BEIJING: Just half an hour away from Shanghai by train stands the Suzhou Industrial Park (SIP).

A joint venture between China and Singapore that began 23 years ago, it formally entered a new stage of development in September 2015 when the State Council of the People’s Republic of China approved the SIP’s proposal to be the first experimental zone on opening-up and innovation in China.

More recently, in November, Singapore and Chinese officials, led by Jiangsu Governor Wu Zhenglong and Singapore Finance Minister Heng Swee Keat, met at the meeting of the 11th Singapore-Jiangsu Cooperation Council to discuss new areas of collaboration in the coming year.

Over the past two years, a new phase of the SIP, SIP 2.0, has been emerging. The incredible transformation that the SIP has undergone in recent years is the story of how a 20-year-old industrial park can pivot to rejuvenate its economy and revitalise its workforce.

SIP 1.0: A CHINA-SINGAPORE JOINT VENTURE

In response to Deng Xiaoping’s call for China to learn from other countries, especially Singapore, during his famous Southern Tour of early 1992, the Chinese government under the leadership of President Jiang Zemin and the Singapore government under the leadership of Senior Minister Lee Kuan Yew and Prime Minister Goh Chok Tong reached an agreement on Feb 26, 1994 to establish the SIP.

The SIP covers an area of 278 sq km, of which the China-Singapore cooperation area makes up 80 sq km. The total population of the SIP is 1.1 million, including some 807,800 residents.

Since the 1990s, the SIP has expanded rapidly, greatly contributing to the city of Suzhou’s development. In its first decade, the SIP’s gross domestic product (GDP) surged from 1.1 billion yuan (US$170 million) in 1994 to 36.5 billion yuan in 2003, a level comparable to Suzhou’s GDP in 1993. In other words, the SIP doubled Suzhou’s GDP in ten years.

Since then, the SIP has continued to grow exponentially, reaching a GDP of 190 billion yuan in 2013, almost the level of Suzhou in 2002, reproducing another Suzhou in another decade.

CapitaLand opened Suzhou Centre Mall in November 2017, the biggest in the Chinese City. (Photo: CapitaLand)

During the same period, the SIP’s budgetary income increased 962 times, from 21.5 million yuan in 1994 to 20.7 billion yuan in 2013; the SIP’s GDP per capita grew from less than US$800 in 1994 to US$41,000 in 2013.

While based on Singapore’s model of urban planning, economic and social management and green development, the SIP developed its own brand of a modern metropolis with a population of more than one million from scratch within two decades.

From farmland of about two square kilometres in Wu Xian (now Wuzhong District) in 1994, the SIP has morphed into a modern city with a high-tech industrial park at its core, a prosperous population, and a green environment.

That was SIP 1.0.

As a result, Suzhou, a prefecture-level city in Jiangsu, became one of the richest cities in China. Suzhou’s GDP passed the mark of one trillion yuan in 2011, and its GDP per capita increased from US$1,607 in 1993 to US$19,896 in 2013.

Even now, the SIP is fast becoming one of the most liveable places in China. And Chinese government officials are not letting its growth plateau.

SIP 2.0: A NEW STAGE OF DEVELOPMENT

After rapid growth for some 22 years, the SIP entered a new stage of development in 2015. In September 2015, the State Council of the People’s Republic of China approved the SIP’s proposal to become the first experimental zone for economic liberalisation and innovation.

It is shifting focus from being an investment park for foreign and domestic manufacturing to becoming an industrial park for high-tech innovation and entrepreneurship, with a services sector focused on research and development, financial technology and shared services that serves a burgeoning economy.

Innovation, as a theory of dynamic economic development, has been a counter-weight to the model of free market economics and price competition in Adam Smith’s “invisible hand” since Joseph Schumpeter championed the notion of innovation-based economics and entrepreneurship as an engine of growth.

In the era of the Internet, innovation is becoming a major force for social and economic development globally.

Freshly-baked Oreo cookies pass along a conveyor belt at a Kraft Foods’ factory in Suzhou, Jiangsu province. (File photo: REUTERS/Aly Song)

It is this spirit that the SIP has been channelling to create an innovation-based ecosystem in four ways. First, since 2015, the SIP has focused on attracting and retaining international talent, the core of the innovation ecosystem.

Incubators like the National University of Singapore’s Block71 Suzhou have been set up to provide support to tech start-ups and aid them in exploring potential business opportunities.

Second, the SIP has established a global network of research institutes and associates through its Dushu Lake Higher Education Town and built a network of international innovation centres, premised on the idea that scientific research provides the foundation for technological innovation.

Third, the SIP is working with partners to transform its financial services sector and put in place an intellectual property regime needed for enterprise to flourish and cross-border transactions, trade and investments to grow. It has even set up a Patent Exchange Navigation Centre where tenants can register, search for, buy and sell their patents while ensuring that their intellectual property is protected.

Fourth, the SIP is building product chains around three new strategic clusters of nano-technology, biotechnology and cloud computing.

During an interview at the end of a five-day visit to Suzhou and Beijing, Finance Minister Heng Swee Keat said the promotion of innovation was something Chinese leaders at the provincial and central government level have given a lot of thought to, and was a topic that came across “very strongly” at all meetings.

SIP 2.0 AS AN INTERNATIONAL BRAND

In the past 23 years, the SIP has been completely transformed. In many ways, the SIP has not always enjoyed the advantages of a number of other special economic zones.

It was set up 15 years later than the Shenzhen, Zhuhai, Shantou and Xiamen Special Economic Zones. It is significantly smaller than the Pudong New Area of Shanghai (which covers an area of 1,210 square kilometres). And it does not have an airport of its own.

However, because of Suzhou’s open and outward-looking policies, the SIP has become one of the most favourable destinations for international investors. In a survey conducted by the Ministry of Science and Technology of the People’s Republic of China in 2016, the SIP ranked first in global competitiveness among 147 national high-tech parks in China.

As an international brand, SIP 2.0 is valuable as a model for developing countries hungry to find solutions to achieve industrialisation without having to sacrifice a clean environment, balancing urban development with social management, and upgrading domestic industries through innovation.

The SIP stands as a model of economic growth and vibrancy. It will be mutually beneficial if the SIP shares its development experiences with those countries along the Belt and Road Initiative through joint ventures, government briefings, and training programmes.

In a new era of globalisation and innovation President Xi Jinping spoke about at the APEC summit, a model like the SIP 2.0 can promote inclusive growth and economic liberalisation.

Professor Bo Zhiyue, a leading authority on China’s politics, is director and professor of the XIPU institute, a think tank established by the Xi’an Jiaotong-Liverpool University and founder of the Bo Zhiyue China Institute, a consulting firm providing services on China to heads of governments and CEOs of multinational corporations.His most recent books include China-US Relations in Global Perspective and China’s Political Dynamics under Xi Jinping.



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