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Economic statecraft in China's new overseas special economic zones: soft power, business or resource security?



    1. Professor of International Development at the School of International Service, American University, Washington DC.
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    1. Senior Research Assistant at the International Food Policy Research Institute, Washington DC.
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    • The research underlying this article was funded by the Smith Richardson Foundation, the German Marshall Fund of the United States, the World Bank, the American University, the City University of New York, and the International Food Policy Research Institute. The authors thank Xinshen Diao, Shaun Breslin, Henry W. C. Yeung, Tewodaj Mogues, Hans Jørgen Gåsemyr, Ted Moran, Shahid Yusuf, Danny Leipziger and Yasheng Huang for their helpful comments. Nicholas Smith provided excellent research assistance.


China's rapidly growing economic engagement with other developing countries has aroused intense debates, but these debates have often generated more heat than light. The Chinese government is clearly pushing its companies to move offshore in greater numbers, and state-owned firms figure prominently in many of the major investments abroad. Yet relatively little research exists on when, how and why the Chinese government intervenes in the overseas economic activities of its firms. China's state-sponsored economic diplomacy in other developing countries could play three major strategic roles: strengthening resource security, enhancing political relationships and soft power, and boosting commercial opportunities for national firms. This article examines China's programme to establish overseas special economic zones as one tool of Beijing's economic statecraft. It traces the process by which they were established and implemented, and investigates the characteristics of the 19 zones initially selected in a competitive tender process. The article concludes that even in countries rich in natural resources, the overseas zones were overwhelmingly positioned as commercial projects. Particularly in the Asian zones, China is following in the footsteps of Japan. The zone programme, and the Chinese foreign investment it hoped to foster, represents a clear case of the international projection of China's developmental state. However, in Africa (but not generally elsewhere) discourse surrounding the zones publicly positions them as a transfer of China's own development success, thus potentially enhancing China's political relationships and soft power on the continent.