Free Trade Zones as Valid Tools to Promote Institutional Innovation in the People's Republic of China

Abstract

Since their implementation during Deng Xiaoping’s era, Special Economic Zones (SEZs) have played an important role in the process of integration of the Chinese economy into the world economy. Chinese SEZs’ main role was that of supporting the gradual opening of the economy and experimenting with new and innovative policies while, at the same time, allowing the central government to still control the pace of such change and manage the downsides of trade liberalization. In 2013, the Chinese government launched a new generation of Special Economic Zones whose pilot project was the Shanghai Free Trade Zones (SHFTZ). According to several experts, one of the main reasons that led the Chinese government to create a new generation of FTZs in 2013 was the necessity to create a new model of development for the country; a model no longer based on the replication of the past development path from when China’s economy was still relatively small and undeveloped. This dissertation analyzes some of the most innovative aspects introduced by the Chinese Government through this new generation of FTZs, to determine whether Free Trade Zones can still be considered valid tools to promote innovation in the Chinese panorama.