A closer look at Chinas SEZs

20 Feb

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1978 could be the most significant date in Chinas modern history. Decisions made here would seal Chinas future on earth. Economic reforms and what is known as the “opening up” process took place which would, in a matter of decades catapult China into the international spotlight. A major part of the economic reforms was the introduction of Special Economic Zones (SEZs) which are cities dotted along the coast of China which offer various incentives to foreign investors. SEZs are the perfect place for foreign companies to invest in for a number of reasons. There are flexible labours laws, generous tax rates, good infrastructure and a locational advantage. However ethical issues have be raised regarding these SEZs.

 From 1979 to 1983 4 SEZs were set up. Zhuhai, Xiamen, Shantou and Shenzhen were created to attract foreign investment. These places have grown from towns to cities and mega-cities. Shenzhen and Shantou both have populations exceeding 10 million. This vast population is an advantage of these SEZs because of the large workforce available to foreign investors. Shenzhen is the largest of the SEZs in China with 49,300 hectares of space. The population of the Shenzhen is a staggering 11.7m. There are reports of the population only being 300,000 in 1980 which just goes to show the positive effects of Shenzhen being an SEZ.

 With Shenzhen being one of the largest SEZs in China it is not without its problems. International watchdogs have reported factory suicides, child labour, slave labour and poor working conditions. Shenzhen allegedly has a big problem with child labour, so much so that 44 out of 206 foreign owned companies in the SEZ employ children less than 16 years old (ihscslnews, 2014). Furthermore, there have been incidents of suicides in factories. A notable example of this is Foxconn which is a contract manufacturer that makes products for Apple and HP. There have been 18 attempted suicides resulting in 14 deaths. A report compiled by 20 universities from Hong Kong, Taiwan and mainland China which interviewed 1800 workers from 12 different factories showed evidence of illegal overtime and failure to report accidents. The report also slammed Foxconn for its management style which was described as inhumane and mentally and physically abusive. The interviews found that 16% had experienced physical punishment, and a further 38% of the workers experienced illegal restriction of their personal freedom (Tam, F. 2014). These reports show the true gritty side of SEZs in China. Chinas incredible growth and economic development could be partially linked to the oppressive, unregulated and exploitative nature of Chinas employment structure.

 SEZs have caused mass rural to urban migration. Often men and women will leave their children with relatives to go and work in factories such as the ones operated by Foxconn. This mass migration to find work has resulted in a sharp increase in GDP (PPP) per capita over the last 3 decades. In 1980 the average annual GDP per capita was $250.87. But now the average GDP per capita is $10,997.28 which is a huge leap from what it used to be in 1980. This is direct evidence to show the effectiveness of Chinas economic ‘experiments’ in the late 1970’s and early 1980’s which involved the creation of SEZs. By 2018 China is predicted to have a GDP (PPP) per capita of $16,231.50 which $4,000 higher the world average (World Bank, 2014).

 In summary, the statistics shown above demonstrate the effectiveness of Chinas economic policy and in particular their Special Economic Zones. But these exponential increases in indicators such as GDP per capita have not been achieved without the problems seen in Foxconn factories in SEZs such as Shenzhen. Child labour, slave labour, illegal overtime, physical and mental abuse are all part and parcel of working in a large chunk of manufacturing factories in SEZs and elsewhere in China. Chinas economic statistics hide a sinister reality.

 

Bibliography

Ihscslnews.org (2014) “Child slave labour in China” at ihscslnews.org accessed 19/02/14

Tam ,F (2014) “Foxconn factories are labour camps: report” at www.scmp.com accessed 19/02/14

The World Bank (2014) “GDP per capita, PPP (current international $” at data.worldbank.org accessed 19/02/14

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