Fiscal, financial reforms to boost China's development zones: Expert

China's national-level economic and technological development zones (ETDZs), long recognized as crucial drivers of economic growth and technological innovation, are set to undergo a significant upgrade, according to Luo Weijie, an economist focusing on macroeconomy and fiscal policies. 

On May 21, the Ministry of Commerce released a work plan aimed at deepening reform and innovation in the country's ETDZs. The plan outlines 16 targeted measures across four key areas, including encouraging foreign investment in sectors such as biomedicine and high-end equipment manufacturing, and supporting the export of digital services.

Luo Weijie, associate professor of economics at Beijing International Studies University, pointed out that the new fiscal and financial support measures for ETDZs are expected to play a greater role in driving economic growth, attracting investment and promoting innovation. Once in place, the measures will facilitate the ETDZs to achieve high-quality development and contribute to China's broader economic strategy. 

One of the key measures is supporting entities that are involved in the construction and operation of development zones in going public to raise funds. According to Luo, this will provide the entities with more capital to accelerate infrastructure construction and improve the carrying capacity of the zones. He cites the Suzhou Industrial Park's development entity, China-Singapore Suzhou Industrial Park Development Group Co. Ltd.'s successful public listing on the A-share market, as a prime example of how such financing can provide robust support for the development of ETDZs.

Another measure outlined in the plan is providing more precise financial support to small- and medium-sized enterprises (SMEs) based on their contributions to innovation, which is important because SMEs frequently face difficulties in obtaining financing, despite often serving as the driving force behind innovation and job creation. Luo emphasized that through targeted financial support, these SMEs will have more resources to invest in R&D, technology upgrades and market expansion, thereby enhancing their competitiveness and contributing to the overall innovation ecosystem of the development zones.

The plan allows local governments to use special-purpose bonds and other funds more flexibly to support the development of national-level ETDZs. As such, local governments will be able to allocate these funds to key areas such as infrastructure construction, public service platforms and major industrial projects within the zones, which Luo explained will boost the overall investment environment and attractiveness of the zones. For instance, in the first three months of 2025, local governments in China issued new bonds worth nearly 1.24 trillion yuan, including around 960 billion yuan in special-purpose bonds. This kind of financial support can significantly boost the development of ETDZs by providing them with the necessary capital for projects that can drive economic growth and job creation.

In line with China's commitment to green development, the plan encourages ETDZs to develop green financial services to support the growth of green, low-carbon and circular industries. By integrating green finance into the development of ETDZs, China aims to promote sustainable economic growth while addressing environmental challenges. According to Luo, this will not only help to reduce the carbon footprint of the zones, but also create new opportunities for green industries and technologies in the global transition toward a low-carbon economy.

On May 27, the State Council Information Office hosted a policy briefing on the work plan, providing detailed data regarding the achievements of the zones. At the briefing, Ling Ji, vice minister of commerce and deputy China international trade representative, highlighted the critical role that ETDZs are playing in opening up and development. 

Ling pointed out that China has so far established more than 230 national-level ETDZs. In 2024, these zones collectively achieved $27.2 billion in actual foreign direct investment (FDI), or 23.4% of the national total, which demonstrates the significant role these zones play in attracting investment and driving economic growth.

As China continues to leverage ETDZs as key platforms for economic development, Luo anticipates that these zones will likely have a profound impact on both the domestic and global economic landscapes.