Introduction

China’s strategy of exporting its economic zone model to other countries has become a hallmark of its foreign economic policy. Through initiatives like the China-UAE Industrial Capacity Cooperation Zone and other overseas industrial parks, Beijing is promoting foreign investment, strengthening trade diplomacy, and fostering economic development in partner nations. This strategy not only bolsters China’s international influence but also provides a replicable model for economic growth in developing countries.

Key Policies and Impacts

The development of overseas industrial parks is guided by policies encouraging Chinese companies to invest abroad and create localized hubs of production. The Belt and Road Initiative (BRI) serves as the primary framework for these efforts, with industrial parks playing a key role in connecting global supply chains and promoting regional development.

The China-UAE Industrial Capacity Cooperation Zone in Abu Dhabi exemplifies this approach. Established in 2017, this 2.2 square-kilometer zone focuses on industries like logistics, manufacturing, and renewable energy. With investments exceeding $1 billion, the zone has attracted more than 20 Chinese enterprises, creating jobs and transferring technology to the local workforce. This model enhances bilateral trade ties and positions the UAE as a gateway for Chinese companies targeting Middle Eastern and African markets.

Another prominent example is the Sihanoukville Special Economic Zone (SSEZ) in Cambodia. Jointly developed by Chinese and Cambodian companies, the SSEZ houses over 170 enterprises, spanning textiles, electronics, and logistics. The park has created over 30,000 jobs for Cambodians and contributed significantly to the country’s export-driven growth, illustrating the role of industrial zones in fostering economic partnerships.

China’s policies also prioritize the localization of operations. In Ethiopia, the Eastern Industrial Zone focuses on light manufacturing and has introduced advanced machinery and training programs for local workers. This approach not only generates economic benefits for host nations but also strengthens diplomatic ties by demonstrating China’s commitment to shared growth.

Stakeholder Perspectives

For host governments, China’s industrial parks provide an opportunity to attract foreign investment, diversify economies, and create jobs. The transfer of technology and infrastructure development associated with these zones enhances local industrial capabilities. However, some governments have expressed concerns about economic dependency and environmental impacts, emphasizing the need for balanced partnerships.

For Chinese companies, overseas industrial parks offer a platform to expand globally and reduce costs by leveraging local resources and labor. The zones provide a structured and supportive environment for businesses, enabling them to mitigate risks associated with international expansion.

For local communities, these parks create employment opportunities and facilitate skills development. However, concerns about labor conditions and limited participation in higher-value operations highlight the importance of fostering inclusive growth and fair labor practices.

From the perspective of global institutions, China’s industrial parks demonstrate a novel approach to fostering South-South cooperation. However, questions about transparency, environmental standards, and debt sustainability have prompted calls for clearer governance and accountability frameworks.

Comparative Insights

China’s overseas industrial parks differ significantly from traditional foreign direct investment (FDI) models. Unlike Western multinational corporations, which typically focus on profit-driven investments, China emphasizes long-term partnerships and infrastructure development. This state-backed approach ensures that the parks align with broader economic and diplomatic goals.

In contrast, special economic zones (SEZs) in regions like Latin America and Africa often struggle due to limited infrastructure and weak governance. By integrating industrial parks into larger initiatives like the BRI, China provides comprehensive support, from financing to technical expertise, ensuring the sustainability of these projects.

Developing nations can draw lessons from China’s model by creating industrial zones that prioritize infrastructure, align with local economic priorities, and foster international collaboration. This approach provides a viable alternative to traditional aid-driven development strategies.

Challenges and Critiques

Despite their success, China’s industrial parks abroad face significant challenges. A key concern is the lack of transparency in project financing and operations. Host nations often question the terms of investment agreements, particularly regarding profit-sharing and debt repayment obligations.

Environmental sustainability is another critical issue. Rapid industrialization associated with these zones can lead to resource depletion, pollution, and ecological damage if not carefully managed. Balancing industrial growth with environmental preservation is essential for ensuring the long-term viability of these projects.

Additionally, some critics argue that China’s industrial parks risk creating economic dependencies. By dominating key sectors in host economies, Chinese enterprises may limit local companies’ ability to compete, potentially undermining the development of indigenous industries.

Geopolitical tensions further complicate the narrative. Western countries often frame China’s overseas industrial parks as tools for expanding influence rather than fostering genuine partnerships. Addressing these perceptions is crucial for maintaining global trust in China’s development initiatives.

Policy Recommendations

To enhance the effectiveness and sustainability of its overseas industrial parks, China should Promote transparency in investment agreements by clearly outlining terms related to financing, operations, and profit-sharing. Collaborative governance structures involving host nations can build trust and accountability. Integrate environmental safeguards into industrial park planning. Adopting green technologies, renewable energy solutions, and sustainable waste management systems can mitigate ecological impacts and align projects with global sustainability goals. Foster inclusive economic growth by prioritizing local partnerships and capacity-building initiatives. Ensuring that host nations share in the economic benefits can create more equitable and enduring relationships. Strengthen local value chains by integrating local suppliers and businesses into industrial park operations. This approach can promote technology transfer and boost the competitiveness of indigenous industries. And lastly Engage with global institutions to establish international standards for industrial parks. Collaborating with organizations like the United Nations and World Bank can enhance credibility and address concerns about transparency and sustainability.

Call to Action

China’s industrial parks abroad showcase the transformative potential of strategic economic zones in fostering global development and trade diplomacy. By addressing challenges related to transparency, sustainability, and inclusivity, these initiatives can serve as a blueprint for equitable and collaborative economic growth. Policymakers, businesses, and global institutions must engage with this model to promote innovation, foster partnerships, and shape a more interconnected global economy.