the quantity, quality, adequacy, and effectiveness of the provision of social assistance services to promote comprehensive multidimensional and heterogeneous rescue. (5) Improve the standardization of handling and management, better design the system of social assistance, define the rights and responsibilities of each subject, attach importance to the use of information facilities, and reduce the occurrence of moral hazard behaviors; encourage professional organizations and personnel of social work to participate in information verification, supervision and inspection, assessment and evaluation and other links to improve the overall governance and performance of social assistance.

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Clarify the Relationship Between Commercial Insurance and Social Security, and Give Full Flay to the Complementary Role Compared with developed countries, there is still a lot of room for improvement in the health protection of Chinese residents. In addition to building a sound social security system, vigorously developing commercial insurance can supplement the deficiencies of basic endowment insurance and medical insurance, so that urban and rural residents can improve their ability of risk prevention and self-protection. To promote the reform of “social security and commercial insurance cooperation”, the governments of special economic zones should take the following measures: (1) Promote the establishment and improvement of a regulatory system for scientific commercial health insurance, clarify the boundaries of responsibility and power between commercial insurance institutions and social security agencies, and actively promote the deep involvement of commercial insurance institutions in medical insurance business and medical reform, encourage the organic combination, mutual benefit and win–win result of commercial insurance and local medical insurance, and give full play to the complementary role of “social security and commercial insurance cooperation”. (2) Strengthen the interaction of data information among commercial insurance companies and hospitals and social security systems, and through the cooperation of insurance companies, hospitals, pharmaceutical companies, and health service companies, and through the customer health data platform integrated with medical and health big data to promote the intelligent development of health insurance, realize data communication, system communication, customer communication, and benefit coordination, and form a closed loop of efficient cooperation between payers (insurers) and service providers (medical and health service networks), so as to achieve dispersion of medical risks, alleviate doctor-patient relationships, and ultimately guarantee the quality and effectiveness of medical and health services. (3) Encourage commercial insurance institutions to strengthen their ties with medical service institutions, health management service institutions, and other related industries, form an industrial chain ecosystem of “product + payment + service”, improve the development and pricing capabilities of commercial health insurance products, and strengthen risk identification, evaluation, management, and control technologies to enable the health insurance platform to be equipped with both the capability for external “medical insurance, drugs and healthcare” ecological linkage and the capability of internally efficient operationings. (4) Make use of social forces to broaden social security service channels. Strengthen in-depth cooperation with social institutions, improve the undertaking and supervisory mechanism of outsourcing social security services, implement multi-site social security business processing, entrust services such as medical insurance cash reimbursement, and remote medical review to commercial insurance institutions, and encourage social security funds to handle settlement business through commercial banks and commercial insurance agencies.

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Promote the Integration of “Internet+” and Human Resources and Social Security Services, and Innovate Informatization Methods for Management Services The construction of “Smart Human Resources and Social Security” in major special economic zones has already achieved certain results. In the subsequent construction of social security informatization, it is necessary to expand the human resources and social security business service network and innovate management service methods. (1) Focus on the national big data strategy, actively participate in the “Internet+” action plan, promote the integration of a new generation of information technology and the human resources and social security business, make use of “Internet+” to improve human resources and social security handling services and internal management, and establish a multi-level service system including online and offline service halls, self-service terminals, and mobile terminals to promote business handling from offline to online, and comprehensively build a high-quality and efficient social security public service system. (2) Build a unified, efficient, and shared cloud service platform to consolidate the service foundation of “Smart Human Resources and Social Security”. Follow the requirements of unified planning and resource sharing to build a cloud service platform, realize that the basic resources of social security services can be captured through the network, and enhance its timeliness and scalability. (3) Expand the scope of the application of data resources. Based on the social security card data, the social unified user management platform is used as a starting point to improve the accuracy and uniqueness of master data; expand the scope of the sharing of data resources to promote multi-domain and multi-dimensional data exchanges. Build a big data analysis platform, and conduct thematic analysis, data display, and early warning reporting through in-depth mining of historical data. (4) Focus on the integration of “Internet+” and human resources and social security services, and broaden the channels of application. Establish strategic partnerships with advanced Internet companies, and make use of the experience of leading Internet companies such as Tencent to carry out in-depth business cooperation; combine the technological capabilities of leading Internet companies and rely on their client products to gradually develop public service functions for individual users. (5) Innovate application scenarios, and handle social security business through “Internet+”. Implement the “City-wide Service, the One-for-All Window” strategy, and build a new social security information system that is more scientific, safer, more inclusive, and more shared. Make sure that simple social security business operations can be completed online with self-service terminals, telephones, social security web pages, mobile apps, and other tools; innovate medical payment methods, and promote cooperation between medical insurance and third-party payment platforms such as Alipay. (6) Integrate the information infrastructure platform of human resources and social security departments, implement internal business system process reengineering, improve the security level and maintenance capabilities of information systems, timely prevent and resolve network security risks, and build a new social security information system that is safer, more scientific and more convenient.

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References Comprehensive Understanding of the Report of the 19th CPC National Congress and the Construction of the Social Security System with Chinese Characteristics, CPCNEWS. http://theory.peo ple.com.cn/n1/2018/0116/c40531-29767488.html Disclosure of Hainan’s Social Security Information in 2018, Department of Human Resources and Social Security of Hainan Province Disclosure of Shantou’s Social Security Information in 2018, Shantou Municipal Human Resources and Social Security Bureau Disclosure of Xiamen’s Social Security Information in 2018, Xiamen Municipal Human Resources and Social Security Bureau Disclosure of Zhuhai’s Social Security Information in 2018, Zhuhai Municipal Human Resources and Social Security Bureau Gongcheng Z (2018) Changes in China’s social security during 40 years (1978–2018)—institutional transformation, path selection, and China’s experience. Teach Res (11) Hainan Promotes the “Internet + Social Assistance” Service System, Xinhuanet. http://www.xin huanet.com/info/2018-07/24/c_137344794.htm Hainan Special Economic Zone Yearbook 2018, Hainan Provincial Bureau of Statistics, Survey Office of the National Bureau of Statistics in Hainan Hongwei HU, Xiaojing DU (2019) Targeted governance of social assistance in China in the new era—current status, challenges and improvements. J Beijing Univ Aeronaut Astronaut (Social Science Edition) 32(2):60. Notice on Shenzhen’s Social Security Information Disclosure in 2018, Shenzhen Municipal Human Resources and Social Security Bureau Quarterly Report on Social Service Statistics in Shenzhen in the Fourth Quarter of 2018, Bureau of Civil Affairs of Shenzhen Municipality Shantou Special Economic Zone Yearbook 2018, Shantou Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Shantou Shenzhen’s 13th Five-Year Plan for the Development of Human Resources and Social Security, Shenzhen Municipal Human Resources and Social Security Bureau Shenzhen Leads the Country in Social Relief, Shenzhen Commercial Daily. http://gdsz.wenming. cn/wmyw/201804/t20180426_5173192.html Shenzhen Special Economic Zone Yearbook 2018, Shenzhen Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Shenzhen Statistical Bulletin on the National Economic and Social Development of Hainan Province in 2018, Hainan Provincial Bureau of Statistics, Survey Office of the National Bureau of Statistics in Hainan Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2018, Shantou Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Shantou Statistical Bulletin on the National Economic and Social Development of Shenzhen Municipality in 2018, Shenzhen Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Shenzhen Statistical Bulletin on the National Economic and Social Development of Xiamen Municipality in 2018, Xiamen Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Xiamen Statistical Bulletin on the National Economic and Social Development of Zhuhai Municipality in 2018, Zhuhai Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Zhuhai Xiamen Creates a New Model of Internet + Social Assistance, Xiamen Daily. http://haisi.haiwai net.cn/n/2018/1227/c3543476-31468762.html Xiamen Special Economic Zone Yearbook 2018, Xiamen Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Xiamen

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Xiaoying Z, Huijie W, et al (2019) The institutional evolution, development vision and policy recommendations of China’s medical security management. Soft Sci Health (3) Zhuhai Special Economic Zone Yearbook 2018, Zhuhai Municipal Bureau of Statistics, Survey Office of the National Bureau of Statistics in Zhuhai

Chapter 6

Report on the Development of the System of Elderly Care Services in China’s Special Economic Zones Keting Zhang and Xin Wang

The Urgency and Importance of the Construction of a System of Elderly Care Services Population Aging Has Become a Serious Challenge that Must Be Faced Squarely on China is not only the country with the largest population in the world but also the country with the largest number of elderly people in the world. At present, the average growth rate of the elderly population in China is 3%, which is significantly higher than other population growth rates during the same period, and the “Silver Wave” is constantly surging. According to the National Bureau of Statistics, as of the end of 2018, there were 249.49 million people aged 60 and over in China, of which 166.58 million people were 65 and over, accounting for 17.9 and 11.9% of the total population respectively.1 These ratios are significantly higher than the United Nations standard boundaries “10%” and “7%” for an aging society. As predicted by the National Office on Aging, it is estimated that by 2050, the number of elderly people in China will reach a peak of 487 million, accounting for 34.9% of the total population and one-quarter of the world’s total elderly population.2 “There will be one old person among three”. At that time, China will enter a deeply aging society. 1 2

Sina.com, https://finance.sina.com.cn/china/hgjj/2019-01-21/doc-ihrfqziz9579052.shtml. Xinhuanet, http://www.xinhuanet.com/health/2018-07/20/c_1123151851.htm.

K. Zhang (B) Department of Economics, Shenzhen University, Shenzhen, China e-mail: [email protected] X. Wang School of Economics, Shenzhen University, Shenzhen, China © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_6

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The rapid development of population aging, as well as the related trends in aging, empty nesting, and disability, have gradually weakened the traditional family pension function, the burden of the social pension has increased year by year, the extreme shortage of professional senior service personnel, and the problems of “getting old before getting rich” and “getting old before getting prepared” make the capacity for economic support even more insufficient. The aging problem is no longer just a population problem; it has been intertwined with economic development, social construction, and other issues, and has become an important issue that plagues the sustainable and healthy development of China’s economy and society. It has become the common call of society and the times to properly and promptly solve the problems caused by the aging population, and it is also an important mission entrusted to us by the new era.

Strengthening the Construction of the Social System of Elderly Care Services Is a Key Task for Building a Moderately Prosperous Society in All Respects The elderly have a happy old age, and the future generations will have apromising future. The CPC Central Committee and the State Council insist on people-oriented and scientific development and proceed from the overall development strategy of socialism with Chinese characteristics to actively, scientifically, and comprehensively deal with the problem of population aging. The Report on the Work of the Government in 2010 first put forward the establishment and improvement of a social system of elderly care services as a priority development strategy. In 2011, the “Twelfth Five-Year Plan” for elderly care services was officially listed as a special plan, and the construction of the social system of elderly care services was included in the government’s economic and social development plans. The “Thirteenth Five-Year Plan” outline clearly pointed out the need to strengthen and improve the top-level design and proposed to build a comprehensive system of response to population aging from multiple perspectives such as elderly care services, health security, and social participation. In the report of the 19th National Congress of the Communist Party of China in 2017, it was once again proposed to actively respond to the problem of population aging as a key task for work deployment. In the Report on the Work of the Government in 2019, the keyword “elderly care” was mentioned 16 times, involving all aspects of elderly care. It emphasized the need to vigorously remove obstacles to the development of elderly care, further improve and expand the government’s “protective bottom line”, and improve supporting conditions for the construction of the system of elderly care services, so as to establish and improve a sound protection system for the rights and interests of the elderly. The 19th National Congress of the Communist Party of China set new goals and requirements for building a moderately prosperous society in all respects in the new era, emphasizing that safeguarding and improving people’s livelihood is the

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fundamental purpose of social development, and social construction focusing on safeguarding and improving people’s livelihood should be the key task of current development, in order to weave a tight security net for the people’s livelihood, and gradually improve the overall happiness index of the society. In response to the severe trend of population aging, since 2010, China has issued more than 300 policy documents related to elderly care. At present, China is in the decisive stage of building a moderately prosperous society in all respects, and it is also an important strategic window period for the reform and development of undertakings for the aged in China and the construction of the pension system. We should seize all favorable opportunities to speed up the construction of the system of elderly care services, and strive to realize that all the elderly can have a sense of security, support, happiness, and peace of mind. In this context, speeding up the establishment of a system of elderly care services featuring “government support, society participation, enjoyable old age, and satisfied families”, and improving the efficiency of serving the elderly and the quality of life of the elderly are important manifestations of the CPC Central Committee’s earnest practice of the fundamental purpose of “serving the people wholeheartedly”, and also the key tasks in building a moderately prosperous society in all respects.

Building a Social System of Elderly Care Services Is an Important Measure in Promoting the Sustainable and Healthy Development of the Economy The intensifying trend of population aging is not only a severe challenge to China’s economic development but also a potential new opportunity for development. From the perspective of challenges, the increase in the aging population has reduced the continuous supply of labor. In the case of the unchanged level of technology or slow growth of labor productivity, this may lead to slower growth of output. The higher the proportion of the elderly population, the greater the burden of support and the pension payment gap, and the more prominent the intergenerational contradictions. But the aging situation also brings new economic growth opportunities. As the demand of the elderly for elderly care products and related services to meet their daily lives increases, a large-scale chain of elderly care industries and an elderly consumer market, namely the Silver Market, will gradually emerge. The ultimate goal of the establishment of a social system of elderly care services is to meet the diverse needs of the elderly for elderly care services. By innovating models of elderly care services, enriching the content and forms of elderly care products, improving the construction of various types of elderly care institutions, and optimizing elderly care service supply methods, the potential of elderly care consumption can be released and the capacity for consumption of elderly care services can be enhanced, which can directly stimulate domestic investment and drive forward the development of related industries. At present, the national space for the elderly consumer market is about

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2.7 trillion yuan. According to a report released by the China National Committee on Aging, the scale of China’s elderly consumer market will reach 3.79 trillion yuan by 2020.3 The “Silver Economy” is becoming a new growth point in China’s current social and economic development. As a new type of service industry, the aging industry is currently a sunrise industry. Improving the social system of elderly care services and vigorously developing the elderly care industry are important forces in promoting economic and social development and optimizing and upgrading the industrial structure.

Establishing a Complete Social System of Elderly Care Services Is an Inevitable Requirement for Creating a Harmonious Society Family elderly care is the most typical and traditional “Chinese-style” model of elderly care. The number of children in the family, the status of the children, and the distance between children and parents are the key factors that directly affect the quality of the family’s elderly care. The “421” family structure is currently common for most urban families in our country. Affected by family planning, the family model of elderly care is difficult to maintain for a long time due to the prerequisite for lack of children and the change in the traditional concept of “bringing up children to support parents in their old age”. Coupled with the strengthening of the trend of aging, empty nesting, and disability, family elderly care shows the characteristics of inadequate performance and weakened functions. Accelerating the construction of a multi-level system of elderly care services will enable elderly people of different economic levels to have the ability to purchase and enjoy elderly care services, and get more diverse channels to obtain those services. The elderly can obtain the care services they need from other channels besides family members, which eases the burden of care on family members, thereby reducing problems between the elderly and their family members caused by elderly care, as well as comparison and competition within the family members to serve as the providers of elderly care services. A harmonious family environment and low-care burden also help family members to focus more on the emotional communication between themselves and the elderly, which is conducive to enhancing the subjective well-being of family members including the elderly and maintaining family harmony. A harmonious family environment is the microscopic manifestation of a harmonious society. Therefore, speeding up the construction of a complete social system of elderly care services is an inalienable requirement for the construction of a harmonious society.

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The Elderly Consumer Market Will Reach 3.79 Trillion Yuan in 2020, and the Problem of Supply Imbalance Needs to Be Solved, Xinhuanet, http://www.xinhuanet.com/2019-04/18/c_1124381403. htm.

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The Basic Situation of the Establishment of a System of Elderly Care Services in the Special Economic Zones In recent years, as the testing ground for economic reform, economic structural adjustment, and upgrading, and the transformation of economic and social development, the special economic zones adhered to the development concepts of innovative development, harmonious development, and openness and sharing, and actively explored and boldly innovated in the construction of the system of elderly care services. They have achieved remarkable results, and also accumulated some experience that can be used for reference, promoted, and replicated. The Shenzhen Special Economic Zone strives to build a smart system of elderly care services, innovates the training model for elderly care professionals, and forms a unique new model of “urban elderly care”; the Zhuhai Special Economic Zone is committed to establishing a model of community home care catering, promoting the construction of “Healthy Zhuhai”, and creating a model of elderly care with Zhuhai characteristics; the Shantou Special Economic Zone is explores a characteristic model of elderly care for neighborhood mutual assistance, deeply carries out the “Silver Age Healthcare Action”, and is building a diversified system of elderly care services; the Xiamen Special Economic Zone is intensifying the reform of “decentralization, management and services” in the elderly care service industry, is expanding coverage to integrate medical care and elderly care, and is paying attention to coordinating the development of urban and rural elderly care services; the Hainan Special Economic Zone is innovating the coordinated development model of medical care and elderly care, and is vigorously advocating ecological elderly care. There is an important reference value in the exploration and practice of the concept, model, and policy of elderly care services in the special economic zones for the establishment and improvement of the social system of elderly care services in other regions.

Shenzhen Special Economic Zone The Shenzhen Special Economic Zone is a leader in China’s reform and opening-up and a demonstration city of socialism with Chinese characteristics. The inclusive and open city has attracted a large number of talents to work, start businesses, and live in Shenzhen, and the urban population has witnessed explosive growth. However, in recent years, the problem of population aging in Shenzhen has gradually emerged. As of October 2018, the total number of permanent residents aged 60 and over in Shenzhen has exceeded 1.2 million, accounting for about 7% of the city’s total population, of which Shenzhen has more than 320,000 registered elderly residents.4 According to the current growth rate, Shenzhen is expected to enter an aging society in 2023. Compared with the overall structure of the age of the population of the whole 4

Shenzhen Will Enter an Aging Society in 2020, Sina.com, http://shenzhen.sina.com.cn/news/s/ 2018-10-20/detail-ihmrasqs8135214.shtml.

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country, although the structure of Shenzhen’s population is still young, Shenzhen has already planned and deployed elderly care services in advance. While promoting rapid economic growth, it also pays attention to the establishment of a system of elderly care services. The urban system of elderly care services has been innovated and improved continuously from scratch. By 2014, Shenzhen had become one of the 42 pilot cities for comprehensive reform of the elderly care service industry across the country, made some explorations and innovations in the construction of the system of elderly care services, and achieved remarkable results.

Improve the System of Policy Support for Elderly Care Services, and Provide an Institutional Guarantee for Residents’ Elderly Care In recent years, Shenzhen has adhered to the concept of “people-oriented, serving the people”, successively issued relevant policy documents and laws and regulations to promote the development of the system of elderly care services, and has established a system of policy support for elderly care services. In 2013, the Opinions of the Shenzhen Municipal People’s Government on Accelerating the Development of Services and Industry for the Elderly was issued, and then the Thirteenth Five-Year Plan for the Development of the Elderly Care Service Industry in Shenzhen was formulated to give priority to the development of the elderly care service industry and encourage social forces to participate in the practice of developing elderly care services, cultivate and expand the supply providers of the elderly industry, and make the aging undertaking an important force in increasing welfare, benefiting people’s livelihood, adjusting the structure, and promoting development in economic and social development. In terms of the planning and construction of elderly service facilities, the Special Plan for Elderly Care Facilities in Shenzhen (2011–2020), the Special Action Plan for the Construction of Quality Nursing Home Services in Shenzhen, and other documents were compiled. In 2017, the construction standards of the supporting facilities of community elderly day care centers were further improved. Regarding the charging standards for elderly care services, the Notice on Service Fees for Elderly Care Institutions in Shenzhen was issued to clearly stipulate that non-profit basic elderly care institutions must operate according to the principle of government pricing, while other elderly care institutions must follow the combination of government-guided pricing and market-based pricing. In addition, Shenzhen has successively formulated documents and policies including the Measures on Funding Private Elderly Care Institutions of Shenzhen Municipality, the Notice on the Pilot Program of of Shenzhen Municipality for Combining Medical Care with Elderly Care, the Programme of Work on Accelerating the Implementation of Catering Assistance Service for the Elderly, the Measures for the Management of Admission Evaluation and Waiting for Public Elderly Care Institutions of Shenzhen Municipality, and carried out forwardlooking policy design and system innovation from various aspects of the elderly care service industry to provide institutional guarantees for the elderly in Shenzhen. In 2018, the Bureau of Civil Affairs of Shenzhen Municipality drafted the Regulations on Elderly Care Services in the Shenzhen Special Economic Zone and set out to build

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a “1336” social system of elderly care services, striving to achieve an organic unity of legalization, normalization, and standardization of elderly care services.

Build a Smart System of Elderly Care Services to Improve the Quality and Efficiency of Elderly Care Services In order to effectively and reasonably match the supply of elderly care services with the needs of the elderly, and solve the problem of the imbalance between the supply and demand of elderly care resources, Shenzhen has gradually carried out the ability assessment and demand research of the elderly in each district since 2016, and dynamically grasped the status of the development of community elderly care services and the specific conditions of the objects of those services. Shenzhen built an elderly care information service platform by means of Internet information, linked up information data from multiple parties, scientifically and reasonably analyzed the development facts of the community, the layout of the elderly population, and the needs of elderly care, integrated the resources for social elderly care services, realized the optimization and upgrading of the original mode and contents of elderly care services, and improved the efficiency of community elderly care services. For example, the “12,345” system of smart elderly care services was created in Longhua District. On the one hand, it took the smart elderly care cloud platform as the core and created the “one network and two systems” model of elderly care services5 to further expand the supply channels and total supply of elderly care services. On the other hand, it has promoted the formation of a new situation of “three natures, four levels and five services” for elderly care services, and has gradually achieved the transformation from the traditional model of basic elderly care to the modern smart model of informationized elderly care. In September 2018, the Shenzhen Social Welfare Association and Heertai CLife Smart Elderly Care reached a cooperation agreement to jointly develop a smart elderly care APP and smart elderly care products to give full play to Heertai CLife’s efforts in professional skills such as emergency rescue, health management, smart care, and medical services. In 2019, the Bureau of Civil Affairs of Shenzhen Municipality also planned to fully launch the Shenzhen Smart Elderly Care Card, which would be realized by integrating all current carriers of services related to the elderly, including home care coupons, old age allowances, accident insurance for the elderly, and preferential treatment for taking the bus, and popularize the “All-in-One Card” for elderly care services, so as to gradually spread the concept of “science and technology to assist the elderly, and smart tools to care for the elderly” to the entire society.

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“One network” refers to the community home care service network, and the “two systems” mainly include the community system of home care linkage services and the system of community home care volunteer services.

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Improve the System of Elderly Care Service Subsidies and Expand the Content of Community Home Care Services The private elderly care institutions in Shenzhen grew out of nothing, and as of October 2018, the number has grown to 21. In 2018, the Bureau of Civil Affairs of Shenzhen Municipality and the Finance Commission of Shenzhen Municipality jointly promulgated the Measures of Shenzhen Municipality on Funding Private Elderly Care Institutions. In order to encourage and support private elderly care institutions to provide more long-term care beds for the integration of medical care and elderly care, the original operation for private elderly care institutions was adjusted. Funding measures such as nursing service funding, medical care, and elderly care integration funding, and elderly care agency liability insurance funding were newly included, and corresponding levels of subsidy based on the results of the evaluation of the grade were provided, which greatly increased the funding standards, lowered the funding threshold, and strengthened the degree of protection for dealing with operational risks of elderly care institutions. In addition, in accordance with the Measures of Shenzhen Municipality on Community Home Care Service Management, the community home care subsidy standard has been raised. The financial department gives 300 yuan to 500 yuan monthly in elderly care service subsidies to the registered elderly residents who are living on subsistence allowances, who are in extreme poverty, and who belong to the “three kinds and five olds”. The government subsidy policy for the elderly has realized a transition from a supplementary subsidy to an inclusive subsidy, allowing the elderly to enjoy the fruits of the economic development of the special economic zones. In March 2019, Shenzhen issued the Programme of Work on Accelerating the Implementation of Catering Assistance Services for the Elderly, which put forward requirements to set up at least one elderly canteen in each sub-district and provide meal subsidies for the elderly with household registration. The Futian District has built 1 district-level and 4 community-level elderly canteens, realizing the full coverage of elderly canteens in the sub-districts; the Nanshan District has established integration of food assistance, ordering, and delivery by setting up a dining service network including food assistance canteens in various communities; the Yantian District, through the construction of a central kitchen inside the social welfare center, provides a combination of unified catering, centralized dining, and home delivery services for the elderly in the community; the Longhua District has opened a total of 45 “Elderly Canteens” in the whole district, which has been refitted according to standards.

Innovate the Model of Talent Training for Elderly Care and Strengthen the Construction of Talent Teams for Elderly Care Due to the low social recognition, high work intensity, and low salary, young people are generally unwilling to join the elderly care industry, and the problem of shortage of human resources is prevalent in the whole industry. In order to solve this problem,

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the quality of elderly care personnel should be improved, so that the elderly can enjoy high-quality elderly care services. Shenzhen has taken measures from various aspects to promote the construction of talent teams for elderly care. First, in accordance with the “demand-oriented” talent training guidelines, Shenzhen has implemented the Special Action Plan for the Construction of Quality Nursing Home Services in Shenzhen since 2017 to establish a training system for elderly service personnel in the city, districts, and institutions, and improve the guarantee system and incentive policy measures for the professionals. Second, Shenzhen has obtained long-term strategic partnerships with international professional elderly care institutions such as Breezy Sukio Co., Ltd. of Japan and Raina Fan Group of German to learn from their advanced practices and experience in the model of the management of elderly care services, and cooperate to establish a talent training mechanism for the health and elderly care industry, and provide free vocational skills training for urban elderly service personnel. Third, in 2018, the government established the Shenzhen Elderly Healthcare College in the form of financial support, which specializes in cultivating elderly service professionals in geriatrics, rehabilitation physiotherapy, nutritional diet, psychological counseling, etc., and adopts the “dual system” vocational education model, combines training of personnel with practical skills, to explore and implement the personnel training methods of “college in front and nursing home in the back,” and “college-and-nursing home integration”. At the same time, Shenzhen vigorously promotes relevant institutions and enterprises to establish mutually beneficial and win-win cooperative relations with the Shenzhen Elderly Healthcare College, to make full use of socially superior resources, and to mobilize all sectors of society to invest in elderly care and nursing training.

Innovate the Supply Providers of Elderly Care Services and Involve Multiple Providers to Participate in Elderly Care Services The Thirteenth Five-Year Plan for the Development of the Elderly Care Service Industry in Shenzhen pointed out that the supply of elderly care resources should be led by the government to achieve diversification of service supply entities and form a four-wheel driving mechanism for the government, enterprise, society, and family. The municipal government regards the establishment of a government-purchased mechanism for community home care services and a subsidy mechanism as a quasipublic service, and it is actively building up a new pattern of elderly service supply oriented by “government as guidance, social power as the main force, and the market as supplement” to provide living care for the elderly and other services in the community, which has achieved good results. Shenzhen introduced the PPP operation model to accelerate the reform of the supply side of elderly care services. And a situation of complementary advantages and mutual benefit was achieved through the establishment of a cooperative relationship between the government and social capital. On December 28, 2016, the Futian District Welfare Center adopted the “PPP” operating model and signed a cooperation agreement with Vanke Suiyuan Jiashu Senior Apartment Management Co., Ltd. to jointly promote the first pilot project for the

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market-oriented reform of public elderly care institutions in Shenzhen. Shenzhen has continued to bring innovations to the supply of elderly care resources, and has basically formed a general idea and guiding principle of “fully mobilizing governments at all levels and all parties in society, attracting the most extensive participation of all sectors of society, and realizing the diversification of investment entities and the marketization of operating mechanisms”. As of October 2018, Shenzhen had established a total of 45 elderly care institutions (including 2 municipal-level public elderly care institutions, 7 district-level public elderly care institutions, 15 sub-district nursing homes, and 21 private elderly care institutions), as well as 89 community elderly day care centers, 672 community party, and mass service centers, and more than 200 home care service sites to achieve full coverage of the home care service in communities.6

Zhuhai Special Economic Zone The Zhuhai Special Economic Zone has been selected as one of the most suitable cities for the elderly in China for many years. In 2010, Zhuhai entered an aging society. Faced with the accelerating process of aging, the Zhuhai Municipal Party Committee and the Municipal Government have innovated development ideas in policy guidance, innovative models of community home care, the development of medical care integrated with elderly care, etc., strengthened their work and made greater efforts to improve the weak links in the development of elderly care services and to alleviate anxiety about elderly care. In this process, Zhuhai has created a batch of experiences that can be popularized and replicated.

Departments Coordinated to Establish Rules and Regulations and Promoted the Establishment and Improvement of a Sound System of Elderly Care Services In recent years, focusing on the construction of elderly care services, Zhuhai has successively issued the Layout Planning of Elderly Care Facilities in Zhuhai City (2015–2020), the Thirteenth Five-Year Plan for the Construction of a System of Elderly Services of Zhuhai Municipality, the Guidance of the Bureau of Civil Affairs of Zhuhai Municipality on Promoting Officially Building and Privately Operating Elderly Care Institutions, and the Plans for Handling the Proposals of Improving the Elderly Care Mechanism and System and Developing Elderly Care Undertakings of Zhuhai. In these documents, it is pointed out that it is necessary to encourage and promote the development of industrial integration of “elderly care +”, cultivate the elderly care service industry to become a new driving force for the economic 6

Admission to Seven Public Elderly Care Institutions in Shenzhen Can Be Applied for Online, People’s Daily Online, http://sz.people.com.cn/n2/2019/0103/c202846-32484552-3.html.

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development of Zhuhai, and actively implement the government purchasing system for key elderly care service projects, give full play to the main role of the market, and improve the efficiency of rational resource allocation. The financial department has been increasing the financial guarantee for the construction of the system of elderly care services year by year, and formulated the Measures on Subsidy for the Construction and Operation of Community Elderly Care Service Facilities of Zhuhai Municipality to provide financial subsidies for investment in community elderly service facilities. Since 2018, Zhuhai has further improved the funding standards for private elderly care institutions, increasing the funding standards for eligible private elderly care institutions from 100 yuan/month to 300 yuan/month, and extending the subsidy period to 3 years; at the same time, a subsidy system for elderly care services has been established for the elderly with household registration who are unable to take care of themselves due to economic difficulties, and the allowance for senior citizens over 80 has been increased. The health and medical security departments cooperated to explore and promote the integration of medical care and elderly care. In December 2016, the Measures for Sickbed Management for Households under Basic Medical Insurance of Zhuhai Municipality was formally implemented. The elderly people registered in Zhuhai can also enjoy 70% reimbursement from the medical insurance fund for treatment based on family beds. The medical insurance benefits have greatly improved the sense of acquisition and well-being of the elderly and have opened up a new model of medical services in Zhuhai. In addition, the departments of planning, housing construction, human resources, and social security, taxation, and market supervision and management have refined the division of responsibilities, performed their duties, established rules and regulations, and increased their support for the construction of the system of elderly care services from different perspectives.

Create a New Humanized Model of Home Care Services, and Explore the Establishment of a Community Elderly Catering Model Zhuhai adheres to the principle of “first-line work law”, establishes “demandoriented” service awareness, deeply understands the basic service needs of the elderly in the community, implements the dominant position of home care in the elderly care methods, and consolidates the basic status of community services. By building a comprehensive service platform of “Internet + community + home care”, Zhuhai has designed personalized service packages on the basis of scientific evaluation of the economic status, cultural structure, living habits, health degree, and other individual conditions of the elderly to provide intensive life care services for the elderly; provide medical assistance services for the disabled elderly; provide educational health and safety services for the middle and low-age elderly. It has realized the precise connection between the supply and demand of home care services, taken into account the needs of different elderly groups, and explored a system of community care services with Zhuhai characteristics. In 2019, Zhuhai issued the Ten Practices about People’s Livelihood and the Work Plan of the Pilot Project of Community Home Care Catering Services in Zhuhai to

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deeply develop community home care catering services. It is clarified that on the basis of the establishment of 10 elderly canteens in 2018, Zhuhai will add 18 new pilot sites. Meanwhile, under the guidance of the Zhuhai Municipal Government, qualified enterprises and charitable organizations will be introduced. The municipality and district will bear the catering subsidy funds in proportion, and jointly explore the establishment of a cooperative and win-win model of community home care catering among the four parties of “enterprise, government, charity, and family”. Besides, in addition to providing meals in the canteens for the elderly, Zhuhai also relies on the information system to provide personalized services such as medical assistance and bathing assistance, traditional Chinese medicine rehabilitation, housekeeping care, and cultural and sports entertainment, etc., gradually realizing the transformation of the service of elderly canteens from “providing meals” to “providing elderly care”. It has gradually formed a unique community catering experience that not only meets the actual economic and social development of Zhuhai, but also meets the living needs of the elderly.

Promote the Construction of “Healthy Zhuhai”, and Realize the Development of Integrated Medical and Elderly Care In order to improve the quality of life of the urban and rural elderly, and to ensure that there should be neither “elderly care” without “medical care” nor “medical care” in place of “elderly care”, on the basis of formulating the policy and legal system for the development of integrated medical and elderly care, Zhuhai actively promotes the development of characteristic medical and elderly care services in each district. The Xiangzhou District actively develops medical and elderly care services, encourages and supports social capital in building self-operated medical and elderly care institutions; the Doumen District further promotes the coordinated development of professional medical institutions and elderly care institutions and the construction of bases, and the Jiuming Enterprise Group cooperated with Zunyi Medical University to build the Jiuming Medical Care and Rehabilitation Center of the Fifth Affiliated Hospital of Zunyi Medical University, Zhuhai; in terms of the rehabilitation and nursing of disabled elderly people, the Jinwan District has established a service model that integrates the disability and the healthy, medical care and elderly care; by relying on family beds, the High-tech Zone integrates community resources, and develops home-based medical and elderly care services; the Gaolan Port Economic Zone focuses on the elderly care service model of “state run and hospital managing, medical care and elderly care integration”, and created the first integrated medical and elderly care pilot unit in Zhuhai—Pingsha Town Social Welfare Center. In June 2019, Zhuhai Municipality’s Project for the Construction of an Elderly Chronic Disease Medical Care Consortium was officially launched. Its purpose is to provide medical and preventive care services for the elderly and guide the elderly to establish a positive and healthy outlook on aging. Generally speaking, Zhuhai has formed a model of the development of integrated medical and elderly

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care with the main types of “joint operationing”, “support radiation”, and “social establishment”.

Shantou Special Economic Zone Statistics show that in 2010, the number of elderly people aged 60 and over in Shantou was 549,600, accounting for 10.1% of the total population of Shantou. This means that Shantou, just like Zhuhai, entered an aging society in 2010. As of October 2018, the resident population of Shantou was about 6 million, and the elderly population was 748,300, accounting for about 12.47% of the total population. It is estimated that the rate of aging in Shantou will reach 14.3% in 2020.7 It can be seen that the aging trend of Shantou continues to grow. In response to this trend, Shantou will promote the construction of a system of elderly care services as one of its current key livelihood projects, it will continue to explore the establishment of a new model of elderly care, and build a multi-party system of risk protection for the elderly.

Improve the Mechanism and Combine the Establishment with Management to Promote the Development of the Elderly Care Service Industry Shantou has continuously reformed and innovated, and improved the top-level design in light of the city’s status of aging development, and formed a policy system for the elderly care services that connects from top to bottom and step by step. First, Shantou introduced supporting policies for the development of the elderly care industry. In 2013, Shantou issued the Implementation Opinions of the Shantou Municipal Government on Accelerating the Development of the Elderly Care Service Industry, which states that it is necessary to vigorously develop a market-oriented elderly care service system on the basis of protecting basic demands, and further reducing the entry cost and threshold of social capital. At the same time, Shantou confirmed the spatial layout of the development of the elderly care service industry. In the same year, Shantou promulgated the Regulations on the Protection of the Rights and Interests of the Elderly in the Shantou Special Economic Zone in the form of special economic zone regulations, which not only provided a legal ground for protecting the rights and interests of the elderly but also provided an important legal guarantee for the development of the cause of the elderly. Second, Shantou attached importance to promoting the normalization and standardization of services in elderly care institutions. Policy documents such as the Measures for the Management of Elderly Care Institutions in Shantou Municipality, the Guidelines of the Shantou Municipal Government on Promoting the Evaluation of Elderly Care Services, and the Basic Standards for 7

The Latest Population Statistics of Shantou in 2018, The Latest Census of Permanent Population and Migrant Population in Shantou, https://www.aiyangedu.com/XinWenShuJu/695847.html.

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Quality Service of Shantou’s Elderly Care Institutions have been issued to continuously improve the certification and evaluation standards for services of elderly care institutions. Third, Shantou improved the preferential policies for supporting elderly care services. The Measures for Supporting and Subsidizing the Private Elderly Care Institutions in Shantou Municipality came into effect on May 1, 2013. According to the document, benefits such as operating subsidies, bed subsidies, and tax incentives are provided for private capital entering the social elderly care service industry. In addition, Shantou took the lead in promulgating the Opinions on Strengthening the Security of “Three-Without-Persons” in Shantou Municipality, which stipulated the standards for support, funding sources, elderly care model, medical security, etc. to provide basic elderly care security services for the “three-without-persons” in urban areas. Fourth, the government’s subsidy policy for the elderly has been transformed from a supplementary type to an inclusive type. Since 2017, Shantou has raised the government subsidy standard for the elderly. The subsidy standard for 80– 89-year-old senior citizens with household registration will be increased from 350 yuan/year per person to 360 yuan/year per person, and the 90–99-year-old senior citizens with household registration will be increased from 350 yuan/year per person to 600 yuan/year per person, so as to further improve the level of elderly care security.

Create a Diversified System of Elderly Care Services, and Explore the Establishment of a Characteristic Elderly Care Model Based on Mutual Assistance Among Neighbors In recent years, Shantou has actively promoted the reform and innovation of the system of elderly care services, and has been committed to creating a diversified system of elderly care services to realize the vision of the elderly enjoying the “sunset red” late years. First, Shantou further reforms and innovates the model of home care services based on the community, and changes the situation in which home care service providers are single and supporting subjects are limited. The Baihe Community in Jinxia Sub-district, Jinping District, relying on government funding, established a standardized home care service center, cultivated a stable and professional home care service team, and became the first demonstration site of home care service centers in Shantou, and the elderly in the community could enjoy comprehensive services “without leaving their homes”. At the same time, it also provides free elderly care services to the elderly who live alone and live on subsistence allowances in the community. In addition, Shantou has adopted the PPP project operation mode to continuously promote the reform and innovation of public elderly care institutions. Taking the Shantou Social Welfare Center built in 2016 as an example, the government’s financial funds were used as the initial construction funds to attract social capital to participate in the construction in the early stage, and a jointly operating mechanism of “coordination, cooperation and win-win” relationship between the government and social entities was established to reduce the government’s pension burden and gradually socialize the sources of pension funds. The Shantou Social Welfare Center not only meets the differentiated consumption needs of institutions

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for the elderly, but also undertakes some of the functions such as providing preferential treatment and care for the disabled and supporting the poor. Moreover, it exerts the radiation function of the welfare centers as elderly care service bases and cooperates with the sub-districts and communities to carry out the community elderly care work. In addition, the Shantou Municipal Government, guided by forming the concept of socializing social welfare, is exploring the establishment of a new model of neighborhood mutual assistance for the elderly with Chaoshan cultural characteristics. It has established 43 neighborhood mutual-assistance elderly care pilot sites in the city. The volunteer service plan with the theme of “Neighbors Care for the Elderly, the Elderly Help Each Other” and the “Respect, Love and Assist the Elderly Project” were adopted to carry out elderly care activities through the combination of mutual assistance between the elderly and the young and mutual assistance among neighbors to create a harmonious social atmosphere for elderly care.

Deepen and Expand the “Silver Age Healthcare Action” to Build a System of Risk Protection for the Elderly The implementation of the “Silver Age Healthcare Action” is an effective supplement to medical insurance for urban and rural residents, and plays an important part in consolidating the system of elderly care security. It is divided into two types: government-paid insurance and self-paid insurance. As the physical function of the elderly gradually deteriorates, their probability of accidental injury is higher, and the risk is greater. Therefore, general commercial insurance regards the elderly as a high-risk group and refuses to insure them. The “Silver Age Healthcare Action” has changed the long-standing situation where the elderly wanted to purchase accident insurance but had nowhere to buy it. And it provides accident insurance services for the elderly by encouraging them and advocating the fact that with “a little government subsidy, a little social subsidy, and some expenses of the elderly or their children, and insurance companies getting some profit”, showing the characteristics of “low payment, high protection, simple insurance, and convenient settlement of claims”, which further improves the ability of the elderly to resist risks. The financial department of Shantou has increased its financial investment to improve the protection of the health and safety of the elderly. Since October 1, 2018, the age of funding in Shantou for unified insurance has been reduced from 80 to 70 years of age. The district and county governments also attach great importance to aging affairs, and actively promote, deepen and expand the “Silver Age Healthcare Action” on the basis of the municipal government’s funding for the unified insurance. The Longhu District and Nan’ao County have achieved full coverage of the “Silver Age Healthcare Action” since 2017 (insuring for the elderly over 60 years of age); the Jinping District has insured comprehensive accidental injury insurance for the elderly aged 73–79; the Haojiang District, Chenghai District, and Chaonan District governments are actively raising funds. Since October 1, 2018, the Haojiang District has also achieved full coverage. The Chenghai District and Chaonan District governments

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have insured comprehensive accidental injury insurance for the elderly aged 65– 69. The Chaoyang District Government is also stepping up the development of this project. Shantou is accelerating the implementation of the “Silver Age Healthcare Action”, which is a specific action for building an inclusive security system for the elderly, and institutional innovation to actively respond to the aging population. This action is in line with the strategic deployment of the Party and the state, and is in line with strengthening and improving people’s livelihood, and the diverse needs of the elderly in the new era.

Xiamen Special Economic Zone The Xiamen Special Economic Zone became an aging society earlier. In 1994, the proportion of the elderly population exceeded the international standard of 10%. Data show that in 2017, there were 2.299 million elderly people registered in Xiamen, of which 337,000 were 60 years old and over, and the aging level was 14.7%; in 2018, the total dependency ratio of the permanent population in Xiamen was 32.0%, an increase of 0.9 percentage points over the previous year; among them, the elderly dependency ratio was 8.3%, an increase of 0.7 percentage points over the previous year.8 This means that the supply of labor resources in Xiamen is declining and the burden of social elderly care is increasing. Xiamen adheres to the concept of the development of the value of “active aging”, takes the construction of the system of elderly care services as an important measure to actively respond to the aging population and a new driving force to further promote the intensive development of the economy of the special economic zones, and has some successful practices and experiences in the reform of “decentralization, management and service” in the elderly care service industry, in-depth promotion of the integrated development of medical care and elderly care, and the overall planning of urban and rural elderly care services.

Adhere to the Coordinated Development of the Government and the Market, and Promote the Reform of “Decentralization, Management and Service” in the Elderly Care Service Industry According to the current status of population aging and its development trend, the Xiamen Municipal Government attaches great importance to it and responds scientifically. The municipal planning department began to take the construction of the system of elderly care services as a special project in 2006 and systematically prepared relevant plans. Under the planning principle of “protecting basics, increasing welfare, and promoting the market”, and in accordance with the basic layout of “one city, 8

Xiamen Municipal Office on Aging: Report on the Supply and Demand of Elderly Care Products, https://www.linkolder.com/article/10922646.

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one district, one center”, an official social welfare center was set up in each district to give full play to the government’s role as a bottom line; at the same time, in order to further solve the problems of insufficient supply of elderly care products and services and low development of the elderly care market, the Xiamen Municipal Government continues to mobilize the public to devote themselves to elderly care services, promote them to becoming the main force in the elderly care market, and to encourage and support social capital investment and operations in elderly care institutions established by the government, privately operated, or privately established and subsidized by the government, or to adopt various measures such as “PPP (publicprivate partnership)” to build elderly care institutions, so as to continuously stimulate the vitality of the elderly care market. In addition, in accordance with the Opinions on Supporting Social Forces to Establish Elderly Care Institutions, Xiamen has simplified the application and approval procedures for the elderly care institutions and set up a parallel “one-stop” online platform of “one acceptance and simultaneous processing” to deeply advance the reform of “decentralization, management and service” in the elderly care service industry, reduce the institutional costs of social enterprises entering the elderly care industry, and socialize the elderly care industry and intensify the elderly care resources. With the implementation of the above measures, Xiamen has improved the efficiency of the social system of elderly care services.

Enhance the Coverage of Medical Care and Elderly Care, and Expand the Scope of Medical Insurance The integration of medical care and elderly care is one of the important measures China has taken to improve the quality of elderly care services. As one of the first batches of pilot cities for the integration of medical care and elderly care in China, Xiamen has accelerated the integration of medical resources and elderly care resources in recent years, and has initially formed an institutional pension model of “medical care driving elderly care forward, medical care promoting elderly care, medical care supporting elderly care, and medical care uniting with elderly care”.9 In 2014, the Opinions on the Implementation of Strengthening Medical Services in Elderly Care Institutions was issued. Under the premise of improving the approval mechanism and meeting the access conditions, Xiamen supports elderly care institutions to set up medical institutions (infirmaries or outpatient departments) according to the number and physical condition of the service population and the scale of the place in order to provide basic medical services for the elderly. As of the end of June 2018, there were 25 built-in medical institutions in the 35 elderly care institutions in Xiamen, and 10 institutions have contracted with community health service centers or township health centers to provide medical services, and the rate of integration of medical care and elderly care accounted for 100%; there were 10,300 nursing beds, 9

Xiamen Achieves Full Coverage of Integrated Medical Care and Elderly Care, and Plans to Add 1,300 beds for Elderly Care This Year, Sina.com, http://fj.sina.com.cn/news/m/2019-03-14/detailihsxncvh2464774.shtml.

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accounting for 89.6% of the total number of beds in elderly care institutions.10 In order to embed simple life care and necessary emergency treatment in elderly care services, and provide targeted and professional medical services for elderly people such as chronic disease treatment and rehabilitation nursing care, Xiamen has also established geriatric medicine departments in some municipal general hospitals, opened geriatrics departments, improved the capability of general hospitals to serve elderly patients, and further promoted the development of medical care and elderly care integration. In addition, in accordance with the requirements of the Opinions on the Implementation of Strengthening Medical Services in Elderly Care Institutions, the coverage of medical insurance has been expanded. Since 2014, Xiamen has gradually included integrated medical and elderly care institutions that meet the corresponding conditions in the scope of medical insurance services. Among them, 21 elderly care institutions have been included in medical insurance designated points to provide the medical insurance card swiping service.

Focus on the Overall Planning of Elderly Care Services in Urban and Rural Areas, and Equalize the Basic Elderly Care Services To build a social system of elderly care services, we must not only pay attention to the construction of the urban community system of elderly care services, but also realize that the elderly care ideas of rural residents are also changing. The government should also pay attention to the construction of a system of rural elderly care security to relieve the worries of rural elderly people and achieve a stable and sustainable development of the rural economy. In the process of promoting the construction of new countryside, Xiamen focuses on establishing and improving the rural social security system. In 2004, the Provisional Measures on Basic Endowment Insurance for Land-Expropriated People in Xiamen Municipality was issued, which was the first to implement basic endowment insurance for land-expropriated people in China, and the Measures were improved in 2007. In 2014, Xiamen took the lead in launching the “Universal Health Care” project integrating urban and rural areas, vigorously developed rural cooperative medical services, explored the establishment of a serious illness medical security system, and established a medical assistance system for poor elderly people, so as to solve the problem of poverty caused by diseases among rural elderly people, as well as the difficulty of getting medical services. In this way, the rural elderly people can get basic social security from the system. In addition, Xiamen has increased its financial investment and actively improved the hardware facilities of rural elderly care services. As of the end of June 2018, there were 35 elderly care institutions in Xiamen, including 6 municipal and district-level public elderly care institutions and 29 private elderly care institutions, with a total of 11,463 elderly care beds of various types. Among them, there were 1,054 beds in 93 rural happiness

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The Rate of Coverage of “Integrated Medical Care and Elderly Care” in Xiamen Elderly Care Institutions Reaches 100%, mini.eastday.com, http://mini.eastday.com/a/190314114648966.html.

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homes, and 54 rural elderly activity centers (rooms).11 Xiamen not only focuses on ensuring the basic needs of the elderly in rural areas, but also continuously adds various recreational facilities, medical service facilities, and other hardware facilities to gradually reduce the difference between the basic level of elderly care services in urban and rural areas and equalize basic elderly care services in urban and rural areas.

Hainan Special Economic Zone As the only provincial-level special economic zone in China, the Hainan Special Economic Zone has gradually become the first choice for retirement domestically by virtue of its excellent ecological environment. The aging process of Hainan Province is also accelerating. As of the end of 2018, Hainan Province included a registered population of 9,275,600, of which 1,410,300 were registered elderly people aged 60 and over, accounting for 15.2% of the total registered population. During the ten years from 2008 to 2018, the elderly population in Hainan Province increased by 303,900 in total, the aging level increased from 12.12 to 14.8%, and the average annual growth rate of the elderly population was 2.87%.12 In order to cope with the social problems that may be caused by the deepening of the aging trend, the Hainan Special Economic Zone has accelerated the establishment of a sound system of elderly care services, and made preparations to support public elderly care institutions to promote the integration of medical care and elderly care and the innovative development of ecological elderly care, and build a diversified model of elderly care services. With the above practices, Hainan Province has accumulated relatively rich and mature experience in the construction of the system of elderly care services.

Adhere to the Bottom-Line Thinking of Policy Benefiting the People, and Give Play to the Leading Role of Planning The People’s Government of Hainan Province, in line with the purpose of serving the people of “all for the elderly, for all of the elderly”, regards the development of the elderly care services in Hainan Province as an important project for building a harmonious Hainan and improving people’s livelihood. In 2010, Hainan issued the Opinions on Accelerating the Construction of the System of Elderly Care Services. Units and organizations at all levels actively implemented the tasks and requirements of the Opinions and clarified their respective work priorities in terms of policy support,

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The Elderly Population in Xiamen Is Increasing, There Are Currently 11,463 Beds in 35 Elderly Care Institutions, https://baijiahao.baidu.com/s?id=1607645461579453095. 12 Hainan Speeds Up the Quality Improvement and Upgrading of Elderly Care Services, Primetime News, https://mini.eastday.com/a/190411170327521.html.

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talent team building, and the construction of platforms for information services, gradually built a system of networks of comprehensive elderly care services and public welfare elderly care services, community benefit elderly care services, and green and ecological elderly care services as the main content, and formed a guideline of “demand and quality as the core” for the work of elderly care services to properly solve the problems existing in the supply and demand of elderly care services. In 2011, the Twelfth Five-Year Plan for the Development of the Undertakings for the Elderly in Hainan Province was compiled, the Opinions of the People’s Government of Hainan Province on the Implementation of Accelerating the Development of the Elderly Care Service Industry was issued in 2014, and the Thirteenth Five-Year Plan for the Development of the Elderly Care Service Industry in Hainan Province was promulgated in 2016. With the goal of “creating a good market environment for the development of the elderly care service industry in Hainan”, these documents are conducive to building an ecosystem of the elderly care service industry, and promoting the branding, specialization, and normalization of the elderly care service industry in Hainan Province. In 2017, the Opinions on the Implementation of Fully Opening the Elderly Care Service Market and Improving the Quality of Elderly Care Services was issued. By relaxing access conditions, simplifying approval procedures, and transforming government service functions, social forces were motivated to participate in the development of the elder care service industry. In 2019, in order to implement the spirit in the report of the 19th National Congress of the Communist Party of China, and to realize the service goal of providing “the elderly with care”, which emphasizes not only “quantity”, but also “quality”, Hainan compiled local standards such as the Standard of Life Care Services for the Elderly with Disability and Dementia in Elderly Care Institutions and the Standard for Community Home Care Services in Hainan Province. These policies and plans have played an important role in promoting the rapid development of elderly care services, protecting the rights and interests of the elderly, and enhancing the awareness of the public in the whole province to actively respond to population aging.

Expand the Content of the Services of Public Elderly Care Institutions, and Give Full Play to the Demonstration and Leading Role of Public Elderly Care Institutions The Hainan Elderly Nursing Home, completed in 2013, is currently the largest comprehensive and high-level public social welfare center for the elderly in Hainan Province. It mainly undertakes the “five-in-one” elderly service including providing living places, healthcare and medical care, nutritious meals, cultural and sports entertainment, psychological counseling, and hospice care. The work of elderly care services overcomes the shortcomings of the single service of traditional public elderly care institutions. At the same time, it has also attracted some “migratory bird-like” groups to live in, promoted cooperation in elderly care in different places to meet people’s service needs for elderly care in different places. In addition, as a public elderly care institution, the Hainan Elderly Nursing Home focuses its work on the care

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of disabled and demented elderly people and underpins the elderly security to provide care for families with disabled and demented elderly people. Since its establishment, it has vigorously promoted the construction of a standardized system of elderly care services, actively promoted the teaching method that combines theory and practice and a head-teacher-in-charge mechanism throughout the province, strengthening the training and management of elderly care workers, and actively cultivated professional service personnel, which paved the way for “the elderly enjoying care and a good life”. After more than six years of exploration and practice, the Hainan Elderly Nursing Home has continuously improved the internal construction of the elderly care institution, strictly complied with the regulations on the management of elderly care services, explored the methods to establish internal management for the elderly, and continuously enhanced the happiness of the elderly. The Hainan Elderly Nursing Home has been recognized by the government and all walks of life. Since 2014, it has successively won the “Vocational Skill Appraisal Training Base for Elderly Care Workers”, “National Respect for the Elderly Unit”, “Civil Administration Standardization Demonstration Unit”, and other honorary titles; and in May 2017, it was recognized by the Standardization Administration as one in China’s fourth batches of comprehensive standardization pilot projects for social management and public services, giving full play to the demonstration and leading role of public elderly care institutions in Hainan Province to guide the reform and innovation of public elderly care institutions across the country.

Innovate the Model of Medical Care and Elderly Care Integration, and Improve the Quality of the Service Against the background that the innovation of the model of integrated medical and elderly care services has become the current hot spot for elderly care, in order to achieve the efficient integrated development of elderly care services and medical and health services, Hainan Province actively promotes the city and county elderly care institutions to sign contracts with medical institutions or establish outpatient departments in the elderly care institutions to provide basic medical services for the elderly. For example, the Hainan Elderly Nursing Home and the Second Affiliated Hospital of Hainan Medical University have established a medical consortium to meet the needs of basic medical services for the elderly in the hospital. Up to now, there are 132 nursing homes with medical clinics or signed cooperation agreements with local hospitals in Hainan Province, with green channels opened for appointment and emergency treatment for elderly residents in nursing homes within the jurisdiction, which greatly improved the convenience for the elderly.13 At the same time, Hainan Province is also making full use of social capital to vigorously establish a “medical 13

Hainan Speeds Up the Quality Improvement and Upgrade of Elderly Care Services and Enhances the Happiness of the Elderly, People’s Daily Online, http://hi.people.com.cn/n2/2019/0411/c22 8872-32834857.html.

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care and elderly care integration” industry, and has explored this new type of model of elderly care services from multiple dimensions. For example, the “Gonghe Garden” affirmed by Premier Li Keqiang and a group of integrated medical and elderly care institutions or enterprises with different models and characteristics represented by Sanya Traditional Chinese Medicine Hospital, Shengshi Health Care, Boao Yiling Life Care Center, Agedcare Community, and Yikang Traditional Chinese Medical Care Center has realized the organic integration of medical care, nursing care, and elderly care to the greatest extent, improved the “basic health care and medical care circle” for the elderly, and upgraded the quality of the integrated medical and elderly care services. In 2017, Hainan cooperated with the Shanghai Ninth People’s Hospital to create a comprehensive first-class modern institution of integrated medical and elderly care services, devoted to providing considerate and comprehensive services to healthy and sick elderly people, so as to achieve the best combination of elderly care and medical care.

Create a “Migratory Bird-Style Elderly Care” Model, and Vigorously Advocate Ecological Elderly Care As a brand-new community elderly care model, ecological elderly care is a positive elderly care method that combines ecotourism, leisure and elderly care, and medical care and health care from the perspective of the elderly to guide the elderly to carry out benign consumption. As the only tropical-style island in China, Hainan Province enjoys an excellent natural ecological environment, which has become its innate advantage in providing ecological elderly care services. Hainan Province has optimized the “daily life service circle” for the elderly by establishing a three-in-one model of elderly care services integrating tourism, elderly care, and medical care, and has formed a supply pattern of high-end elderly care supplemented by middle and low-end elderly care services. The new ecological model of elderly care mainly includes the migratory bird-style tourism model of elderly care, the large-scale community style tourism model of elderly care, the farmhouse boarding style tourism model of elderly care, and the medical travel style tourism model of elderly care. The “migratory bird-like traveling and vacationing slow life” model promoted by the Mountain & Sea Resort Company aims to make the elderly from outside freely enjoy local superior resources like migratory birds. The Haikou Gonghe Garden designs targeted health improvement plans for the elderly mainly through in-depth research on the status of the physical health of the elderly to provide a method of health management and health education, which makes up for some deficiencies in the current medical system of China. The Hainan Yikang Traditional Chinese Medical Care Center, as a national demonstration base for health care for the elderly, integrates medical care and physical therapy, medicated diet and bathing, and health care. These new ecological models of elderly care with different forms and characteristics have played an important role in meeting the needs of local and foreign seniors in life, healthcare, tourism, and social interaction.

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The Experience and Development Prospect of Constructing the System of Elderly Care Security in the Special Economic Zones The special economic zones actively improve the social system of elderly care services, raise the happiness index of the elderly, and build a multi-level elderly care service supply network that is led by the government, supported by the market and society, and based on the family. The information-based and smart elderly care in the Shenzhen Special Economic Zone, the community elderly catering model and neighborhood mutual-assistance elderly care in the Zhuhai Special Economic Zone, the “Silver Age Healthcare Action” in the Shantou Special Economic Zone, the coordinated urban and rural elderly care services in the Xiamen Special Economic Zone, and the ecological elderly care models in the Hainan Special Economic Zone, etc. all have their own characteristics, basically forming a “four-in-one” system of elderly care services with complete policies, diverse subjects, various forms, and comprehensive coverage.

Experience in the Construction of the System of Elderly Services in the Special Economic Zones Improve the Policy System of Elderly Services Based on the Concept of Taking People’s Livelihood as a Priority Each special economic zone firmly grasps the key links in the development of elderly care services, taking the construction of the system of elderly care services as a practical matter to consolidate the economic foundation and benefit people’s livelihood. And they adhere to the principles of overall planning, unified deployment, and distributed implementation, and lead in the front, innovate in the front, and practice in the front to steadily promote the work of social services for the elderly. In terms of the development of the elderly care industry, subsidy for elderly care services, infrastructure construction, government-purchased elderly care services, mobilization of social forces, etc., the special economic zones have improved the top-level design of the system of elderly care services through formulating overall planning schemes and policies and regulations to clarify the specific goals and tasks, and solidify the advancement and implementation, which promoted the healthy operationing of the social system of elderly care services.

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Meet the Diverse Needs of Elderly Care Services with Social Participation as a Supplement The elderly care service is a huge and complex livelihood project that covers all aspects of the daily lives of the elderly. Due to the huge demand for elderly care services and the diversity of the content of services, it requires the joint efforts of the whole society to participate in-depth. The government is the leading force and plays the role of overall planning and coordination, including system design, fundraising, facility construction and supervision, rights protection, etc. It cannot be replaced by any other main body. However, besides the government, social organizations and families are required to participate and assume corresponding responsibilities. This is determined by the family-oriented and individualized characteristics of elderly care services. Shenzhen promoted the “system of government-purchased home care services” implemented by the government and operated by non-governmental organizations, Zhuhai explored the establishment of a model of community home care catering, and Shantou and Xiamen actively supported and advocated the reform and innovation of public elderly care institutions, all of which are aimed at promoting social forces to becoming the main body of elderly care service supply, promoting close collaboration between the government, the society, and the families, and building a consensus on social services for the elderly, so as to form a pattern with benign interaction among various main bodies and provide diversified forces to meet the needs of elderly care services.

Improve the Quality of Elderly Care Service by Integrating Medical Care and Elderly Care The integrated community medical and elderly care service is a differentiated model of elderly care services. Its feature of “collaboration of medical care and elderly care and integration of the two institutions” has transformed the elderly care service function from the “single type” to the “comprehensive type”. The effect was transformed from “benefiting one” to a “win-win” result, and achieved a result of “1+1 > 2”. All special economic zones are actively exploring new ways to combine medical and health services with elderly care services, and implement thoroughly the principle of “integration of medical care and elderly care”. Shenzhen and Xiamen have opened geriatrics departments in district-level hospitals and introduced medical resources to elderly care institutions and welfare centers. On the one hand, the integration of medical care and elderly care improves the quality of life of the elderly and enables them to enjoy the fastest and most convenient treatment; on the other hand, it reduces the burden of running to the hospital for family members, as well as their economic burden. The integration of medical care and elderly care has truly achieved the purpose of “medical care for the elderly and health care for the elderly”.

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Prospects for the Construction of the System of Elderly Care Services Strengthen the Functional Integration of Management Agencies and Build a Comprehensive Supervisory System for Elderly Care Services Judging from the current status of elderly care services in various special zones, there are problems of overlapping and blank jurisdictions among various government departments, and the different working and operating mechanisms of each government have led to unclear responsibilities between departments. The decentralization of elderly care management institutions has weakened the efficiency of the implementation of the system of elderly care services. In addition, relaxing the barriers to entry does not mean relaxing the regulatory requirements. The special economic zones have not yet established a comprehensive access evaluation mechanism, a supervisory system during and after the event, and a quantifiable management evaluation standard for elderly care services. A comprehensive mechanism of supervision and management is an important guarantee for maintaining the healthy operations of the system of elderly care services. We believe that each special economic zone should explore a way to establish a classified management model based on evaluation, effectively clarify the regulatory responsibilities and scope of each department, improve the access and exit mechanisms of elderly care services, and formulate an all-around (including elderly care service qualifications, food safety, fire safety, product quality, environmental monitoring, etc.) and quantifiable standard system of assessment.

Deeply Explore the Mutual-Assistance Elderly Care Model and Promote Active Aging Although each special economic zone has basically built a government-led, marketand society-supported, family-based service supply system, and created a variety of new elderly care models such as smart elderly care, integrated medical and elderly care, and ecological elderly care, the model of mutual-assistance elderly care among the elderly still needs to be explored and put into widespread practice. Mutualassistance elderly care is a part of the entire social system of elderly care services. It is connected with the social system of elderly care services, and guided by the mutual-assistance concept that “today you help me and tomorrow I will help you”. This new type of elderly care service supply method is an important supplement to modern methods of elderly care. The special economic zones should actively explore this new model of “mutual assistance among the elderly and mutual assistance between the elderly and the young”, and form different types of models such as “friend circle”, “volunteering”, “savings” (represented by time banks), and “marketbased” mutual-assistance elderly care to gradually build a mutual-assistance system

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of elderly care with regional characteristics, and form a mutual-assistance aging society that integrates “self-assistance, others’ assistance, and mutual assistance”. This will not only make up for the gap between the government and the family to provide elderly care services but also help mobilize the social participation of the elderly to truly achieve an “accomplishment for the elderly”.

References Cui R (2017) Research on the elderly care model in Hainan against the background of an aging population [J]. Inner Mongolia Science Technology & Economy 21:10–11 Dai W (2016) Study on the policies and regulations of constructing the chain of the elderly care service industry in Hainan [J]. Mod Bus Trade Ind 37(32):119–120 Ding J (2017) China social security and social service research, Huazhong University of Science & Technology Press Dong H (2011) Research on the construction of China’s social system of elderly care services, China Social Sciences Press National Development and Reform Commission, Ministry of Civil Affairs (2017) National Office on aging: entering the new era of the development of the elderly care service industry—a collection of typical cases of elderly care service industry development. Social Sciences Academic Press (China) Xiao L (2019) Exploration of the supply-side structural reform of the elderly care services in Xiamen [J]. J Xiamen City Univ 21(1):21–25 Yao Q (2013) Ideas and countermeasures of the development of the elderly care industry in Shantou [N]. Shantou Daily, 25 Nov (009) Yi R (2016) Establish the new medical service model in Zhuhai [N]. Zhuhai Special Zone Daily, 8 Dec (F02) Yuan R (2011) A preliminary study on the new model of humanized home care services in Zhuhai [J]. Labor Security World (theory Edition) 8:30 Zhang K (2008) Accelerate the development of the elderly care industry and build an innovative service center in Shenzhen. China Economic Times, 11 Mar (008) Zhang X (2015) “Five transformations” in the elderly care services in Xiamen [J]. Chin Soc Welfare 2:30–31 Zhang Y (2016) Research on the construction of the social system of elderly care services, Dongbei University of Finance & Economics Press Zhao B (2018) Analysis of the reform of the system and mechanism of urban elderly care services— taking Shenzhen as an example [J]. Pract Theor SEZs 4:88–93

Chapter 7

Report on the Development of the Financial Industry in China’s Special Economic Zones in 2019 Maojia Guo

The Main Characteristics of the Development of the Financial Industry in China’s Special Economic Zones in 2018 Although the Scale Has Expanded, the Momentum Has Slowed Down Significantly Although the Scale of the Banking Industry Has Expanded, the Momentum Has Slowed Down Significantly (see Table 7.1) It can be seen from Table 7.1 that in 2018, although the scale of deposits and loans in local and foreign currencies in the five traditional special economic zones continued to expand compared with the previous year, the growth rates were only 3.6 and 11.6% respectively. Among them, the average growth rate of loans slowed down by 2.3 percentage points from 2017; the growth rate of deposits slowed down by 5.1 percentage points from 2017.

Although the Scale of the Securities Industry Has Expanded, the Momentum Has Slowed Down Significantly (see Table 7.2) The data in Table 7.2 shows that compared with 2017, the growth rate of the assets of the six A-share listed securities companies in the special economic zones in 2018 was only 3.3%, a slowdown of 3.7 percentage points. M. Guo (B) China Center for Special Economic Zone Research, Shenzhen University, Shenzhen, China e-mail: [email protected] © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_7

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M. Guo

Table 7.1 Statistics on the scale and growth rate of deposits and loans in local and foreign currencies in the 5 traditional special economic zones from 2014 to 2018 (unit: 100 million yuan; %) Year

2014

2015

2016

2017

Outstanding of deposits

58,078.1

82,533.4

92,565.7

100,633.4

10.9

42.1

12.2

8.7

3.6

43,456.5

50,835.4

62,233.8

70,889.5

79,108.2

16.2

17.0

22.4

13.9

11.6

Deposit growth rate Loan balance Loan growth rate

2018 104,278.2

Source The Statistical Bulletin on National Economic and Social Development in the 5 traditional special economic zones from 2014 to 2018

Table 7.2 Statistics on the growth rate of assets of 6 A-share listed securities companies in the special economic zones from 2015 to 2018 (unit: 100 million yuan; %) Listed 2015 securities Asset companies amount

2016 Growth Asset rate amount

2017 Growth Asset rate amount

2018 Growth Asset rate amount

Growth rate

CITIC Securities

6159.2 28.5

5974.4

−3.0

6255.7

4.7

6531.3 4.4

China Merchants Securities

2917.9 50.8

2430.6

−16.7

2856.4 17.5

3049.3 6.8

Guosen Securities

2443.4 51.4

1930.3

−21.0

1996.4

3.4

2118.1 6.0

Guotai Junan Securities

4544.7 42.3

4117.5

−9.4

4316.5

4.8

4367.3 1.2

Orient securities

2078.4 93.3

2124.1 2.2

2318.6

9.1

2268.7

First Capital Securities

332.6 57.6

317.0

−4.7

331.2

4.5

335.6 1.3

18,476.2 54.0

16,893.9

−8.8

18,074.8

7.0

18,670.3 3.3

Total

−2.2

Source Annual reports of 6 A-share listed securities companies in the special economic zones from 2015 to 2018

Although the Scale of the Insurance Industry Has Expanded, the Momentum Has Slowed Down Significantly (see Table 7.3) The statistical results in Table 7.3 show that in 2018, although the premium income of insurance companies in the 5 traditional special economic zones exceeded 180 billion yuan for the first time, the growth rate was 10.39 percentage points slower than that in 2017, especially the growth rate of life insurance premium income. It was 14.41 percentage points slower than 2017.

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Table 7.3 Statistics on the main indicators of the development of the insurance industry in the special economic zones from 2014 to 2018 (unit: 100 million yuan; %) Year

2014

2015

2016

2017

2018

Premium income

900.7

1060.48

1304.12

1604.63

1807.68

18.2

17.73

22.97

23.04

351.3

365.45

395.78

Growth rate Property insurance premium income Growth rate Life insurance premium income Growth rate Compensation expenditure Growth rate

12.65

469.1

551.84

20.2

4.0

8.3

18.5

17.6

549.3

695.03

908.34

1135.53

1255.83

17.0

26.5

30.7

25.0

10.59

284.7

320.4

405.07

450.21

569.22

24.7

12.5

26.4

11.1

26.43

Source The Statistical Bulletin on National Economic and Social Development in the 5 traditional special economic zones from 2014 to 2018

Table 7.4 Statistics of asset scale changes of the financial leasing companies in the special economic zones shortlisted among the top 10 national financial leasing companies from 2017 to 2018 (unit: 100 million yuan; %) National ranking

Company

2017 Asset size

2018 Growth rate

Asset size

Growth rate

1

ICBC Leasing

3148.9

4.30

2715.0

−13.78

2

BOCOM Financial Leasing

2072.4

20.40

2317.0

11.80

3

CDB Leasing

1871.0

12.30

2380.7

27.24

4

Minsheng Financial Leasing

1782.9

16.80

1736.7

−2.59

5

CMB Financial Leasing

1554.1

13.40

1712.9

10.22

6

CIB Financial Leasing

1349.4

14.60

1281.3

−5.05

11,778.7

13.60

12,143.6

Total

3.01

Source Annual reports of 6 financial leasing companies of ICBC, BOCOM, CDB, CMB, and CIB in the special economic zones in 2018

Although the Scale of the Financial Leasing Industry Has Expanded, the Momentum Has Slowed Down Significantly (see Table 7.4) The data in Table 7.4 shows that in 2018, although the size of overall assets of the six special zone financial leasing companies that entered the top 10 in China expanded by 3.01%, its growth rate was significantly slower than in 2017 by 10.59 percentage points. Among them, ICBC Leasing, CIB Financial Leasing, and Minsheng Financial Leasing showed negative growth, with negative growth rates reaching 13.78%, 5.05%, and 2.59% respectively.

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M. Guo

Although the Quality of Development Has Improved, the Differentiation Has Increased Significantly The Quality of the Development of the Banking and Financial Leasing Industries Has Improved Significantly The Quality of the Development of the Banking Industry Has Improved Significantly (see Tables 7.5 and 7.6) The data in Table 7.5 shows that in 2018, the total net profit of the 5 A-share listed banks reached 252.95 billion yuan, a net increase of 19.8 billion yuan over 2017, with an average increase of 8.5%, which was higher than that in 2015, 2016 and 2017 by 3.5 percentage points, 4.1 percentage points, and 2.1 percentage points respectively. The year of 2018 has been the fastest growth year since 2015, indicating that the bottoming out and rebounding momentum of the net profit growth rate of the banking industry has been further consolidated. The statistical results in Table 6 show that in 2018, although the scale of nonperforming loans of the 5 A-share listed banks in the special economic zones was still expanding, the growth rate was only 4.1%, the lowest growth rate since 2014, indicating the slowing momentum of the scale growth of non-performing loans of the banking industry has been further consolidated.

The Quality of the Development of the Financial Leasing Industry Has Been Further Improved (see Table 7.7) Table 7.7 shows that in 2018, the operating revenue and net profit growth rates of the 6 financial leasing companies in the special economic zones that entered the top 10 in China were 22.1% and 19.7% respectively. Compared with the 13.6% growth rate of total assets in the same period, they exceeded by 8.5% and 6.1% respectively, indicating that their output greatly exceeded the input.

The Quality of the Development of the Securities Industry, the Trust Industry, the Fund Industry, and the P2P Online Lending Industry Has Deteriorated Significantly The Quality of the Development of the Securities Industry Has Deteriorated Significantly (see Table 7.8) The data in Table 7.8 shows that the operating revenue and net profit that reflect the quality of the development of the listed securities companies in the special economic zones in 2018 have significantly deteriorated compared with 2017, and the negative growth rates have exceeded double digits, reaching −11% and −29.0% respectively.

30.0

21.7

16.1

198.0

113.8

1999.7

Ping An Bank

Bank of Shanghai 2100.2

130.0

218.7

580.2

506.0

665.3

5.0

14.2

10.4

3.8

7.6

1.0

Growth rate

2193.0

143.1

226.0

620.8

531.0

672.1

Net profit

2016

4.4

10.1

3.3

7.0

4.9

1.0.0

Growth rate

Source Annual reports of 5 A-share listed banks in the special economic zones from 2014 to 2018

Total

8.1

559.1

CMB

5.7

470.3

14.9

658.5

Net profit

SPDB

2015

Net profit

Growth rate

2014

BOCOM

Listed bank

2331.5

153.3

231.9

701.5

542.6

702.2

Net profit

2017

6.4

7.1

2.6

13.0

2.2

4.5

Growth rate

2529.5

180.3

248.2

805.6

559.1

736.3

Net profit

2018

8.5

17.6

7.0

14.8

3.0

4.9

Growth rate

Table 7.5 Statistics of changes in net profit of A-share listed banks in the 5 special economic zones from 2014 to 2018 (unit: 100 million yuan; %)

7 Report on the Development of the Financial Industry in China’s Special … 167

39.3

30.4

42.5

105.0

44.3

1074.7

Ping An Bank

Bank of Shanghai 1626.9

63.8

176.4

474.1

60.0

44.1

68.0

69.9

62.3

30.7

Growth rate

2016

2078.2

64.8

256.8

611.2

521.8

623.7

Scale

27.2

1.5

45.6

28.9

48.9

11.0

Growth rate

Source Annual reports of 5 A-share listed banks in the special economic zones from 2014 to 2018

Total

52.0

279.0

CMB

350.5

562.1

25.4

65.3

430.2

215.9

BOCOM

2015 Scale

Growth rate

2014

Scale

SPDB

Listed bank

2294.5

76.4

290.0

573.9

685.2

669.0

Scale

2017

2018

12.7

17.8

2388.7

97.0

349.1

536.1

−6.1 12.9

681.4

725.1

Scale

31.3

7.4

Growth rate

Table 7.6 Statistics of changes in the amount of non-performing loans of listed banks from 2014 to 2018 (unit: 100 million yuan; %)

4.1

27.0

20.4

−6.5

−0.5

8.3

Growth rate

168 M. Guo

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169

Table 7.7 Statistics on the quality of the development of the financial leasing companies that were shortlisted in the top 10 national financial leasing companies in the special economic zones in 2018 (unit: 100 million yuan; %) National ranking

Company

Registration place

1

ICBC Leasing

Binhai District, Tianjin

81.7

4.1

35.7

4.3

2

BOCOM Financial Leasing

Pudong District, Shanghai

124.0

37.1

24.1

20.4

3

CDB Leasing

Shenzhen

118.0

9.1

21.3

36.5

4

Minsheng Leasing

Binhai District, Tianjin

118.7

34.7

17.0

32.1

5

CMB Financial Leasing

Pudong District, Shanghai

89.8

30.7

19.6

15.0

7

CIB Financial Leasing

Binhai District, Tianjin

71.1

17.1

15.2

10.1

Average

Operating revenue

Growth rate

22.1

Net profit

Growth rate

19.7

Source Annual reports of 6 financial leasing companies of ICBC, BOCOM, CDB, Minsheng, CMB, and CIB in the special economic zones in 2018

The Quality of the Development of the Trust Industry Has Deteriorated Significantly (see Table 7.9) Table 7.9 shows that in 2018, the scale of entrusted assets, operating revenue, and net profit of the four special zone trust companies all fell by more than a double digit year-on-year, reaching 18.24%, 11.95%, and 12.06% respectively.

The Quality of the Development of the Fund Industry Has Deteriorated Significantly (see Table 7.10) The statistics in Table 7.10 show that in 2018, although the size of the total assets of a public offering of funds with assets under management of more than 50 billion yuan has not shrunk, the net income has shown a loss of more than 100 billion yuan.

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Table 7.8 Statistics of the operating revenue and net profit of 6 listed securities companies in the special economic zones from 2014 to 2018 (unit: 100 million yuan; %) Listed securities companies

2017 Operating revenue

2018 Growth rate

Net Profit

Growth rate

Operating revenue

Growth rate

Net profit

Growth rate

CITIC securities

432.9

13.9

114.3

10.3

372.2

−14.0

93.9

−17.8

China Merchants Securities

133.5

14.1

57.8

7.1

113.2

−15.2

44.3

−23.3

Guosen Securities

119.2

−6.5

45.7

0.4

100.0

−16.1

34.2

−25.2

Guotai Junan Securities

238.0

−7.6

98.8

0.4

227.2

−4.5

67.1

−32.1

Orient Securities

105.3

53.0

35.5

53.6

103.3

−1.9

12.3

−65.4

First Capital Securities

19.5

−24.7

17.7

−9.2

1.2

−71.4

7.85

933.6

−11.0

253.0

−29.0

Total

1048.4

−3.9

7.9

4.2

356.3

Source Annual reports of 6 listed securities companies in the special economic zones from 2017 to 2018 Table 7.9 Statistics on the operation status of the 4 trust companies in the special economic zones in 2018 (unit: 100 million yuan; %) Company

Registration Assets under Growth Operating Growth Net Growth place management rate revenue rate profit rate

Ping An Trust 5341.24

−18.17

48.79

−17.38

31.78

− 18.7

CR Trust

9549.19

−29.11

23.88

−3.5

21.41

−1.5 9549.19

Xiamen International Trust

2500

−15.5

8

−23.37

4.8

Hwabao Trust 5348

−10.19

28.2

−3.55

12.78

− 1.99

Total/Average 22,738.43

−18.24

108.87

−11.95

70.77

− 22,738.43 12.06

5341.24

− 2500 26.04 5348

Source Compiled based on relevant data in the annual reports of 4 trust companies in the special economic zones in 2018

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Table 7.10 Statistics on changes in fund assets with a management scale of over 50 billion yuan and net profits in 2018 (unit: 100 million yuan; %) No

Total

Fund company

Registration Management Management Scale of Scale of place scale in 2017 scale in 2018 net net profits profits in in 2018 2017

Bank of China Investment Management

2327.86

2555.84

92.02

165.02

2327.86

Bosera Funds

2254.27

2464.94

148.31

58.34

2254.27

China Universal Asset Management

1872.93

2419.70

216.93

−143.95

1872.93

Harvest Fund

2288.31

2187.06

344.45

−266.92

2288.31

Southern Asset Management

2050.11

2173.44

216.92

−127.66

2050.11

China Merchants Fund

1828.38

1790.08

145.36

77.32

1828.38

Fullgoal Fund

1303.77

1257.43

102.87

−244.5

1303.77

HuaAn Funds

1196.73

1164.36

131.32

−112.41

1196.73

Yinhua Fund

770.81

1020.78

132.53

−56.39

770.81

Guotai Asset Management

893.57

998.59

124.38

−199.2

893.57

Penghua Fund

974.16

953.61

77.76

4.58

974.16

BOCOM Schroders

680.32

938.86

63.20

−25.52

680.32

Dacheng Fund

731.55

892.59

94.24

−17.96

731.55

Ping An Fund

186.90

732.89

47.12

60.27

186.90

Huatai-Pinebridge Fund Investment

525.40

639.60

84.14

−118.2

525.40

Invesco Great Wall

550.36

609.77

102.84

−108.79

550.36

AXA SPDB Investment Managers

368.85

534.00

27.33

29.38

368.85

Galaxy Fund Management

407.09

506.01

33.63

−6.64

407.09

21,211.37

23,839.55

2185.35

− 1033.23

21,211.37

Source Annual reports of public offering of funds from 2017 to 2018. Note: The asset scale does not include the scale of monetary funds

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The Quality of the Development of the P2P Online Lending Industry Has Further Deteriorated According to the data of the TOP50 ranking list of online loan ratings released by WDZJ-OFFICIAL, the loan balance of the P2P platform in the special economic zones that entered the top 50 in the country has shown a significant shrinkage compared with the end of 2017. The balance has decreased by 58.734 billion yuan, a decrease of 19.06%. The phenomenon of severe polarization not only exists among the financial industries in different special economic zones but also exists within the financial industry in each special economic zone. First, the polarization of the securities industry is obvious. Although some small and medium-sized securities companies have difficulties in survival, leading securities companies relying on their scale advantages have a relatively strong ability to resist industry downturns. More than 70% of the main underwriting businesses of stocks and bonds is monopolized by three large securities companies, CITIC Securities, China Merchants Securities, and Guotai Junan Securities. Second, the polarization of the fund industry is obvious. There are the Bank of China Investment Management and Ping An Fund, which have seen substantial growth in net income, and the Harvest Fund and Fullgoal Fund, which have lost more than 20 billion yuan. Third, the polarization of the financial leasing industry is obvious. Among the top 10 financial leasing companies in the special economic zones in China, there are CDB Leasing, BOCOM Financial Leasing and CMB Financial Leasing, which have maintained double-digit net profit growth rates, reaching 17.64%, 13.62%, and 13.27% respectively. There are also ICBC Leasing and CIB Financial Leasing with obvious negative growth rates as high as 9.89% and 8.82% respectively. Fourth, private banks are highly polarized. Among the three private banks opened in the special economic zones, the three main operating indicators of asset scale, operating revenue, and net profit of Shenzhen WeBank increased by 169%, 49%, and 71% respectively compared with the same period of the previous year. On the other hand, the Shanghai Hua Rui Bank is the only private bank among the 16 private banks opened in China that has a reduced balance sheet; Tianjin Kincheng Bank is the only one among the 16 private banks opened in China with both operating revenue and net profit decreased compared with the same period of the previous year. Fifth, the insurance industry is highly polarized. The total net profit of the insurance industry in the special economic zones is 135.4 billion yuan, of which two listed insurance companies reached 125.4 billion yuan, accounting for 92.6%, while the non-listed insurance companies accounted for only 7.4%. Sixth, online lending platforms are highly polarized. While nearly 500 online lending platforms in the special economic zones collapsed, five online lending platforms including Orange Finance, Paipai Loan Finance, Xiaoying Finance, Youme Finance, and Youme Loan were successfully listed in the US and Hong Kong respectively.

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173

Although the Risks Are Generally Controllable, the Hidden Worries Have Not Vanished The Overall Risks Are Controllable (see Tables 7.11 and 7.12) The data in Table 7.11 show that in 2018, the average non-performing loan ratio of the 5 A-share listed banks in the special economic zones decreased from 1.62% in 2017 to 1.53%; the statistical results in Table 7.12 show that the capital adequacy ratio of the 5 A-share listed banks in the special economic zones rose from 13.4% in 2017 to 13.64%, indicating that the banking industry in the special economic zones was generally stable. Table 7.11 Statistics on the non-performing loan ratios of 5 A-share listed banks in the special economic zones from 2013 to 2018 (unit: %) Banks

2013

2014

2015

2016

2017

2018

BOCOM

1.05

1.25

1.51

1.52

1.50

1.49

SPDB

0.74

1.06

1.56

1.89

2.14

1.92

CMB

0.83

1.11

1.68

1.87

1.61

1.36

Ping An Bank

0.89

1.02

1.45

1.74

1.70

1.75

Bank of Shanghai

0.82

1.25

1.19

1.17

1.15

1.14

Average

0.87

1.14

1.48

1.64

1.62

1.53

Source Annual reports of 5 A-share listed banks in the special economic zones from 2013 to 2018

Table 7.12 Statistics of changes in capital adequacy ratios of 5 A-share listed banks in the special economic zones from 2017 to 2018 (unit: %) 2017

2018

Capital adequacy ratio

Year-on-year change

Capital adequacy ratio

Year-on-year change

BOCOM

14.0

0

14.37

0.37

SPDB

12.02

0.26

13.67

1.65

CMB

15.45

2.15

15.68

0.23

Ping An Bank

11.20

−0.33

11.5

0.3

Bank of Shanghai

14.33

1.16

13.0

−1.33

Average

13.4

0.65

13.64

0.24

Source Annual reports of 5 listed banks in the special economic zones from 2017 to 2018

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The Hidden Worries and Risks of the Financial Industry Have Not Been Eliminated (1) The hidden risks of the banking industry have not been eliminated. Although the non-performing loan ratio of the banking industry has declined, it is still relatively high compared to the level before 2016; although the capital adequacy ratio has increased, the problem of lack of improvement still exists. (2) The expectation of long-term stability and a worry-free atmosphere in the insurance industry has been changed. Due to the combined effect of multiple factors such as intensified market competition, declining premium income growth, excessive growth in claims, and equity investment fluctuation, non-listed insurance companies have generally experienced a trend of decline in the quality of their operations. Among them, the comprehensive solvency of Funde Sino Life and that of Shanghai Life Insurance are both lower than the regulatory red line of 150%; the core solvency of Foresea Life Insurance and that of Funde Sino Life are lower than the regulatory red line of 100%. (3) Internet financial risks are still in a period of accelerated exposure. The number of online lending platforms dropped sharply from more than 2,000 during the peak period to less than 500 at the end of 2018. In Shenzhen, there were 27 online lending institutions that were disconnected, and 71 online lending institutions voluntarily withdrew. With the further refinement of the special measures to rectify Internet financial risks, it is hard to say that the clearance of Internet financial risks has been completed. Even relatively safe Internet insurance companies are under pressure to fall into operational difficulties (see Table 7.13). Table 7.13 shows that the comprehensive solvency indicators of the two Internet insurance companies in the special economic zones have fallen sharply, much higher than the regulatory red line of 150% in 2017, while they were close to or below the regulatory red line in 2018. (4) The phenomenon of “cross-contagion” of risks in the financial industry has increased significantly. Due to the improvement of comprehensive operations and innovation, the accumulation of risks in the financial industry in the special economic zones has shown a trend of spreading from individuals to groups, from a single industry to multiple industries. Table 7.13 Statistics on changes in the comprehensive solvency of two Internet insurance companies in the special economic zones in 2018 (unit: %) Company

Special Economic Zone

2017

2018

Change

Cathay Insurance

Shanghai Pudong

384

127

−257

1an Insurance

Shenzhen

Average

363

175

−189

373.5

151

−223

Source Compiled based on data from the annual reports of the two related insurance companies in 2018

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(100 million yuan)

Deposit and loan balance

175

(Year)

Fig. 7.1 The deposit and loan balance and increase or decrease in local and foreign currencies in the special economic zones from 2015 to 2018. Source The Statistical Bulletin on National Economic and Social Development in the special economic zones from 2015 to 2018

Although the Intensity of “Disconnecting with the Virtual Economy” Is Not Small, the Progress of “Connecting with the Real Economy” Is Still Relatively Slow The Strength of Capital Return Is Unprecedented (see Fig. 7.1) It can be seen from Fig. 7.1 that 2018 was a year with the smallest deposit and loan balance since 2015, which was only 2.5 trillion yuan, a decrease of 457.3 billion yuan from the same period the previous year. The most important reason for this is that the adoption of “disconnecting with the virtual economy” allows non-standard assets to return from off-balance sheet to on-balance sheet, prompting a relative increase in loans.

The Investment Direction of the Returned Capital is not Completely “Connected with the Real Economy” (see Table 7.14) Table 7.14 shows that in 2018, the growth rate of housing-related loans of the 5 listed banks was as high as 18.04%, which was much higher than the average growth rate of 11.6% of the special economic zone banks. The growth of housing loans accounted for 25.56% of the growth of the whole amount of loans in banks, which shows that a considerable part of the capital for “disconnecting with the virtual economy” flowed into the real estate market.

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Table 7.14 Statistics on changes in the housing-related loans of 5 listed banks in the special economic zones in 2018 (unit: 100 million yuan; %) Abbreviation for banks

Year-end mortgage balance

BOCOM

10,075.3

12.3

40.1

9287.6

11.4

25.9

CMB

Year-over-year increase

Proportion of housing-related loan increment in total loan increment

SPDB

5889.9

16.6

23.6

Ping An Bank

1823.6

19.3

10.1

Bank of Shanghai

1194.66

30.59

28.1

Total/Average

2827.06

18.04

25.56

Source The annual reports of 5 A-share listed banks in the special economic zones in 2018. Among them, the data of the Bank of Shanghai is in the interim report in 2018

Although There Are Many Difficulties in Continuing to Move Forward, that Has not Stopped the Pace of Opening up In 2018, although some financial institutions still have problems such as the insufficient capacity to serve the real economy, unclear positioning of intermediary service functions, weak awareness of compliance operations, and low level of practitioners, the pace of the opening-up of the financial industry in the special economic zones has not stalled.

Opening-Up Has Been Intensified In 2018, the China Banking and Insurance Regulatory Commission approved the application of Chiyu Banking Corporation Limited to establish a branch in Shenzhen and Allianz SE to establish Allianz (China) Insurance Holdings Co., Ltd. in Pudong, Shanghai. Among them, the Allianz (China) Insurance Holdings Co., Ltd. is the first wholly foreign-owned insurance holding company approved by the China Banking and Insurance Regulatory Commission, which indicates that the opening-up of the financial industry in the special economic zones has been intensified continuously.

Internal Opening-Up Has Been Intensified In 2018, the most important result of the internal opening-up of the financial industry in the special economic zones was the breakthrough of “open banking”. Marked by the unbounded open bank launched by the Shanghai Pudong Development Bank, API (Application Programming Interface) Bank, it puts product promotion, sales, and customer acquisition under scenarios with no boundaries. Similarly, the Shanghai

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Hua Rui Bank connects with third parties through interfaces and realizes “opening banks in 17 million apps”; WeBank uses third-party platforms or apps to promote financial products.

New Opportunities Facing the Financial Industry in the Special Economic Zones in 2019 Business Opportunities that May Be Brought About by Economic Adjustments Business Opportunities That May Be Brought About by Counter-Cyclical Adjustments for Business Development In 2019, facing the downward pressure of economic growth, the management will have to use monetary and fiscal policies to make timely and appropriate countercyclical adjustments, so as to create a relatively loose monetary policy environment for the operationing of the financial industry in the special economic zones.

Business Opportunities That May Be Brought About by Economic Restructuring for Business Development In 2019, under the influence of the three factors of the transition from the old normal to a new normal, the acceleration of regional economic integration, and the U.S. suppression of Chinese high-tech enterprises, relevant policies will be successively issued to strengthen environmental governance, support the revitalization of emerging strategic industries, and eliminate regional imbalances in economic development. And investment and financing businesses related to these three types of policies will increase rapidly.

Business Opportunities That May Be Brought About by Consumption Upgrades In 2019, affected by Sino-US trade frictions, the economic growth of the special economic zones will be driven more by consumption. Related to this, banking businesses such as loans for consumption, housing mortgage loans, small and micro loans, and credit card services will be further increased.

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Business Opportunities That May Be Brought About by the Aging Population In 2019, the population over the age of 60 in the special economic zones will account for more than 18% of the population, which is typical of an old-age society. This will lead to a further increase in the insurance business in the fields of security for people’s livelihoods such as medical care, health care, and elderly care. Especially when the insurance depth and insurance density indicators are lagging behind those of the developed countries or even under the global average level, with the two major effects of stable economic growth and continuous increase in residents’ income levels superimposed, the construction of elderly care and medical care and social security systems related to life insurance business will usher in a new climax.

Business Opportunities that May Be Brought About by Financial Reform Business Opportunities that May Be Brought About by the Full Implementation of “New Asset Management Regulations” The year 2019 will be the year to implement “new asset management regulations”, “new financial management regulations” and the Measures for the Management of Financial Management Subsidiaries of Commercial Banks. The foreseeable results will include: (1) The financial management business of commercial banks will move toward corporatization. Compared with concurrent operations, there are at least four benefits of the corporatization of financial management business: First, it is conducive to the establishment of self-management and self-financing assessment and incentive mechanisms, thereby isolating the risks of financial management business from the parent company; second, for the financial management business, it is conducive to returning to the origin of asset management; third, it is conducive to establishing a constraint system of “seller’s responsibility” and “buyer’s responsibility” in the financial management market, so as to truly break rigid payment; fourth, it is conducive to leading financial management business toward intensification, specialization, and refinement. In view of the advantages of corporate financial management, coupled with the system allowing financial management subsidiaries to directly invest in the stock market through the issuance of publicly-offered financial products, it will reverse the trend of decline in the scale, revenue, and profit of the financial management business in the special economic zones. (2) The cooperation between financial management subsidiaries of commercial banks and non-banks will be strengthened. Analyzed from the perspective of the cooperation between financial management subsidiaries of commercial banks and securities companies, there are at least three spaces for further expansion, such as purchasing investment research services from securities companies; selling bank financial products with the help of

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business departments and branches of securities companies; and carrying out asset management cooperation with the fixed income line of securities companies and so on. From the analysis of the cooperation between the banks and the Internet platforms, since the financial management subsidiaries of commercial banks can use the Internet platforms to distribute financial products when they issue them, and customers who purchase financial products for the first time do not need to carry out counter risk assessment. This will stimulate the initiative of the Internet platform to sell the financial products of the financial management subsidiaries of commercial banks on a commission basis, and even to seek to get involved in the construction of an investment system for the financial management subsidiaries of commercial banks. Even among competitors (namely the financial management of commercial banks and the public offering fund), there will be the possibility for cooperation. Due to the certain differences in customer groups, talent structure, service capabilities, and product systems, it provides the possibility of establishing a win–win cooperation and resource-sharing mechanism between the two.

Business Opportunities that May Be Brought About by the Launching of the Science and Technology Innovation Board In 2019, with the accelerated development of the Science and Technology Innovation Board, the benefits it will bring to the financial industry in the special economic zones are mainly as follows: First, the volume of securities brokerage business will increase rapidly. On the one hand, because the market expands faster, the number of stocks available will increase; on the other hand, because the price limit is greatly relaxed, it will greatly enhance the activity of stock market transactions, which will lead to an increase in the volume of transactions. Second, the volume of the business of investment banks will increase rapidly. On the one hand, the implementation of the registration system means that the capital market has opened a convenient door for enterprises to direct financing, which will greatly benefit the investment banking business of securities companies; on the other hand, the Sci-Tech Innovation Board allows institutional arrangements with no profit or with weighted voting rights, which will allow more companies to become the service targets of investment banking business. Third, the self-operated business will increase rapidly. On the one hand, when an investment bank sponsors the Sci-Tech Innovation Board, the IPO companies must follow to invest; on the other hand, the emergence of the Sci-Tech Innovation Board has made the portfolio of self-operated businesses of investment banks more diversified and decentralized, which will lead to the emergence of alternative investment subsidiaries, and promote self-operated business operations to develop toward demutualization and professionalization. Fourth, investment consulting services will increase rapidly. Due to the inclusion and expansion of listing standards, it will inevitably increase the difficulty of company valuation and investment, which will relatively improve the guiding function of research reports of securities companies and investment counselors for investors.

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Opportunities that May Be Brought About by Solving Financing Difficulties and the High Cost of Small and Medium-Sized Enterprises In 2019, the problem of difficult and high-cost financing for small and medium-sized enterprises will still be common for the governments and the financial industry in special economic zones. How can this be resolved? The most effective solution is definitely not traditional credit, because it relies on the asset credit or collateral credit of the financing entity, it cannot meet the needs of pure credit, high-frequency, and low credit limit for small and medium-sized enterprises. The most effective solution may be supply chain financing, because it relies on accounts receivable financing, prepaid accounts financing, inventory financing, and related ABS operations. As a result, it can satisfy the need of small and medium-sized enterprises for pure credit, high frequency, and low amounts of credit.

Business Opportunities that May Be Brought About by the Improvement of the Operating Environment Business Opportunities that May Be Brought About by the Expansion of the Financial Management Market On the one hand, the continuous enhancement of the concept of investment and financial management by the governments, enterprises, and resident families in the special economic zones will encourage more economic entities to join the ranks of investment and financial management; on the other hand, as the disposable income of residents in the special economic zones continues to increase, especially the number of high-net-worth individuals continues to rise, the demand for investment and financial management in the special economic zones will show an increasingly multi-layered trend. There are both capital-guaranteed investment and financial needs and family wealth inheritance investment and financial needs; there are both small investment and financial management needs from the ordinary people and huge investment and financial management needs from local tyrants; there are both wealth appreciation needs and wealth preservation needs; there are both wealth creation needs and inherited wealth needs; and there are both domestic deployment needs and overseas deployment needs. Correspondingly, the investment and financial management market services are also showing an increasingly multi-layered trend: there are both public financial management services and private wealth management services; both financial management services with higher levels of risk and capital-guaranteed and value-preserving financial management services; there are both PE, VC, and family trusts; and there are both onshore wealth management services and offshore wealth management services.

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Business Opportunities that May Be Brought About by the Purification of the Business Environment In 2019, in order to consolidate the dam to avoid any systemic financial risks, the speed of clearing the shadow banking business and defective P2P platforms in the special economic zones may be further accelerated. As a result, the overall operations of the financial industry in the special economic zones will become increasingly standardized, which will not only help to ensure the safety of depositors and investors’ funds, but it will also help the compliant financial institutions in the special economic zones to concentrate on their operations.

Business Opportunities That May Be Brought About by Fintech Innovation In 2019, faced with increasingly fierce market competition, financial institutions in the special economic zones will increase the penetration of financial technology. They will not only establish independent financial technology companies, management teams, and operating mechanisms, but they will also widely adopt tools such as the Internet, big data, cloud computing, and artificial intelligence to build “cloud + API + blockchain” and “data + AI” ecosystems, so as to provide safer, more convenient, more effective and more inclusive financial services to satisfy the demand in the special economic zones.

Business Opportunities That May Be Brought About by Mergers and Reorganizations The year of 2019 is not only a period of intensification of polarization, but also a climax of reshuffling. With the continuous increase in failure and clearance, a large number of financial institutions on the brink of elimination need to get out of trouble or regain vitality through mergers and reorganizations. Some leading financial institutions can take advantage of mergers and follow the trend to grow bigger and stronger. This will especially give non-performing asset management companies more opportunities to dispose of non-performing assets, such as helping the platforms to design settlement plans and debt-for-physical business, helping the survived P2P platforms to move toward “compliance” and to connect with the depository banks, etc.

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Business Opportunities that May Be Brought About by Intensified Opening-Up In 2019, there are mainly two important policies for opening up further: First, the policy of raising the proportion of foreign investment in the financial industry of the special economic zones will be implemented at a faster pace, and the foreign-funded institutions with a good reputation and credit, characteristics and expertise will enter the financial industry in the special economic zones. Second, the policy of easing the access of foreign investment into the capital market of the special economic zones will be implemented at a faster pace. For example, with the implementation of open policies such as A-share included in “MSCI Emerging Market Index” and “FTSE Russell International Index”, Shanghai-London Stock Connect, and SSE-JPX ETF Connectivity, there will be more international investors to participate in the capital market of the special economic zones. As a result, there will be more opportunities for the financial industry in the special economic zones to provide financial services for foreign investors.

New Challenges Facing the Financial Industry in the Special Economic Zones in 2019 Challenges in Expanding the Scale Subject to the Continued Slowdown in Economic Growth (see Fig. 7.2) Figure 7.2 shows that in 2018, the average GDP growth rate of the 7 special economic zones was only 6.21%, and they continued to operate in a downward trend, and there was no obvious signal to stop the decline. The continued slowdown of economic growth will inevitably make it more difficult to develop the financial industry in the special economic zones, which will lead the indicators such as operating revenue, operating profit, and financial industry-added value to go from bad to worse.

Subject to Increased Difficulty in Capital Replenishment On the one hand, with the strengthening of financial supervision, higher net capital, or capital adequacy requirements have been put forward for the operations of the financial industry in the special economic zones; on the other hand, as the interest spreads between deposit and loan continue to narrow and the rate of return on equity capital continues to decline, the attractiveness of the financial industry in the special economic zones to private capital has been declining, and the overall valuation level has been declining, too.

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GDP average growth rate

2012

2013

2014

2015

2016

2017

2018 (Year)

Fig. 7.2 Statistical chart of the changes in the economic growth rate in the special economic zones from 2012 to 2018. Source The Statistical Bulletin on National Economic and Social Development in the special economic zones from 2012 to 2018

Subject to Increased Competition With the relaxation of the entry barriers for foreign and domestic capital, the number of financial institutions in the special economic zones has been increasing. Those financial institutions with a small scale and limited credit, relying on high leverage, regulatory arbitrage, and blind expansion to expand, are not only unsustainable but also in danger of being eliminated.

Subject to Intensified Disintermediation On the one hand, with the deepening of the aging of the population in the special economic zones, the growth of household savings has been weak, leading to a significantly lower growth rate of deposits than the growth rate of loans; on the other hand, with the enhancement of public investment and the concept of financial management, the stickiness of banks, and other financial institutions to customers decreases.

Subject to the Constant Retreat of the Tide In 2019, the tide of money supply will continue to recede, and the growth rate will run in single digits; the tide of shadow banking and idle funds will continue to recede, and the accelerated return of off-balance sheet funds is still on its way; the tide of finance deviating from intermediary properties will continue to retreat, and returning to the origin of promoting the development of the real economy will lead to inevitable abandonment of some non-main businesses; the tide of expansion of the financial market will continue to recede, as a result, not only will interbank financial management shrink but also the overall scale of financial management will decline.

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Subject to the Shrinking Scale of Housing-Related Loans On the one hand, with the tightening of the national macro-control, the risk of housing-related loans will rise, and housing-related loan behaviors will become relatively prudent; on the other hand, the leverage ratio of the residential sector is approaching the limit of 50%. The growth potential of housing-related loans has peaked.

Challenges in Improving Quality and Efficiency Subject to a Shortage of High-Quality Assets The economic downturn will inevitably reduce the number of high-quality financing targets, which will greatly increase the difficulty for banks, securities, trusts, insurance, funds, leasing institutions, and other financial institutions to find satisfactory financial services.

Subject to the Weak Foundation of the Decline in the Non-performing Loan Rate In 2018, although the asset quality of the banking industry has improved significantly, which accounts for more than half of the financial industry in the special economic zones, the foundation is still not strong enough. The reasons are as follows: First, the decline in the non-performing loan ratio is not mainly due to the decrease in the scale of non-performing loans as the numerator, but to the expansion of the scale of loans as the denominator, that is, the return of off-balance sheet credit and non-standard assets to the balance sheet. As the pace of return to the balance sheet slows down, the dilution effect of loan expansion will be significantly weakened. Second, the implementation of the policy of renewing loans without repayment has concealed the exposure of some non-performing loans. Third, under the heavy pressure of strict supervision, some banks have stepped up their efforts to write off non-performing loans, resulting in a decline in the ratio of non-performing loans. The situation in 2019 is not optimistic: First, due to the impact of economic structural adjustments, some industries with severe overcapacity still have some non-performing assets that need to be further cleared; second, affected by changes in the international political and economic environment, some export-oriented enterprises are facing more difficulties in their operations, and the probability of newly increased non-performing assets will rise; third, as the standard for identifying non-performing assets increases, more non-performing assets will be exposed. Fourth, due to the introduction of new regulations on the ratio of provision coverage and the ratio of loan provisions, the banking industry in the special economic zones will continue to devote greater efforts to disposing of non-performing assets. Fifth, as the impetus for housing prices to

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continue to rise rapidly is weakened, the risk exposure of the real estate market in the special economic zones will be accelerated, which will lead to the increase in the scale of non-performing housing-related loans in the banking industry in the special economic zones.

Subject to the Obvious Decline in the Quality of the Assets of Small and Medium-Sized Financial Institutions Since the equity structure of small and medium-sized financial institutions is more complex, corporate governance is worse, their mood of overtaking is more urgent, and the service targets are the groups most affected by the regional economic downturn and supply-side reforms, etc., these will lead to more serious problems such as connected transactions of small and medium-sized financial institutions, embezzlement of financial institution funds by major shareholders and fund misallocation, and this will cause a greater probability of asset quality decline.

Challenges Caused by Insufficient Service Capacity The Capability for Services Cannot Keep up with the Requirements of Market Changes (1) The service capability cannot meet the requirements of scientific and technological progress. The rapid advancement of financial technology has made it increasingly difficult for the traditional business philosophy and business model of the traditional financial industry to adapt to the objective requirements of the advancement of financial technology. (2) The capability for services cannot meet the requirements of the new asset management regulations. The existing capabilities for services of financial institutions in the special economic zones cannot meet the capabilities for investment research, those for asset allocation and for investor suitability management required by the new asset management regulations. (3) The capacity for services cannot meet the requirements of the approval system of the Science and Technology Innovation Board. The current model of the investment banking business of the financial industry in the special economic zones is the role of underwriters. However, after the trial of the registration system on the Science and Technology Innovation Board, the model of the investment banking business of the financial industry in the special economic zones must be transformed into a real investment bank role, thereby proposing new challenges for the existing financial industry: First, it will impose a major impact on the traditional valuation theories and methods of stock investment in the financial industry in the special economic zones; second, it will put forward new requirements on the traditional operating concepts and procedures of the underwriting business for the issuance of stocks in the financial industry in the special economic zones; third, it will pose new challenges to the traditional consulting business of financial

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industry stock trading; fourth, it will pose new challenges to the capital capability and investment judgment ability of the financial industry in the special economic zones.

The Capability for Services Cannot Meet the Changing Requirements of Customers Thanks to the long-term mutual services and support provided by the elderly highnet-worth individuals, the large financial institutions in the special economic zones have established a high sense of identity and loyalty with them. Therefore, these institutions in the special economic zones have high proficiency in expanding the financial services of high-net-worth individuals such as private banks, family trusts, and family insurance for middle-aged and elderly clients, but there are few ways to firmly attract young ordinary people who have just entered colleges or the workplace, resulting in endless consumer credit innovations or bubbles of small loans, online loans, campus loans, and cash loans for ordinary people, and some are entangled by Internet finance companies such as Ant Financial and WeChat Finance.

Challenges in Risk Control Subject to External Shocks One challenge is subject to interference from various external factors. The continuous world economic and trade frictions have made the psychological expectations of the global market very pessimistic, leading to weak global economic growth and shrinking global financial demand, especially the continuous economic, trade, technological, and military frictions between the two major economies of China and the United States, which will increase external uncertainties, lead to frequent and large fluctuations in the stock market, gold market, foreign exchange market, and futures market, and bring more problems to the operationing of the financial industry in the special economic zones. The second challenge is subject to the impact of lack of experience. In the process of increasingly opening up domestically and abroad, the complexity and contagion of financial risks will increase accordingly. Regarding how to deal with the hype of cross-border and cross-institutional capital inflows and outflows and “hot money”, regulators of the financial industry in the special economic zones do not have much practical experience.

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Subject to Internal Shocks First, it is subject to the impact of the downturn on the growth of the real economy. The differentiation among different regions, different industries, and different companies has intensified. The customer resources, business models, and risk prevention and control of the financial industry in the special economic zones are bound to face more severe challenges. In the context of frequent fluctuations in the external market, coupled with large internal asset bubbles, and high leverage ratios, the number of incidents such as the takeover of small and medium-sized banks, failure of trust products and P2P online lending platforms, and bond defaults will greatly increase, and it will be easy to form mutual contagion and resonance, which will cause more dominant risks in the property market, stock market, futures market, bond market, and credit market. Second, it is subject to the impact of the “shared debt” issue. A credit consumer not only opens multiple credit cards in multiple banks but also applies for cash loans on multiple online lending platforms at the same time, with loans on multiple platforms. Once a certain platform fails, a chain reaction of credit risks will be formed. Third, it is subject to the impact of increased cross-boundary business. Cross-boundary allows the traditional financial industry to obtain the big data resources of user banks required for credit granting. However, how to protect the security and privacy of customer information is a topic that cannot be bypassed, especially how to supervise “open banking”. Under the premise of having not formed a unified standard, too many cross-boundaries may make risk management and control more difficult. Fourth, it is subject to the impact of high leverage in the non-financial and residential sectors. Affected by the dual factors of the rapid decline in nominal GDP growth and the excessively rapid increase in debt, the leverage ratio of the nonfinancial and residential sectors of the special economic zones has rapidly moved from emerging market economies to advanced economies, which will lead to the deterioration of banking assets and significantly increase the difficulties of maintaining economic and financial stability in the special economic zones. Fifth, it is subject to the impact of breaking the rigid payment. After breaking the rigid payment expectations, some small and medium-sized financial institutions in the special economic zones with fewer qualifications will find it more difficult to raise funds in the industry. Once the flow of interbank fund-raising of the small and medium-sized financial institutions is cut off, they will first sell their assets with high liquidity for cash, leading to an increase in selling pressure on the market of liquid fixed income and equity assets, and spreading this liquidity panic to large-scale financial institutions with higher qualifications.

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New Measures to Be Taken in the Development of the Financial Industry in the Special Economic Zones in 2019 Focus on “Real” and Spare No Effort That is to serve the real economy as the purpose of development, and know more about “connected with the real economy”. The first measure is to continuously optimize and adjust the market, financing and institutional systems, and products and structures according to the multi-level development needs of the real economy of the special economic zones. As a result, various asset management products such as credit, securities, insurance, trust, and leasing products can be widely covered, multi-level, different, and characteristic. The second measure is to provide more standardized, more transparent, more open, more dynamic, and more efficient financial services through technological innovation in accordance with the need of improving the quality of the growth of the real economy in the special economic zones. In light of the key points of the growth of the special zone real economy, the third measure is to shift the focus of services to major strategic fields, fields with infrastructure shortcomings, regional economic development areas such as the Guangdong-Hong KongMacao Greater Bay Area, the Yangtze River Economic Belt, and the Beijing-TianjinHebei integration area, the field of the transformation and upgrading of consumption and the traditional manufacturing industry, the field of energy conservation and environmental protection, and industries and enterprises that are in line with the direction of the development of the industries in the special economic zones, with advanced technology and marketable products. Fourth, in light of the pain points of the steadily increasing downward pressure on the real economy in the special economic zones, it is necessary to intensify the reverse adjustment of the economy, speed up credit provision, support the issuance of bonds by private enterprises, and reduce unnecessary regulatory interventions on the capital market; encourage more innovation-based enterprises to raise funds on the capital market. Fifth, based on the difficulty of the asymmetry between the supply of financial services in the financial industry in the special economic zones and the demand for financial services of the real economy, it is necessary to abandon the widespread state-owned only and largescale only service concept of “despising the poor and currying favor with the rich” and “focusing on big enterprises and ignoring small ones”, so as to establish a model that matches returns and risks, and introduce more exclusive or inclusive financial and credit products such as “small enterprise loans”, “bank + tax + insurance”, and “investment + loan + insurance” for small and micro enterprises and technological innovation enterprises.

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Focus on “Light” and Spare no Effort That is to pursue high-quality development with light burden. One measure is the “light capital”. On the one hand, because there are still some non-standard businesses that will continue to return from off-balance sheet to on-balance sheet in 2019, it will further increase the consumption of capital; on the other hand, the return on capital investment in the financial industry will further decline, and channels for replenishing capital will be blocked. Therefore, in 2019, only by vigorously expanding businesses that do not consume capital can the financial industry in the special economic zones achieve sustainable development. The second measure is the “light asset”. In 2019, due to the replenishment of unsustainable capital, the rate of expansion of the scale of assets will inevitably decline further. If the financial industry in the special economic zones plans to maintain the original net profit growth rate and continue to move forward, it must intensify the degree of the transformation from asset holders to asset managers, and vigorously expand asset-light businesses such as asset management, investment banking, asset securitization, asset trusteeship, settlement receipts and payments, and consulting. The third measure is the “light debt”. Under the general direction of the debt level of national economic entities, the financial industry of the special economic zones should reduce its debt ratio.

Focus on “New” and Spare no Effort That is to increase the penetration rate of financial technology to promote transformation and upgrading. One measure is to further improve the level of financial technology empowerment. First of all, it is necessary to comprehensively apply big data tools to the construction of financial service platforms, and take advantage of big data management methods to build models of automatic loan credit, monitor financial industry transactions in real time, and reflect the business operations of the financial industry in real time. Next, it is necessary to comprehensively apply the methods of industrial chains to the construction of financial service platforms, and integrate the network data platform with the industrial chain, supply chain, and value chain financing of various industries as much as possible, so as to comprehensively improve the efficiency of the services of the financial platform of the industrial chains. Then it is necessary to comprehensively apply artificial intelligence methods to the construction of financial service platforms; fill in accounts automatically for enterprises with robotic process automation technology, liberate the productivity of outlets with intelligent teller machines, and carry out image recognition of accounting files with optical character recognition technology. The second measure is to focus on creating a digital financial ecosystem without boundaries. It is necessary to work with partners such as financial technology companies, suppliers, and third-party developers to reconstruct the financial digital ecosystem, build the whole financial industry into a super connector and platform in the special economic zones, implant services to the government, institution and customer end, and integrate services into scenarios of production, circulation, and consumption. Consequently, this can make it possible

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for customers to find the best financial service solutions that suit them through open products and services, transactions and processes, data, and algorithms. The third measure is to pay attention to the introduction and training of financial technology compound talents. In particular, great importance must be attached to the introduction and training of high-level and compound talents who are proficient in financial principles and technical applications such as big data, cloud computing, blockchain, and artificial intelligence.

Focus on “Steady” and Spare No Effort That is, to maintain the overall stable operationing of the financial industry. (1) The basis for the stability of the financial industry must be clarified. According to international experience, the financial industry must be built on four foundations for stable and long-term development: The first one is sufficient capital. In order to ensure the long-term stability of the financial industry in the special economic zones, it is necessary to broaden the channels of capital replenishment as soon as possible and raise the overall level of capital adequacy ratios. The second one is the degree of leverage. All financial institutions must control the leverage ratio within a certain range, among which, for institutions engaged in the credit business, the leverage ratio should not exceed 10 times. The third one is well-founded credit. Even the credit granting of the Internet financial industry cannot be without credit and scenario constraints. It should take industry chain credit and full-scenario credit as the basis for credit granting. The fourth one is to control risks well. It is not only necessary to use traditional methods such as pre-loan investigation, in-loan review, and post-loan inspection to filter risks, but also to establish powerful processing technologies such as big data, cloud computing, and artificial intelligence to control risks and reduce the rate of non-performing loans. (2) It is necessary to clarify the industrial characteristics of the financial industry in the special economic zones. There are two “2&8” phenomena in the financial industry in the special economic zones: one is that in terms of financial assets, the assets of the banking industry account for about 80%, while those of non-bank financial institutions account for only about 20%; the other is that the assets of large financial institutions account for about 80%, while those of small and medium-sized financial institutions only account for about 20%. Therefore, to stabilize the financial industry of the special economic zone, we must first stabilize the banking industry; secondly, we must stabilize large financial institutions. (3) It is necessary to clarify the source of the operational risks of the financial industry in the special economic zones. The potential operational risks that lead to the instability of the financial industry in the special economic zones mainly come from three aspects: The first one is that the leverage ratio is too high. Since the banking industry is subject to multiple constraints such as the ratio of capital adequacy, deposit reserve, loan-to-deposit ratio, bad debt provision, etc., the increase of the ratio of leverage will be greatly restricted, and the probability of the outbreak of systemic risks is relatively small. By contrast, the non-banking industry lacks the strict constraints of the above-mentioned framework, and the greater the flexibility of

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the increase in the ratio of leverage is, the higher the probability of risk. Therefore, the problem of excessive leverage should be classified and implemented; the expansion of productive and consumption leverage in the banking industry should be given a high degree of tolerance, while strict supervision and severe punishment should be carried out to the non-banking industry for the increase in the ratio of investment leverage. Second, it is an illegal operation. In order to prevent the risks brought about by non-compliant operations, the financial industry in the special economic zones must improve its governance structure and institutional system, and accept the daily supervision of financial regulatory agencies. Third, it is the deviation from the original idea of business. In order to prevent financial institutions from deviating from the original idea of intermediary to lead to financial risks, the asset management and wealth management of the financial industry in the special economic zones should adhere to the original idea of “entrusted by others and managing wealth on behalf of them”; P2P platforms should adhere to the original idea of matching intermediaries; insurance companies should stick to the original idea of insurance. (4) The vision of stabilizing financial business must be broadened. The first measure is to establish and improve the cross-financial business risk monitoring mechanism and risk pre-warning system to achieve precise monitoring and pre-warning, and to remove the hidden dangers and fuse of risks in advance. The second measure is to make use of financial technology to introduce big data and artificial intelligence into the intelligent risk control platform to improve the overall level of the management of systematic risks and capabilities for proactive management. The third measure is to improve the comprehensive information statistics and accurate release system of the financial industry in the special economic zones. The fourth measure is to make use of advanced monitoring technology and payment and settlement methods to timely monitor international and domestic, online, and offline capital flows, so as to improve the ability to prevent and control financial risks and participate in international financial governance under open conditions.

Focus on “Comprehensive” and Spare No Effort That is to improve the capabilities for comprehensive financial services. First, it is imperative to appropriately increase and optimize the main structure of the industry. The financial industry in the special economic zones should closely follow the two core themes of “smart + professional”, and strive to create a three-dimensional system of collaborative financial services of “online + offline + call center”. It is necessary to not only continuously improve the service function including mobile banking services, corporate mobile banking services, and online banking services, but also reshape the service image of offline outlets, optimize the distribution of physical outlets, and improve the efficiency of outlet services. Second, it is necessary to establish a popular, simplistic, diversified, and standardized system of product supply; proceed from the needs of the industrial chain and carry out the layout of financial services according to the procurement, production, and sales processes, so as to provide companies with a financial service management platform integrating the

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management of monetary funds and accounts receivable and payable, payment and settlement, trade financing, operating capital supervision, and financial management; provide exclusive financial services such as operating capital forecasting, liquidity analysis, and financial planning reports based on the operating characteristics of different enterprises.

Focus on “Cross” and Spare No Effort That is to broaden the space for business development by opening up various barriers between domestic and overseas, between inside the industry and outside the industry, and within the industry. First, expand the cross-border degree of business services. While attracting more foreign banks, insurance companies, securities companies, fund management companies, and other financial institutions to set up corresponding financial systems and supply financial products in the special economic zones, it is necessary to build an “Internet + cross-border financial business” platform and explore a model of cross-border business cooperation in order to promote corporate trade liberalization and facilitation. In terms of infrastructure projects, financial services such as diversified cross-border settlement, guarantee, credit support, cash concentration, and insurance cover also need to be introduced. Second, expand the cross-boundary degree of business services. While further expanding the in-depth cooperation between the traditional financial industry and Internet companies on fundraising, account opening, payment and settlement, and inclusive finance, it is also necessary to further expand the depth of cooperation of banks, securities, insurance, trust, and fund companies on investment banking services such as bond business, mergers and acquisitions business, and asset securitization. Third, expand the cross-industry degree of business services. While the banking industry in the special economic zones provides incubation loans for start-ups to increase the depth of industry–finance integration, the securities industry should closely follow the theme of the pilot registration system for the Science and Technology Innovation Board, and explore cooperation among investment banks, research institutes and alternative investment subsidiaries of securities companies; the Internet finance industry needs to increase the depth of industry-finance integration, break up the barriers between the scenarios and data of logistics, capital flow, and information flow in Internet and big data platforms and the bank credit, and embed loans into private car operation scenarios, core enterprise supply chain scenarios, and specific group entrepreneurship scenarios to solve the problem of financing difficulties for small and micro enterprises.

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References Annual reports of listed financial enterprises in the special economic zones from 2013 to 2018 Statistical Bulletin on National Economic and Social Development in the special economic zones from 2012 to 2018 Yitao T (2014) Annual Report on the Development of the Special Economic Zones in China (2013). Social Sciences Academic Press (China) Yitao T (2015) Annual Report on the Development of the Special Economic Zones in China (2014), Social Sciences Academic Press (China) Yitao T (2016) Annual Report on the Development of the Special Economic Zones in China (2015), Social Sciences Academic Press (China) Yitao T (2017) Annual Report on the Development of the Special Economic Zones in China (2016), Social Sciences Academic Press (China) Yitao T (2018) Annual Report on the Development of the Special Economic Zones in China (2017), Social Sciences Academic Press (China) Yitao T (2019) Annual Report on the Development of the Special Economic Zones in China (2018), Social Sciences Academic Press (China) Zhong W (2019) Ten financial Black Swans in the second half of 2019. 21st Century Business Herald, June 29

Chapter 8

Report on the Development of Cultural Industries in China’s Special Economic Zones Yaqin Zhong and Chunlin Liao

In 2018, the Communist Party of China and the government successively introduced a series of related policies to lead the correct direction of the development of the domestic cultural industries, including the Opinions on the Implementation of the Rural Revitalization Strategy, the Opinions on the Implementation of the Revolutionary Cultural Relics Protection and Utilization Project (2018–2022), the Guidelines on Promoting the Development of All-for-One Tourism, the Guidelines on Promoting Models of Government and Private Capital Cooperation in the Tourism Field, the Working Measures for the Outward Transfer of Intellectual Property Rights (Trial), the Classification of Culture and Related Industries (2018), the Notice on the Implementation of Cultural Market Management Policies in the Pilot Free Trade Zone, the Guidelines on the Development of the Digital Economy and the Stabilization and Expansion of Employment, and the Guidelines on Accelerating the Development of the Sports Competition Performance Industry. With the strong support of the Communist Party of China and the government, domestic cultural and related industries are moving the trend upward and moving forward toward the developmental goal of becoming pillar industries in the national economy in 2020. In 2018, the development of cultural industries across the country maintained a steady growth trend, and the digital cultural industry is still gaining momentum. The integrated development of culture and tourism has become a new highlight for promoting economic growth and upgrading the structure of consumption. According Zhong Yaqin, Distinguished Associate Research Fellow at the Institute for Cultural Industries, Shenzhen University, Ph.D. (Postdoctoral), Master Supervisor. Liao Chunlin, Postgraduate at the Institute for Cultural Industries, Shenzhen University. This paper is the phased research result of the 2018 Youth Project of the National Social Science Fund of China “Research on the Production of Literary Cross-Media from the Perspective of ‘Comparative Text Media’ Theory” (No. 18CZW005). Y. Zhong (B) · C. Liao The Institute for Cultural Industries, Shenzhen University, Shenzhen, China e-mail: [email protected] © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_8

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to data released by the National Bureau of Statistics, in 2018, the operating revenue of enterprises above the designated size in cultural and related industries in China increased by 8.2% from 2017 on a comparable basis, reaching 8.9257 trillion yuan; among them, the cultural service industry developed relatively more rapidly, and the growth rate of operating revenue was 15.4%, which was as high as 3.4454 trillion yuan.1 Data shows that culture and related industries continue to play a role in promoting the optimization and upgrading of the overall industrial structure, among them, the supporting benefits of the cultural service industry are becoming more prominent for the economy and society. Shenzhen and Zhuhai in the special economic zones are important components of the “9+2” city group. With the continuous advancement of the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, the Pan-Pearl River Delta region has also ushered in a golden period of development. How to seize the historical opportunity in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area and drive local economic growth and industrial upgrading has become a major issue facing the special economic zones. In this context, the special economic zones actively matched up with the national policy plans, relying on their own advantages to carrying out the layout of the cultural industries, and they have achieved a series of developmental results.

Development of Cultural Industries in the Special Economic Zones Shenzhen Special Economic Zone Shenzhen has continued to implement various programmatic planning policies during the period of the “Thirteenth Five-Year Plan”, and to stride forward in the direction of enhancing its comprehensive strength in the cultural industries and building a culturally strong city. In 2018, the overall scale of cultural industries in Shenzhen rose steadily. The added value of cultural and related industries above the designated size increased by 6.3% compared with the previous year, reaching 156.052 billion yuan. The added value of the digital economy industry in 2018 increased by 3.8%, reaching 124 billion yuan.2 The strength of Shenzhen’s cultural innovation is very strong, and the digital economy industry represented by animation and games continues to grow steadily, and it maintains the leading advantage in the cultural industry across the country.

1

National Bureau of Statistics: Operating revenue of Enterprises above the Designated Size in Cultural and Related Industries Increased by 8.2% in 2018. http://www.stats.gov.cn/tjsj/zxfb/201 901/t20190131_1647735.html, 2019-01-31. 2 Shenzhen Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Shenzhen Municipality in 2018. http://www.sz.gov.cn/sztjj2015/xxgk/zfxxgkml/ tjsj/tjgb/201904/t20190419_16908575.htm, 2019-04-19.

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In 2018, the environment of policies regarding the cultural industry in Shenzhen continued to be optimized. The Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality completed a new round of revisions to the Innovation and Development Policy for Shenzhen’s Cultural Industries. The municipal government encouraged original research and development and invested more than 150 million yuan in subsidizing cultural and creative enterprises and promoting continuous innovation in cultural industries.3 In addition, the Shenzhen Municipal People’s Government has also launched a series of norms and policies about cultural and related industries to strengthen the management of the cultural market and promote further development of cultural industries. Relevant policies include the Interim Measures for Honest Operation of Entities in the Cultural Market in Shenzhen, the Measures for the Management of Experts Committee on the Protection of Immovable Cultural Relics (Trial), and the Measures for the Acceptance of Prefunded Projects of the Special Fund for the Development of Cultural and Creative Industries in Shenzhen, etc. Compared with 2017, Shenzhen has improved its provision of public cultural services. In 2018, the total collection of public libraries in Shenzhen increased by 5.3% over 2017, reaching 42.958 million volumes (pieces); the number of film projection companies in the city increased by 14.4% to 286.4 In addition, Shenzhen has also continued to strengthen the construction of public welfare cultural venues such as museums and art galleries, as well as radio and television stations. In 2018, Shenzhen achieved remarkable results in business integration and innovative development of the cultural industries. It has continued to carry out the selection of outstanding emerging business enterprises, held industrial exchange activities such as game developer conferences, promoted the construction of an international creative industry incubation center, and successfully held many international cultural industry exchange projects such as the “Edinburgh-Shenzhen Smart Innovation Week in 2018” and the “1980” Sino-Mexico Culture and Trade Exchange Conference. In addition, the industrial development model of “culture+tourism” of Shenzhen is progressing rapidly to promote the two-way deep integration of culture and tourism. And tourism is increasingly improving in system construction, brand image, and service levels. New progress has been made in the construction of major tourism projects such as “Dapeng New Area Xinda Tourism” and “Golden Sand Bay International Park”. Cultural tourism communities such as Gankeng Hakka Town, Mission Hills Print Artists Village, and Dalang Fashion Town have become models of culture and tourism integration. Among them, Gankeng Hakka Town was successfully selected as the second batch in the list of the Culture and Tourism Integration Development Demonstration Zones in Guangdong Province in 2018. At 3

Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality: Summary of the Work of the Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality in 2018. http://www.sz.gov.cn/wtlyjnew/xxgk/ghjh/ndgzjhjzj/201904/t20190408_16749624.htm, 2019-0408. 4 Shenzhen Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Shenzhen Municipality in 2018. http://www.sz.gov.cn/sztjj2015/xxgk/zfxxgkml/ tjsj/tjgb/201904/t20190419_16908575.htm, 2019-04-19.

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the same time, Shenzhen actively participated in regional tourism cooperation such as the Tourism Federation of Cities in the Guangdong-Hong Kong-Macao Greater Bay Area, and participated in a number of large-scale international tourism exhibitions in Shanghai, Guangdong, Hong Kong, Macao, Taiwan, etc., and successfully carried out the “May 19th” China Tourism Day activities; in addition, the tourism service team in Shenzhen has been further expanded, and the professional training of tourism personnel has been improved, and the number of tourism volunteer participants increased to 6,600, and the overall level of quality and services of tour guides and team leaders has further improved. According to data released by the Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality, the number of tourists in Shenzhen in 2018 increased by 5.97% compared with 2017, reaching 139 million; the overall revenue of the tourism industry increased by 8.32% compared with the previous year, reaching 160.9 billion yuan.5 In 2018, the comprehensive strength of cultural industries in Shenzhen continued to increase. The Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality organized the identification of the “Top 100 Cultural and Creative Enterprises”, and carried out the selection and investigation of the top ten export enterprises in the cultural and creative industries and the outstanding emerging cultural and creative enterprises in Shenzhen. The top 100 cultural and creative enterprises such as Tencent, Fantawild, Skyworth, Overseas Chinese Town Group, and other outstanding cultural and creative enterprises have great strength and continue to play a leading role. Moreover, the construction and management of cultural industry clusters are more standardized. The municipal government continues to improve the methods of evaluation and assessment of cultural and creative industrial parks, to guide and standardize the operations of cultural industrial parks in the city, and to promote the maximization of industrial agglomeration effects. In 2018, the China (Shenzhen) New Media Industrial Park and the University Creative Park cluster area obtained the qualification to establish the Provincial Cultural Industry Demonstration Park. In addition, the 14th Shenzhen International Cultural Industries Fair in 2018 was successfully held. With the theme of “celebrating the 40th anniversary of reform and opening-up”, the fair attracted 7.33 million people, an increase of 10% compared with the previous year.6 And enterprises from 42 countries and regions were in the fair. “The Belt and Road International Hall” was undoubtedly the fair hall with the highest level of international participation, with a total of 40 countries and regions involved, an increase of 5 from that of the previous year, further consolidating its position as the “No.1 Cultural Products Trade Fair” in China. The Shenzhen International Cultural Industries Fair also announced the top 30 national cultural enterprises, 5

Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality: Summary of the Work of the Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality in 2018. http://www.sz.gov.cn/wtlyjnew/xxgk/ghjh/ndgzjhjzj/201904/t20190408_16749624.htm, 2019-0408. 6 Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality: Summary of the Work of the Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality in 2018. http://www.sz.gov.cn/wtlyjnew/xxgk/ghjh/ndgzjhjzj/201904/t20190408_16749624.htm, 2019-0408.

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and the Overseas Chinese Town Group and Fantawild were in again. Moreover, as an extension of the Shenzhen International Cultural Industries Fair, the China (Shenzhen) Cultural Industries Fair Macao Expo in 2018 was successfully held. With the theme of “Culture + Digital Creativity” and “Culture + Tourism”, the expo organized a number of cultural and creative works to show in the Macao International Trade and Investment Fair. As a result, the influence of the Shenzhen International Cultural Industries Fair continued to expand.

Zhuhai Special Economic Zone With a beautiful natural environment, a superior location, a pleasant climate, and rich historical sites, Zhuhai has innate advantages in developing the tourism industry. According to relevant data, the regional GDP of Zhuhai in 2018 increased by 8.0% compared with 2017, reaching 291.474 billion yuan; the total revenue of the tourism industry increased by 26.8% compared with the previous year, reaching 46.616 billion yuan, a great increase compared with that of 2017 (16.0%). Data shows that the stimulus effect of tourism on Zhuhai’s economy is more significant. Relevant data shows that in 2018, the number of inbound tourists in Zhuhai increased by 2.9% to 5.1373 million and the foreign exchange income brought by it increased by 21.3% to 1.468 billion U.S. dollars; the number of domestic tourists for the year increased by 9.1% to 37.9758 million, with the domestic tourism revenue increasing by 29.0%, as high as 36.899 billion yuan.7 With the developmental trend of increasingly crossboundary integration of the cultural industries, Zhuhai continues to broaden the boundaries of its own cultural industries, guide the in-depth development of the “culture + tourism” industrial model, create a number of competitive cultural tourism projects such as the Zhuhai Grand Theater, the China (Zhuhai) International Circus Festival, the China International Aviation and Aerospace Exhibition, etc., to provide tourists with cultural tourism products with cultural connotations. According to the Plan on the Development of the Cultural and Creative Industry of Zhuhai Municipality during the Period of the Thirteenth Five-Year Plan (2016), Zhuhai will focus on the layout of high-tech industries such as cultural tourism, the film and television industry, and the digital content industry during the period of the “Thirteenth Five-Year Plan”. The Zhuhai Municipal Government has continuously increased investment in cultural industries in recent years. In 2018, the growth rate of culture, sports and media expenditures was 24.5%,8 the amount of expenditure was 959 million yuan, and the growth rate was much higher than the average. 7

Zhuhai Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Zhuhai Municipality in 2018. http://www.stats-zh.gov.cn/tjsj/tjzl/tjjpcgb/201904/ P020190402320663300111.pdf, 2019-03-28. 8 Zhuhai Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Zhuhai Municipality in 2018. http://www.stats-zh.gov.cn/tjsj/tjzl/tjjpcgb/201904/ P020190402320663300111.pdf, 2019-03-28.

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In addition, the district-level government represented by Doumen actively cooperated with the municipal government’s planning measures on the development of the cultural and creative industry, and successively introduced new regulations for the cultural industries. In August 2018, the Doumen District Government launched the Strategic Plan for the Development of Cultural Industries in Doumen District, Zhuhai (2018–2030), focusing on creative design, modern media, digital animation, cultural software, cultural tourism, high-end auxiliary services, and cultural high-end intelligent manufacturing to build a system of high-end cultural industries. The Doumen District plans to complete the construction of 3–5 provincial-level cultural industry clusters in 2020 and build 1–2 cultural industry demonstration bases. By then, the added value of its cultural industries is expected to have reached 1.5 billion yuan. In recent years, the cultural industries in Zhuhai have undergone transformation and upgrading, and the industrial ecology has shifted from a decentralized and independent industrial model to an agglomerated and integrated development model. The cultural industrial park has become an important name card for Zhuhai in developing the cultural industries with its own characteristics. At present, Zhuhai has established 4 municipal-level cultural and creative industrial parks and 4 characteristic bases such as the Beishan China-Western Cultural and Creative Industrial Base and Gillian 19, The Hidden City. The total investment amount exceeds 1.1 billion yuan, the total construction area exceeds 300,000 square meters, and the number of cultural enterprises exceeds 400. In addition, Zhuhai is currently promoting the establishment of 4 cultural and creative industrial parks, such as the Zhuhai TECH 1 BAY and Hengqin Creative Culture City.9 The cultural industry ecology has been improving day by day, and the construction of industrial agglomeration has achieved remarkable results.

Xiamen Special Economic Zone In 2018, the economy of Xiamen performed well, and the development of its cultural industries maintained steady progress. The regional GDP of Xiamen in 2018 was calculated at comparable prices, which was an increase of 7.7% over 2017, reaching 479.141 billion yuan. The growth rate of the added value of the tertiary industry was 7.5% to 278.685 billion yuan, which contributed 54.6% to the growth of the GDP; the modern service industry was developing rapidly and was deeply integrated with the “Internet+”. From January to November, the Internet and the related service industry revenues in Xiamen increased by 23.7%.10 Data shows that the economic and industrial structure of Xiamen continues to be optimized, emerging industries are growing rapidly, and new business forms and models continue to expand. 9

Zhuhai Municipal Government, China: The 14th China (Shenzhen) International Cultural Industries Fair Ended, the Zhuhai Exhibition Group Attracted Attention with “Culture + Tourism” Elements. http://www.zhuhai.gov.cn/xw/xwzx_44483/zhyw/201805/t20180515_434 91689.html, 2018-05-15. 10 Xiamen Municipal Bureau of Statistics: Analysis on Economic Operations of Xiamen Municipality in 2018. http://tjj.xm.gov.cn/tjzl/ndgb/201903/t20190312_2232159.htm, 2019-03-12.

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The Xiamen Municipal Government has established the cultural and creative industry as a strategic emerging industry in the city. In 2018, the Supplementary Regulations on Further Promoting the Development of Cultural Industries in Xiamen was issued. In order to meet the needs of the development of the cultural industry in the new era, the Xiamen Municipal Government has provided policy support in terms of taxes and funds for the construction of an exhibition and exchange platform for the development of cultural industries, creative design services, the development of cultural enterprises, the development of cultural and creative products and the construction of the film and television industry. It is particularly worth noting that 11 of the 18 new supplementary regulations are related to the film and television industry, providing support for the construction of film and television industrial parks, landing and development of film and television enterprises, post-production technology of film and television plays, the introduction and cultivation of talents, and the establishment of film and television service platforms, which reflects the determination and strategic layout of the Xiamen government in building an “international film and television city”. Relying on the beautiful natural scenery and the urban architectural style that combines Eastern and Western cultures, Xiamen is known as the “Natural Studio”. In recent years, more than 100 film and television plays were located in Xiamen for shooting every year. In 2018, the hit movie Hello, Mr. Billionaire chose Xiamen as the main location for shooting. With the policy support of Xiamen governments at all levels, it is worth looking forward to building Xiamen as the most advanced modern film and television industry base in China and even in the Asia–Pacific region. In addition, in 2018, the municipal government also issued a series of documents including Several Opinions on Strengthening the Construction of the Exhibition Industry Credit System in Xiamen (Trial), the Measures on Further Stimulating Innovation and Entrepreneurship of Talents in the Free Trade Zone, and the Ten Measures on Promoting the Entrepreneurship and Employment of Young People in Taiwan to improve the cultural industry policy environment. As the most innovative international exhibition city and a national tourism and leisure demonstration city, the tourism and exhibition industries of Xiamen have developed rapidly. The number of domestic and foreign tourists in Xiamen in 2018 increased by 13.7% over the previous year, reaching 89.0032 million, and the total amount of revenue from tourism increased by 20.0% to 140.212 billion yuan.11 The 2018 Cross-strait (Xiamen) Cultural Industries Fair achieved gratifying results, and it has increasingly become an important cultural brand of Xiamen. With the theme of “Chinese Dream, Cross-Strait Love”, the Cross-strait (Xiamen) Cultural Industries Fair for this year focused on displaying the latest achievements in the development of cross-strait cultural industries since the 18th National Congress of the Communist Party of China. There were 11 exhibition halls with 3,440 booths, and the overall exhibition area was more than 70,000 square meters. More than 1100 exhibitors

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Xiamen Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Xiamen Municipality in 2018. http://tjj.xm.gov.cn/tjzl/ndgb/201903/t20190322_ 2238302.htm, 2019-03-22.

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came here, attracting 403,200 visitors to visit during the exhibition.12 As one of the most important platforms for cross-strait cultural and creative industries, the Cross-strait (Xiamen) Cultural Industries Fair plays an important role in promoting economic growth and cultural exchanges across the Straits. In addition, Xiamen has successfully held the 2018 Cross-Strait Folk Art Festival, the 2018 Xiamen Biennale of National Meticulous Painting Exhibition, the 14th Cross-Strait Book Fair, and other brands of cultural exchange activities. The municipal government is actively devoted to building a national and international exhibition platform. In 2018, 229 exhibitions of various types were held. The total exhibition area increased by 8.6% to 2.3783 million square meters. And the overall benefit of the exhibition economy increased by 5.7% to 40.303 billion yuan.13

Shantou Special Economic Zone In 2018, the economic and social development of Shantou remained stable and healthy. According to relevant statistics, the regional GDP of Shantou in 2018 increased by 6.9% compared with 2017, reaching 251.205 billion yuan.14 Among these statistics, the growth rate of the added value of the modern service industry was 6.8%, reaching 53.158 billion yuan; the added value of the private economy increased by 7.6%, reaching 179.437 billion yuan.15 As a coastal city with a profound cultural heritage, Shantou has inherent natural advantages in developing the cultural and tourist industries. The overseas Chinese hometown culture, marine culture, intangible cultural heritage culture, and folk culture are all unique cultural resources in Shantou. In recent years, Shantou has continuously explored its own regional characteristics, gradually improved the system for the development of cultural industries, and promoted the transformation of traditional industries into creative ideas. In 2018, the Shantou Municipal Government formulated the Three-Year Action Plan of the Culture, Radio, Television, Tourism and Sports Bureau of Shenzhen Municipality to Build a Regional Cultural Center (2018–2020), proposed to “plan the construction of a regional cultural center with a higher standing, a higher vision, and higher requirements, to build a modern cultural system and to accelerate the construction of a cultural highland”, and focused on the four directions of “promoting 12

People’s Government of Fujian Province: Closing of the 11th Cross-strait (Xiamen) Cultural Industries Fair. http://www.fujian.gov.cn/xw/fjyw/201811/t20181106_4581058.htm, 2018-11-06. 13 Xiamen Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Xiamen Municipality in 2018. http://tjj.xm.gov.cn/tjzl/ndgb/201903/t20190322_ 2238302.htm, 2019-03-22. 14 Shantou Municipal Bureau of Statistics: Analysis on the Economic Operations of Shangtou Municipality in 2018. http://www.shantou.gov.cn/tjj/tjfx/201902/76b300f041f147e2aa22fff7a4c a3aa5.shtml?from=groupmessage&isappinstalled=0, 2019-02-20. 15 Shantou Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2018. http://www.shantou.gov.cn/tjj/tjgb/201904/9c80e7 cd90be4d3ca930f0edccd0bff4.shtml, 2019-04-04.

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the development of modern cultural industries”, “strengthening the construction of cultural industrial parks”, “promoting the development of cultural and creative products”, and “promoting the construction of state-owned cultural and artistic academies and teams” to further develop the cultural industries. In recent years, Shantou has been relying on printing and packaging, toy production, and other cultural manufacturing advantages to carry out cross-boundary integration and to form industrial clusters, focusing on building the toy animation industry cluster in Chenghai, the new printing and packaging industry clusters in Longhu and Jinping, the cultural tourism industry clusters in Haojiang and Nan’ao, and the stationery industry clusters in Chaoyang and Chaonan. Under the leadership of the Shantou Municipal Government and the efforts of all sectors of society, the construction of the cultural industry cluster in Shantou has achieved great results. The Occidental Culture Town was awarded the qualification to establish a provincial-level cultural industry demonstration park in 2018, and the Shantou Culture Museum was also rated as a provincial-level cultural relics unit and cultural and creative product development pilot unit in 2018.16 In 2018, the Shantou Municipal Government issued the Opinions of Shantou Municipality on Implementing the Plan of Guangdong Province to Promote the Development of All-for-One Tourism, proposing the four major development tasks to “focus on optimizing the all-for-one tourism development pattern”, “focus on building an all-for-one tourism brand”, “focus on cultivating an all-for-one tourism industry”, and “focus on building a new public service system”, promoting rural revitalization, prospering the tourism market, and promoting the construction of provincial sub-central cities and international coastal tourism cities; the government proposed that great efforts will be made to realize the development goal, that is “by 2020, the number of tourists will reach approximately 50 million in the whole city, the overall income of tourism will reach about 75 billion yuan, and the comprehensive contribution rate of tourism to the national economy will reach 15% or more”. According to data from the Shantou Municipal Bureau of Statistics, the number of overnight tourists in Shantou in 2018 increased by 15.2% over the previous year, reaching 21.6444 million; the total revenue from tourism increased by 20.0%, reaching 53.449 billion yuan.17 Data shows that the scale of tourism in Shantou maintained rapid growth in 2018, which was closer to the 2020 goal for development. In addition, the orientation of Shantou’s policy to promote industrial integration in all respects around the “culture + tourism” industry development strategy has further shown good results. For example, in 2018, the Overseas Chinese Culture Tourist Area, Qianmei Ancient Village was successfully selected as the second batch in the list of the Culture and Tourism Integration Development Demonstration Zones in Guangdong Province. 16

Shantou Municipal Government: Shantou Municipality Got Another Piece of Good News for the Development of the Cultural Industries! http://zwgk.st.gov.cn/wgxj/0500/201811/3124ba89b 5314c60bce7fd60c18d01f4.shtml, 2018-11-28. 17 Shantou Municipal Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Shantou Municipality in 2018. http://www.shantou.gov.cn/tjj/tjgb/201904/9c80e7 cd90be4d3ca930f0edccd0bff4.shtml, 2019-04-04.

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Hainan Special Economic Zone In recent years, Hainan has attached great importance to the cultural industry, included it in the priority development strategy for “twelve key industries” in the province, and launched a series of supporting policies to promote the rapid development of the cultural industry. In 2018, the scale of the cultural industries in the province maintained rapid growth. According to relevant survey results, in the first three quarters of 2018, the operating revenue of cultural and related industry enterprises (above the designated size) increased by 16.2% from 2017, reaching 18.924 billion yuan (calculated on a comparable basis). Among them, the two fields of “cultural auxiliary production and intermediary services” and “creative design services” grew most rapidly. The operating revenue of the cultural auxiliary production and intermediary services increased by 28.7% to reach 10.089 billion yuan; the operating revenue of the creative design services increased by 13.5% to 3.043 billion yuan.18 In 2018, the State Council issued the Guidelines on Supporting Hainan in Furthering All-Round Reform and Opening-Up. The provincial government actively responded to the national policy and launched the One Million Talents in the Hainan Action Plan (2018–2025) and other related planning policies, actively expanded the space for the development of tourism consumption, focused on film and television production, animation games, and performing arts industries, fully promoted the culture industries to develop rapidly, and made specific deployment in vigorously introducing talents and encouraging innovation and entrepreneurship. In recent years, Hainan Province rose abruptly based on its accumulated strength in the film and television industry, and continuously strengthened its cultural and creative industry in the form of industrial clusters. The Haikou Cultural Industry Park, as a key emerging film and television industrial cluster in Hainan Province, is a representative model of “government + industrial park + enterprise” to make the cultural industry bigger and stronger. According to relevant data, as of the end of September 2018, there were 122 enterprises in the Haikou Cultural Industry Park, and 74 film and television projects were reported. The value of the output and tax revenue created by the enterprises in the park reached 714 million yuan and 202 million yuan respectively.19 In addition, Hainan Province is committed to the development of digital creative industries such as online culture, virtual reality, and e-sports, and actively cultivates emerging formats of cultural consumption. In 2018, the Second World Electronic Sports Games (WESG) Global Finals were successfully held in Haikou, attracting nearly 600 players from 46 countries and regions to participate in the event.20 18

Hainan Provincial Bureau of Statistics: Enterprises in Cultural and Related Industries above the Designated Size in the Province Continued to Maintain Rapid Growth in the First Three Quarters of 2018. http://stats.hainan.gov.cn/xxgk/tjyw/jjxx/201811/t20181101_2908199.html, 2018-11-01. 19 Ministry of Culture and Tourism of the People’s Republic of China: Enriching Cultural and Tourism Activities to Warm the Winter in Hainan, Integration of Culture and Tourism Better Benefits Hainan, https://www.mct.gov.cn/whzx/qgwhxxlb/hn_7734/201812/t20181217_836532.htm, 201812-17. 20 China News: The Second World E-Sports Games Global Finals Start in Haikou, http://www.chi nanews.com/sh/2018/03-13/8466831.shtml, 2018-03-13.

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In addition, the tourism and exhibition industries in Hainan Province are advancing steadily. In 2018, the overall revenue from tourism in the province grew by 14.5% year-on-year, reaching 95.016 billion yuan. The added value of tourism increased by 8.5% compared with 2017, reaching 39.282 billion yuan, and the total number of tourists increased by 11.8% from the previous year, reaching 76.2739 million.21 The Sanya International Cultural Industry Fair 2018 was successfully held. Taking the theme of “Sanya ICIF Led Silk Road Countries in Developing Trade with Culture”, the fair attracted more than 30 countries and regions along the Silk Road, with a total of nearly 30,000 exhibits on display. The China (Sanya) International Cultural and Creative Design Competition and the “Belt and Road” International Concert were also held at the same time as the Sanya ICIF, which received a good response.

Analysis of the Development of Cultural Industries in the Special Economic Zones Compared with the development in 2017, the development of cultural industries in the special economic zones in 2018 has made some breakthroughs, showing the following characteristics.

The Cultural Industries Have Entered a New Stage of High-Quality Development From the “Twelfth Five-Year Plan” to the “Thirteenth Five-Year Plan”, the cultural industries of China underwent a process of growth from accelerating construction to paying more attention to the pursuit of quality and profitable development.22 In 2018, the Ministry of Culture and Tourism and the Ministry of Finance jointly issued the Guidelines on Promoting Models of Government and Private Capital Cooperation in the Field of Tourism, which aimed at promoting the PPP model in the cultural industry field to facilitate innovation in supply mechanisms, stimulate investment vitality, promote the high-quality development of the cultural industries, and satisfy people’s spiritual and cultural life with high-quality cultural supplies. The cultural industries in the special economic zones achieved rapid development during the period of the “Twelfth Five-Year Plan”, relying on policy support. In recent years, the growth rate of the cultural industries has slowed down. In 2018, the Xiamen Municipal Government attached great importance to the further development and 21

Hainan Provincial Bureau of Statistics: Statistical Bulletin on the National Economic and Social Development of Hainan Province in 2018. http://stats.hainan.gov.cn/tjj/tjgb/fzgb/n_71782/201901/ t20190128_2282048.html, 2019-01-28. 22 China Economic Network: China’s Cultural Industries Are Moving towards High-Quality Development. http://www.ce.cn/culture/gd/201804/04/t20180404_28716983.shtml, 2018-04-04.

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improvement of the film and television industry in Xiamen, and the Film Industry Development Plan related to this is under preparation. In the future, the film and television industry is expected to become another growth point for Xiamen’s cultural and creative industries.23 In addition, each special economic zone has made strategic layouts and achieved a series of results in the digital economy industry, cultural tourism, creative design industry, cultural high-end intelligent manufacturing, and other high-end cultural industry systems, which are the embodiment of the stage of high-quality development in the cultural industries.

The Integration of Culture and Tourism Drives Forward Economic Growth In order to implement the concept of “all-for-one tourism”, the State Council issued the Guidelines on Promoting the Development of All-for-One Tourism in 2018. The Guidelines put forward requirements for the integration of culture and tourism to excavate outstanding traditional cultures in various regions through the implementation of the “Chinese Traditional Craft Revitalization Plan”, so as to integrate regional high-quality cultural resources into the development of tourism projects, and to enhance the cultural attributes of tourism products. In recent years, tourism in China has been growing rapidly, and it has become a strategic pillar industry for China’s economic construction. According to relevant statistics, the total number of domestic tourists in 2018 increased by 10.8% compared with 2017, reaching 5.539 billion; the total number of outbound tourists increased by 14.7% over the previous year, reaching 149.72 million; the total annual revenue from tourism increased by 10.5% compared with the previous year, reaching 5.97 trillion yuan.24 The year 2018 can be called the first year of “integration of culture and tourism”. Since the official establishment of the Ministry of Culture and Tourism in early April, by the end of November, the culture and tourism departments of Xinjiang and Tianjin had been officially established, and the reform of the culture and tourism institutions of the central and local governments has continued to improve. The Department of Tourism, Culture, Radio, Television and Sports was established in Hainan Province, the Culture, Radio, Television, Tourism and Sports Bureau was established respectively in Shenzhen, Zhuhai, and Shantou, and the Bureau of Culture and Tourism was established in Xiamen. The integration of cultural institutions and tourism institutions aims to “promote tourism with culture and display culture through tourism”, cultivate new forms of cultural tourism, expand the supply of high-quality tourism products, 23

Guangming Daily: Xiamen: The High-Quality Development of Cultural Industries. http://share. gmw.cn/news/2019-04/04/content_32714405.htm, 2019-04-04. 24 Ministry of Culture and Tourism of the People’s Republic of China: Statistical Bulletin on the Development of Culture and Tourism of the Ministry of Culture and Tourism of the People’s Republic of China in 2018. http://zwgk.mct.gov.cn/auto255/201905/t20190530_844003.html?key words=, 2019-05-30.

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and promote tourism in the direction of modernization, internationalization, intensification and qualification. All the special economic zones have achieved gratifying results in the process of promoting the deep integration of culture and tourism. Among them, the total revenue from tourism of Zhuhai, Xiamen, and Shantou has increased by more than 20% respectively. The industrial model of culture and tourism integration promoted new breakthroughs in cultural industries in the special economic zones.

Digital Cultural Industry Ushered in the Peak of Development In 2018, the Guidelines on the Development of the Digital Economy to Stabilize and Expand Employment was released. Proposals were made in the Guidelines to vigorously develop the digital economy, accelerate the construction of digital infrastructures, promote the digital transformation of traditional culture, and stimulate the vitality of innovation and entrepreneurship in the digital economy. With the renewal and iteration of digital technologies such as network technology, data processing technology, cloud computing, and AI, the digital cultural industry has forcibly risen. Digital cultural products such as online games, online literature, online blockbusters, online music, and online variety shows have become the main products of mass cultural consumption. As an important field in the development of the digital economy, the online audiovisual content industry achieved rapid development in 2018. As of December 2018, the number of domestic online video users accounted for 87.5% of the total netizens, and the number was as high as 725 million. In 2018, the market size of the entire video content industry grew by 52.8% compared with the previous year, reaching 187.13 billion yuan. As one of Shenzhen’s strategic emerging industries, Shenzhen’s digital economy industry exceeded the 100 billion mark in its industrial added value in 2018. And the cultural and creative enterprises in Shenzhen, represented by Tencent, Fantawild, IDMT, and Artron, were at the forefront of the country in the development of digital cultural products.

Suggestions on the Development of Cultural Industries in the Special Economic Zones The domestic cultural industries have entered a new stage of high-quality development, and at the same time, the special economic zones are facing huge market opportunities and challenges in developing their cultural industries. The special economic zones can promote further improvement of cultural industries from the following aspects.

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Deepen the Reform of the Cultural System The high-quality development of cultural industries requires the joint promotion of the government and the market, as well the coordinated development of culture and technology. Therefore, the special economic zones need to further deepen the reform of the cultural system and mechanism. Deepening the reform of the cultural system requires continuous innovation of the policy system of cultural industries and cultural undertakings in the special economic zones, and policy support for various cultural industry operators in terms of taxation, funding, finance, land, and talents; and it also requires an increase in the proportion of the cultural service industry in cultural and related industries, and deeply optimize the structure of the cultural industry. It is necessary to encourage technological innovation in the hightech field and promote emerging technologies such as network technology, data processing technology, cloud computing, AI, and 5G to deeply integrate with the cultural industries. Efforts need to be made to promote the transition from cultural management to cultural governance, improve the mechanism of social participation, and stimulate the vitality of innovation and creativity in all sectors of society.

Develop the Cultural Tourism Industry with Regional Characteristics The special economic zones are mostly coastal cities with beautiful natural environments, relatively developed economies, a high degree of modernization and internationalization, and they are suitable for the development of tourism. With the deepening of the developmental model of the “culture + tourism” industry in the special economic zones, and the implementation of the “village revitalization strategy” and the “all-for-one tourism strategy”, it is imperative to develop a cultural tourism industry with regional advantages. It has become a major issue to make good use of cultural resources such as the characteristic port culture, intangible cultural heritage, and folk culture, and urban culture, tell the stories of the special economic zones, and build cities for cultural tourism in the process of the integration and development of culture and tourism in the special economic zones.

Vigorously Promote the Development of the Digital Cultural Industry With the support of national policies, the domestic digital cultural industries have made great progress, and the digital content industry has gained a broad market. At present, leading cultural and creative enterprises have deployed digital content production, and have been constantly exploring new industrial models in the fields of

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online games, online blockbusters, online literature, online music, and online variety shows. However, there are still problems in the current development of China’s digital cultural industry such as the lack of content creativity, the shortage of talents in content production, the coexistence of homogeneity and vulgarity, and the backward system of management. All of the special economic zones should seize the opportunities for the development of the digital cultural industry, make use of the existing policies and economic advantages to avoid corresponding problems, and support the digital cultural industry in encouraging innovation, talent introduction and cultivation, and market supervision and management.

Improve Intellectual Property Protection The production of content is the core area of the cultural industry, and it is also the key factor for cultural business entities to build their own core competitiveness. The weak capacity of the production of content has long restricted the improvement of the efficiency of cultural industry production, and the scarcity of high-quality content is still the ordinary state of the current cultural industries. The development of cultural industries in the special economic zones needs to center on support for the production of content, focus on content innovation and talent training, and strive to improve the capabilities for innovation in the content industry. At the same time, each special economic zone should establish a sound system of evaluation of cultural product content, implement scientific and effective supervision, and strengthen intellectual property protection to create a good environment for the innovation and development of cultural industries.

Part III

Report on the Investigation of the Development of the Special Economic Zones

Chapter 9

Report on the Construction and Development of Cuba’s Special Economic Zone Haiping Luo

The Foundations and Conditions for Establishing Special Economic Zones in Cuba The Republic of Cuba (“Cuba” for short) is located in the northwestern part of the Caribbean Sea. It is an archipelagic country in the northern Caribbean Sea of North America, consisting of more than 1600 islands including the Island of Cuba and the Isle of Youth. The country measures 109,884 square kilometers, and is also known as the “Key to the Gulf of Mexico” and “Green Crocodile on the Caribbean Sea”. On January 1, 1959, Cuba overthrew the Fulgencio Battista regime. In May of 1961, Castro announced the beginning of the socialist revolution and established the socialist system. Cuba is one of the few socialist countries in the world now. Due to the long-term economic blockade imposed by the United States, Cuba’s economy is less developed. In 2015, Cuba’s GDP was 87.133 billion U.S. dollars, and its per capita GDP was 7602 dollars. Despite this, Cuba is still one of the countries with the highest human development index in the world, with an index reaching 0.815, ranking 44th in the world. As an archipelagic country, Cuba has good conditions and foundations of location for developing foreign trade and establishing special economic zones. Cuba is located at the entrance of the Gulf of Mexico in the northwestern Caribbean Sea, with a coastline of 5746 km. Since January 1, 2011, Cuba’s national administration has been divided into 15 provinces and 1 special economic zone, with 167 cities under the provinces. The capital city Havana is located in the northwest of Cuba, with an area of 728.26 square kilometers and a population of 2.122 million. It was once the main fortress of Spain in the Americas and the largest port in the Western Hemisphere, H. Luo (B) Central China Economic Development Research Center, Nanchang University, Nanchang 330027, Jiangxi, China e-mail: [email protected] © Social Sciences Academic Press 2023 Y. Tao and Y. Yuan (eds.), Annual Report on the Development of China’s Special Economic Zones (2020), Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-9235-3_9

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known as the “Pearl of the Caribbean”. Located in eastern Cuba, Santiago is the second-largest city and second-largest port in Cuba, with a population of 514,000. Camagüey is the capital of Cuba’s largest province—Camaguey Province (located in central Cuba, covering 14% of the country’s total area), and is also an important center of industry, trade, and transportation. The economy of Cuba has been subject to the blockades and sanctions of the United States for a long time, resulting in extremely difficult development. The United States has imposed a comprehensive economic blockade on Cuba since February 1962. The blockade cut off the direct flight or ocean route between the two countries, and any personnel and cargo exchanges between the two countries must pass through a third country. After 1977, the relations between the United States and Cuba began to thaw, and the Cuban economy was on the rise. However, after the dissolution of the Soviet Union, the United States further intensified its blockade of the Cuban economy. After the “September 11 Terrorist Attacks” in the United States in 2001, the United States further listed Cuba as a peripheral country of “axis of evil”, accusing Cuba of possibly supporting terrorism and developing biological and chemical weapons, and the relations between the two countries have further deteriorated. Under the long-term economic blockade and suppression from the United States, the Cuban government has been trying to gradually open up its economy, increase its pace of “going out”, and completely get rid of the pressure of the United States on the Cuban economy by strengthening economic exchanges with other countries other than the United States. However, due to the higher-level and stricter blockade from the United States against Cuba, the reform and opening-up of Cuba and its economic liberalization have not achieved good results. In recent years, the United States has gradually relaxed its sanctions and suppression against Cuba. In 2009, restrictions on the travels of Cuban-Americans to Cuba and remittances were lifted. In 2011, U.S. citizens were allowed to go to Cuba for academic research, teaching, and cultural and religious exchange activities. In terms of air traffic control, the U.S. government authorized U.S. international airlines to open direct charter flights to Cuba under certain conditions. In terms of maritime shipping, the United States resumed direct maritime freight transportation between the two countries in 2012, which had been suspended for more than 50 years. In June 2013, the United States and Cuba restarted negotiations on direct mail technology. On December 17, 2014, the leaders of the United States and Cuba announced the beginning of the process of rebuilding diplomatic relations. In January 2015, the State Department of the United States issued a series of measures to relax sanctions against Cuba, including allowing Americans who meet 12 categories of conditions to travel to Cuba and relaxing restrictions on the number of overseas remittances of Cuban-Americans. Subsequently, Cuba and the United States conducted two rounds of dialogue to rebuild diplomatic relations. After that, the United States removed Cuba from the list of countries supporting terrorism, lifted the ban on Cuban commercial ferries, and the two countries reopened their embassies to each other. The improvement in relations with the United States brought good opportunities for the development of Cuba, as well as new opportunities for the development of Cuba’s special economic zone.

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The Export-Oriented Economic Development of Cuba The Cuban economy is relatively small in size and is relatively closed with the development of a foreign trade economy that lags behind others. For a long time, the total volume of import and export goods was not large, while the trade deficit was large. According to the statistics on Cuba’s import and export goods from 2010 to 2014, the total volume of Cuba’s imports and exports in 2010 was 15.194 billion pesos, and the gap between import and export was −6.095 billion pesos. The total volume of imports and exports from 2011 to 2013 remained between 19 and 20 billion pesos. In 2014, the total volume of imports and exports fell to 17.894 billion pesos, and the balance of imports and exports has remained at the level of a deficit of 8–9 billion pesos. It can be seen that the Cuban foreign trade economy showed three significant characteristics of instability, a lack of strong growth momentum, and an excessively high deficit. Cuba’s export capacity is relatively weak, and the value of its exports remained at around 5 billion pesos during the five-year period from 2010 to 2014 (Table 9.1). In addition to the small total volume of imports and exports, the major trade partners of Cuba are single, and the proportion of trade in goods with major economies is too small. Cuba’s imports and exports are overly dependent on Venezuela, and the Venezuelan economy itself is very fragile, which imposes a great impact on Cuba. Since 2011, Cuba’s top ten foreign trading partners are Venezuela, China, Spain, Canada, Brazil, the Netherlands, Mexico, Italy, the United States, and Germany. In the following years of 2012, 2013, and 2014, this order was basically maintained, and there was no significant increase in the total volume of imports and exports with each trading partner, but slight fluctuations or declines (Table 9.2). In order to better develop its foreign trade economy, Cuba has been actively promoting foreign investment to attract more foreign capital. Cuba promulgated laws in 1994 to allow foreign investment. In 2014, La Asamblea Nacional del Poder Popular, the highest authority in Cuba, passed a new law regarding foreign investment to provide a preferential economic environment for foreign companies investing in Cuba. Cuba hoped to attract about 2 billion U.S. dollars in foreign investment every year. According to Cuba’s new decree No. 118 Foreign Investment Law in Table 9.1 Statistics on Cuba’s import and export goods from 2010 to 2014 (unit: 100 million pesos) Year

Value of exports

Value of imports

Total volume of imports and exports

Gap between imports and exports

2010

45.5

106.44

151.94

−60.95

2011

58.7

139.52

198.23

−80.82

2012

55.77

138.01

193.78

−82.24

2013

52.83

147.07

199.9

−94.24

2014

48.57

130.37

178.94

−81.8

Source Almanac of Cuba’s Economy 2014, National Statistical Office of Cuba

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Table 9.2 Cuba’s Major trading partners from 2011 to 2014 Country

Total volume of imports and exports

1

Venezuela

81.75

85.63

70.67

72.58

2

China

20.6

16.96

18.77

16.36

3

Spain

11.84

11.56

13.98

11.66

4

Canada

11.97

9.38

9.13

9.33

5

Brazil

7.26

7.56

6.95

6.51

6

Netherlands

7.28

7.92

5.44

5.76

7

Mexico

4.74

5.11

5.3

4.59

8

Italy

4.39

4.14

5.16

4.21

9

U.S.A

4.34

5.09

4.02

3.9

10

Germany

3.26

3.54

4.25

3.78

Source Almanac of Cuba’s Economy 2014, National Statistical Office of Cuba

2014, foreign investment can be made in Cuba by means of joint ventures, international economic association contracts, and wholly foreign-owned enterprises. Among them, the joint venture refers to a joint-stock legal person formed by all parties to the joint venture, which is different from each party, and the shares shall be registered and comply with the current laws. The proportion of capital contributions of foreign investors and domestic investors must be agreed upon by all shareholders through negotiations and must be stipulated in the (joint venture) approval letter. Joint ventures can establish offices, representative offices, branches, and subsidiaries domestically and abroad, and can also hold shares in foreign institutions. In terms of participating in foreign investment, Cuba generally invests in shares in the form of land use rights, buildings or their use rights, existing equipment, and infrastructure. The value of the buildings on the land and the land use rights in the shares must be assessed and priced by professional appraisal companies. Cuba has long imposed stringent requirements on joint ventures. Usually, joint ventures were required to be controlled by Cuba, with a maximum of 50% of the equity for the foreign party. Such excessive intervention in foreign investment has seriously affected the enthusiasm for foreign investment. The actual implementation of the new law remains to be evaluated after it goes into effect. International economic association contracts include risk exploration contracts for non-renewable natural resources, construction contracts, agricultural production contracts, hotel management, production management, or service management contracts, and professional service provision contracts. In a wholly foreign-owned enterprise, the foreign investor exercises leadership, enjoys all the rights and assumes all the obligations stipulated in the approval letter. After registration in the industrial and commercial department, the foreign investors of wholly foreign-owned enterprises can act as a natural persons within the territory (of Cuba) and carry out activities in their own name, or establish subsidiaries of foreign institutions owned by them as a legal persons in Cuba after notarization, and the

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subsidiary shall be in the form of a registered joint-stock enterprise. The foreigninvested enterprises can establish a branch of foreign institutions in Cuba as a legal person. On October 31, 2017, at the second investment forum of the Havana International Fair (FIHAV), the Cuban MINCEX released the Catalogue of Foreign Investment Projects from 2017 to 2018. There were a total of 456 projects in the new version of investment projects released by the Cuban government, with a total investment of more than 10.7 billion U.S. dollars. Among them, 50 projects belonged to the construction projects of the Mariel Special Economic Development Zone, and other projects were distributed throughout the country. The new version of the catalogue was divided into 18 industries, sorted by the number of projects, followed by tourism (152 projects), agricultural product processing industry (104), petroleum industry (78), manufacturing industry (33), biotechnology and pharmaceutical industry (15), construction industry (14), new energy (13), mining industry (10), transportation (8), water conservation industry (7), sugar industry (7), wholesale industry (4), cultural industry (3), medical and health services industry (2), audio-visual medium industry (2), financial industry (2), real estate industry (1) and logistics industry (1). At present, the catalogue of foreign investment in Cuba continues to expand, but it is still insufficiently open. For this reason, Cuba regards the special economic zone as a new engine for promoting Cuba’s opening up and economic development.

Policy on Cuba’s Special Economic Zone On September 19, 2013, the Republic of Cuba issued decree No. 313 Law on the Mariel Special Economic Development Zone, and then the Cuban Council of Ministers issued the Regulations on the Implementation of the “Law on the Mariel Special Economic Development Zone”. The Law on the Mariel Special Economic Development Zone (decree No. 313) was formulated to establish the Mariel Special Economic Development Zone and stipulate its functions. The decree stipulates that in addition to the prescribed scope of the existing special economic zone, as long as it is conducive to better realizing the relevant objectives of the special economic zone, the Council of Ministers can decide whether to include the adjacent areas of the special economic zone into the scope of the special economic zone. The main objectives that the decree requires for establishing the special economic zone are: (1) to promote national development; (2) to increase exports and promote import substitution; (3) to facilitate the transfer of advanced technology, proprietary technology and management experience; (4) to attract foreign investments; (5) to obtain new employment channels and long-term financing channels; (6) to be conducive to the sustainable development of the environment; (7) to develop infrastructure that is conducive to economic development; (8) to establish an efficient logistics system for imports and exports and for cargo distribution; (9) to encourage domestic and foreign enterprises to settle; (10) to ensure its connection with other

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parts of the national economy. The decree stated that in order to ensure the consistency, relevance and compatibility of economic objectives, the special economic zone must implement the Land and City Planning approved by the Council of Ministers. The resettlement of residents, facilities, the natural environment, and resources in the special economic zone must especially coordinate with social development and the protection of the natural environment and cultural heritage. The special economic zone must encourage and protect all enterprises, encourage the development of industry, agriculture and animal husbandry, machinery manufacturing, tourism, and production activities of all goods and services permitted by Cuban laws which use clean technology, take knowledge and innovation as a basis, and increase added value. According to the Law on the Mariel Special Economic Development Zone, any foreign investment measures permitted by the Cuban government can invest in the special economic zone from the time it is registered as a franchisee or lessee in the special economic zone. Regarding the organization and management of the special economic zone, Cuba has established an(a) (special economic zone) office to manage the special economic zone and control relevant activities in the zone. And it is the Special Economic Zone Office that formulates and implements the Plans on the Development and Operation of the Special Economic Zone. The Special Economic Zone Office, as a national institution permitted by the current laws, has its organizational structure approved by the Council of Ministers and is subordinate to the Council of Ministers. The main functions of the Special Economic Zone Office are to: (1) coordinate with the central administrative agencies, institutions and related units of the state in terms of the main operations and developmental policies of the special economic zone, and submit the Plans on the Development and Operation of the Special Economic Zone to the Council of Ministers; (2) evaluate the applications for entering the special economic zone as franchisee and lessee to ensure that they comply with the Plans on the Development and Operation of the Special Economic Zone and that they have technical, economic, environmental and legal feasibility based on the applications, environmental and social impact; (3) coordinate with national central administrative authorities, agencies and relevant units on applications for entering the special economic zone as franchisees or lessees; (4) implement necessary registration to ensure the performance of management and control functions, and register approved franchisees and lessees accordingly; (5) coordinate the overall development of foreign investment, analyze the production chain, and control foreign investment; (6) carry out systematic inspections about whether the franchisees or lessees are engaged in business activities consistent with the approval certificate, and whether they comply with this decree, implementation regulations and other relevant existing laws and regulations; (7) build an independent and efficient one-stop system of window services to contact the central administrative agencies, institutions and related units of the state and related units of the Special Economic Zone Office, and provide services for franchisees and lessees stationed in the special economic zone to apply for licenses, permissions and approval procedures; (8) establish a system to promote and attract foreign investment in the special economic zone, and take actions to achieve relevant goals in the shortest possible time; (9) promote projects for investment in the

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construction of infrastructure in the special economic zone and other projects that are conducive to the sound operations of the special economic zone; (10) pay attention to the implementation of the relevant results of the Strategic Environmental Assessment conducted by the Ministry of Science, Technology and the Environment for approved projects in the special economic zone; (11) pay attention to the quality and diversity of basic public services in the special economic zone with more education, cultural and sports activities involved to help build a good environment in the special economic zone; (12) consult international organizations and institutions when necessary; (13) take systematic control measures within the scope of authority; (14) evaluate together with the Bureau of Land Planning and recommend to the Council of Ministers whether to include the adjacent areas into the special economic zone; (15) coordinate the national central administrative agencies and other units to implement various control measures and provide convenience within the scope of their powers in the special economic zone. The Special Economic Zone Office, with the assistance of the committee composed of representatives of the central administrative agencies, institutions, and other units, evaluates the materials submitted by the applicants, submits foreign investment applications which are approved by it to the Council of Ministers, and gives approval or rejection to the remaining applications. The “Franchisee and Lessee Application Evaluation Committee in the Mariel Special Economic Development Zone” is permanently composed of representatives from agencies including the Ministry of Economy and Planning, the MINCEX, the Ministry of Finance and Pricing, the Ministry of Labor and Social Security, the Ministry of Science, Technology and the Environment, the Ministry of Justice, the Ministry of the Revolutionary Armed Forces, the Ministry of Internal Affairs, the Central Bank of Cuba, the Bureau of Land Planning, and the Artemisa Provincial Government. The Special Economic Zone Office decides whether the evaluation committee needs to add representatives from other departments as needed. The Special Economic Zone Office appoints the Secretary-General of the Evaluation Committee and can replace him/her as needed. The directors of the national central administrative agencies, institutions, and other units that make up the Evaluation Committee shall notify the appointment of their representatives to the Special Economic Zone Office. The Special Economic Zone Office can invite other central administrative agencies, institutions, and other units to send representatives to participate in project evaluation based on specific circumstances. Foreign investment in the special economic zone shall be approved by the Council of Ministers and the Special Economic Zone Office respectively, as appropriate. Among them, foreign investment in the fields of the exploration of non-renewable natural resources, the development of natural resources, the investment related to the use of renewable energy, the investment involving the transfer of state-owned assets or other state-owned real estate, and the investment in public services, such as transportation, telecommunications, water conservation, electricity, or construction and development of public projects, real estate development, wholly foreign-owned enterprises, investment involving foreign state capital, investment in health, education, and armed forces-owned enterprises must only be approved by the Council of Ministers, and other foreign investment except for the above and

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other applications not mentioned must be approved by the director of the special economic zone. For domestic financial institutions that operate under the license of the Central Bank of Cuba, their applications as a lessee must be approved or rejected by the president of the Central Bank through an issuing order within 10 natural days from the date of receipt of the materials submitted by the director of the Special Economic Zone Office. Foreign natural persons and legal persons who live abroad and possess foreign capital, as well as domestic legal persons, can obtain concessions upon approval. And the concession is granted with the approval of the Council of Ministers. The concession period is up to 50 years and can be extended with the approval of the original agency for approval upon its expiration, and the period must not be longer than the previous authorization period.

Development of the Cuban Mariel Special Economic Development Zone Cuba’s special economic zone, namely the Mariel Special Economic Development Zone, is located in the Port of Mariel. The Mariel Special Economic Zone is regarded as “Cuba’s gateway to the world”. It is located 45 km west of the capital Havana, with a total area of 465 square kilometers. The plan for the special economic zone includes a port terminal area, a logistics support area, an industrial park area (light industry, high-tech, and heavy industry), a modern services area (telecommunications and information), a transportation center (air, land, and sea transportation), a business center (real estate and exhibition hall), a recreation area, hotel facilities, etc. According to the plan, the Mariel Special Economic Development Zone is expected to create 7000 jobs, but as of July 2015, only 328 workers were working in Block A, in addition to 4000 temporary workers participating in the construction. The special economic zone has been steadily advancing its work in accordance with the method of “no rush, no pause”. By 2015, more than 400 enterprises in the special economic zone had established contact with the Special Economic Zone Office, but only 25 enterprises had completed the preparation of materials. The development of Cuba’s special economic zone is relatively slow, just like the situation in which Cuba’s overall economic growth is sluggish, and the special economic zone has not been very effective in accelerating the country’s economic growth. Arturo Lopez, a Cuban economist at the Center for International Studies, New York University, said, “I think the time it takes to implement the so-called ‘no rush, no pause’ reforms in various industries is very inappropriate. But in any case, it is a good idea to establish the Mariel Special Economic Development Zone. Its supporting laws have eliminated many of the bottlenecks that existed in Cuba’s state-owned economy in the 1990s. Of course, there are still many problems”. With the improvement of Cuba’s relations with the United States and Europe, the special economic zone will become an important platform for Cuba’s exports. As of 2015, the Mariel Special Economic Development Zone has permitted the introduction of

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7 enterprises, including 2 Belgian enterprises, 2 Mexican enterprises, 1 Spanish enterprise, and 2 Cuban enterprises, involving food, chemical, logistics, automobiles, and other industries. Since the Law on the Mariel Special Economic Development Zone came into effect, the development of Mariel has been changing with each passing day. The construction of warehousing, processing, logistics, and other parks has been also constantly advancing and supporting infrastructure such as water, electricity, and sewage has started fully launching. As of 2017, a total of 23 enterprises have obtained business licenses in the special economic zone, which are from 9 countries in Europe, Latin America, and Asia, with a total investment of 960 million U.S. dollars. Compared to decree No. 118 of the Foreign Investment Law that Cuba issued in 2014, decree No. 313 of the Law on the Mariel Special Economic Development Zone in 2013 and decree No. 113 Tax Law in 2012, the tax incentives of the special economic zone are as follows (Table 9.3). In spite of the generous preferential policies of the special economic zone, foreign enterprises are still facing great uncertainty in the relationship between the United States and Cuba while stepping up their deployment in the Cuban market. For this reason, the Cuban government has a stronger desire to attract more foreign investment and realize the diversification of foreign trade through the development of the Mariel Special Economic Development Zone. The administrative department of the special economic zone has expedited contacts with enterprises in China and other countries and regions. By 2018, the special economic zone had attracted investments from 34 companies from 16 countries with a total amount of 1.191 billion U.S. dollars. The Mariel Special Economic Development Zone has become an important platform for attracting foreign investment and boosting Cuba’s economic development. By the end of 2018, the enterprises that have obtained business licenses in the special economic zone include 5 wholly-owned Cuban enterprises, 19 purely foreign-owned enterprises and 8 mixed ownership enterprises. The enterprises with Spanish capital in the special economic zone account for the largest number, reaching eight, followed by enterprises with Brazilian and French capital, each with three. And the number of enterprises with Belgian, Mexican, and Netherlandish capital is two respectively. Other foreign capital came from El Salvador, Vietnam, Panama, Canada, Puerto Rico, Italy, Portugal, Switzerland, and South Korea. At present, the industrial parks, modern ports, and container terminals in the Mariel Special Economic Development Zone have all been activated. The Port of Mariel is a natural port, and once it is connected to Cuba’s system of port transportation and even that of the entire Latin America, it will greatly promote the integration of Latin America and the Caribbean, and bring new opportunities to the Mariel Special Economic Development Zone and even to the economy of the whole of Cuba.

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Table 9.3 Comparison of tax incentives in Cuba’s special economic zone Tax type

New foreign Law on the Mariel investment law (decree special economic No. 118) development zone (decree No. 313)

Tax law (decree No. 113)

Corporate income tax

Tax free for the first 8 years (extendable in special circumstances), and 15% tax after then

Tax free for the first 10 years (extendable in special circumstances), and 12% tax after then

35%

Labor usage tax

Tax free

Tax free

20% (it will be gradually reduced to 5% by 2016)

Local development contribution tax

Tax free during the payback period

Tax free (payment It is stipulated in the for SEZ development annual budget bill and fund is required) implemented gradually

Sales tax or services tax

Tax free for the first Tax free for the first year after opening, and year after opening then with a discount of 1% after then 50% of wholesale tax rate or sales tax rate

Individual income tax Tax free Exploration and utilization of natural resources and environmental protection tax (5 tax types)

Applicable for decree No. 118

With a discount of 50% Applicable for of wholesale tax rate decree No. 118 or sales tax rate during the payback period

2% for wholesale sales tax 10% for services tax Gradual collection 15% Tax on beach development and use, tax on river sewage, and tax on groundwater use: stipulated in the budget bill every year Tax on the development and use of forest resources and wildlife resources, and tax on port development and use in accordance with decree No. 113

Tariff

The imported equipment, machinery and appliances are tax-free during the investment period in accordance with relevant regulations of the Ministry of Finance and Pricing

The means of production and equipment are tax-free during the investment period

In accordance with the tariff regulations

Social insurance payment

14%

14%

14% (continued)

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Table 9.3 (continued) Tax type

New foreign Law on the Mariel investment law (decree special economic No. 118) development zone (decree No. 313)

Tax law (decree No. 113)

Ways of Foreign Investment Wholly foreign-owned enterprise

Applicable for decree No. 113

Applicable for decree Applicable for decree No. 313. Tax free No. 113

International economic association contracts for hotel management, production management, service management and provision of professional services

Applicable for decree No. 113. Tax free for sales tax and services tax

Applicable for decree No. 118

Applicable for decree No. 113, of which the corporate income tax is 4% of the gross profit

Conclusion On the whole, the location of Cuba provides good conditions for the establishment and development of special economic zones. And Cuba gives great expectations for the special economic zone and regards it as a window for opening up to the outside world. However, the development of Cuba’s special economic zone has been extremely slow. It has neither realized the rapid economic development as a special economic zone nor has it achieved the goal of driving the rapid growth of the entire country and the acceleration of opening up through the special economic zone. The reasons are as follows: First, the government has not made enough effort to promote the development of the special economic zone, and the determination to support the special economic zone and opening-up to the outside world are not strong enough. The practice of special economic zone development has not stopped, but there have been no major achievements. By 2019, Cuba still has only one special economic zone, which is in Mariel; second, the uncertain and unstable relations between Cuba and the United States affect the developmental trend of the special economic zone and the entire Cuban economy, as well as the confidence of investors; third, Cuba has failed to expand its economic and trade relations with major countries and regions in the world, its trading partners are single, and it has not been able to deeply explore the potential of cooperation, leading to long-term economic closure and isolation.

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References Cuba’s First Special Economic Zone Is Maturing, Successfully Attracting an Investment of 1.2 Billion U.S. Dollars, cankaoxiaoxi.com, March 26, 2018. Cuba Gave Permission to 7 Investment Projects in the Special Economic Zone. http://cu.mofcom. gov.cn Cuba Imitated China in Establishing Its First Special Economic Zone and Learned from the Experience of Reform and Opening-up, Chinanews.com, November 10, 2013. Economic and Commercial Counsellor’s Office of the Embassy of the People’s Republic of China in Cuba. http://cu.mofcom.gov.cn/ Ma G, Zhao H, Gao C, Feeling the pulse of reform in the special economic zone of Cuba. http:// www.xinhuanet.com//2017-02/26/c_1120531267.htm, February 26, 2017. The First Phase of the Cuban Mariel Special Economic Development Zone Project Was Completed and Started Operating. http://news.xinhuane, January 27, 2014