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Zhang, Y.; Fu, Z.; Xu, L.; Lu, Z. The Impact of COCZs on Sustainable Trade. Encyclopedia. Available online: https://encyclopedia.pub/entry/53515 (accessed on 01 July 2024).
Zhang Y, Fu Z, Xu L, Lu Z. The Impact of COCZs on Sustainable Trade. Encyclopedia. Available at: https://encyclopedia.pub/entry/53515. Accessed July 01, 2024.
Zhang, Yu, Zeyu Fu, Lei Xu, Zhenzhen Lu. "The Impact of COCZs on Sustainable Trade" Encyclopedia, https://encyclopedia.pub/entry/53515 (accessed July 01, 2024).
Zhang, Y., Fu, Z., Xu, L., & Lu, Z. (2024, January 07). The Impact of COCZs on Sustainable Trade. In Encyclopedia. https://encyclopedia.pub/entry/53515
Zhang, Yu, et al. "The Impact of COCZs on Sustainable Trade." Encyclopedia. Web. 07 January, 2024.
The Impact of COCZs on Sustainable Trade
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This entry is adapted from the peer-reviewed paper 10.3390/su152416951

Under the concept of “government-guided, enterprise-led, and market-oriented” operation, the Chinese Overseas Economic and Trade Cooperation Zones (COCZs) have developed a new type of international production pattern, which has become an effective way for developing countries to integrate into the global production network sustainably. 

overseas economic and trade cooperation zones sustainable trade host country

1. Introduction

China’s Overseas Economic and Trade Cooperation Zones (COCZs) are a replication of the successful operation of China’s special economic zones. From the 1990s, Chinese enterprises have independently explored the construction of overseas parks. The COCZs adhere to the concept of “government-guided, enterprise-led, and market-oriented” operation and develop a novel international production pattern. They are a crucial means for China to break away from the trap development and enhance the new international production network, and they are also an effective way for the host country to obtain more added value and integrate into the global value chain. For the host country, the COCZs provide a “window effect” to share experience, provide technical support and capital export, and promote the market-oriented reform of the host country. According to the Ministry of Commerce of China, by the end of 2022, Chinese enterprises had invested a total of USD 57.13 billion in COCZs along the “Belt and Road”, paid USD 6.6 billion in taxes to the host country, and created 421,000 jobs for the locals. The economic and social impact on host countries has been expanding year by year, which has effectively promoted mutual benefit and common development between COCZs and host countries. For China, enterprises use COCZs as a platform to go abroad in groups; not only can they use the abundant labor and resources of the local area to achieve cost reduction, efficiency improvement, and enhance their international competitiveness, but also can obtain enough space and resources for domestic industrial development and transformation through international capacity cooperation and build a new path for China’s manufacturing industry to climb to the middle and high end of the value chain.
International trade is rooted in the need for mutual complementarity and the exchange of resources among countries. COCZs are an important platform for China to deepen international trade cooperation, promote deep integration with the host country’s economy and trade, and achieve mutual benefit and win–win results. As the number and scale of COCZs increase, their impact has attracted widespread attention. However, most studies of COCZs have been from the perspective of Chinese enterprises [1][2][3]. Furthermore, they have primarily focused on case studies of specific COCZs [4][5][6], lacking detailed econometric analysis and coverage of sustainability issues. 

2. Sustainable Trade

Sustainable trade research is rooted in the concept of “sustainable development”, which involves satisfying present needs while ensuring that future generations have the capacity to satisfy their own needs. According to the definition of the International Institute for Environment and Development (IIED, 2000) [7], international transactions of products and services conducted in a sustainable manner should be able to generate positive social, economic, and environmental benefits and comply with the four basic principles of sustainable development: increasing economic value, reducing poverty and inequality, conserving and utilizing environmental resources, and operating within an open governance framework. In addition, according to the International Chamber of Commerce (ICC, 2018) [8], sustainable trade is defined as “commercial behavior or activities that buy or sell bulk commodities, goods, and services that promote global sustainable development while minimizing negative social and environmental impacts.” Subsequently, the World Economic Forum (WEF, 2019) [9] put forward five proposals to promote sustainable trade in underdeveloped countries around the world, including international cooperation and investment, technology and education support, emerging country development issues under new economic conditions, trade inclusion potential for poor countries, and their environmental impact in trade. UNCTAD (2021) [10] discusses the role of voluntary sustainability standards in promoting sustainable development and international trade. Overall, sustainable trade pays more attention to comprehensive sustainable development issues such as fairness, human rights, poverty reduction, etc., on the basis of green trade. Generally speaking, trades conducted in a sustainable manner are sustainable trades whose production supply chains are sustainable, environmentally friendly, and fair.
In recent years, many scholars have begun to focus on the topic of sustainable trade. Costanza et al. [11] argued that sustainable trade is a new paradigm for world welfare and proposed a framework for analyzing the ecological and economic impacts of trade. Existing studies have confirmed the positive effects of international trade on national economic development [12][13][14], but the findings of international trade’s effects on the environment are inconsistent. Antweiler et al. [15] explored the effects of international trade on income and environmental quality by decomposing trade into scale, technology, and compositional effects and showed that free trade not only increases per capita income, but also has a positive effect on the environment. Frankel et al. [16], using the instrumental variables approach, also came to similar conclusions: trade not only promotes national economic growth, but also when environmental quality is measured in terms of NO2, SO2, and CO2, the results show that trade contributes to the improvement of the environment. Aller et al. [17] constructed national trade centrality indicators to study the relationship between trade participation and the environment, and the study showed that the participation of developing countries in world trade contributes to the improvement of environmental quality. Xu et al. [18] show that international trade positively affects the global process of achieving the nine environment-related Sustainable Development Goals (SDGs). Moreover, in addition to the studies that concluded a positive effect of international trade on environmental quality, according to a review study by Sorroche-del-Rey et al. [19], 20.68% of the studies showed that international trade has a negative effect on environmental quality, and this negative effect is due to the negative impact on the environment of developing countries as a result of the use of developing countries as “pollution havens” by developed countries. Wang et al. [20] investigate the impacts of structural changes in global trade on 13 SDGs, and the results showed that structural changes in trade have the greatest impacts on environmental indicators. A study by Wang et al. [21] reaches a similar conclusion: high-income countries are able to decouple their economic growth from environmental pollution in a better way, whereas low-income countries have difficulty decoupling economic growth from environmental pollution. Le et al. [22] even argue that trade openness positively affects environmental efficiency only in high-income countries.
Globalization has created an increasing geographical division between the production and consumption of goods, which has led to an unprecedented transfer of environmental and social consequences to developing country trade in international trade [23] and the imbalance of benefits and costs triggered in international trade between countries [24][25], making it more difficult for developing countries’ trade to achieve the Sustainable Development Goals (SDGs), which has triggered many scholars to give attention to the issue of sustainable trade in developing countries. Belloumi et al. [26] examine the impact of trade openness on sustainable development in Saudi Arabia, and the results of the study show that trade openness is associated with two sustainable development indicators, namely economic growth and environmental quality indicators, which have a long term relationship. The study of Daly et al. [27] also found that trade openness, on the one hand, promotes economic growth in Saudi Arabia, which leads to more resource consumption and pollution emissions, and, on the other hand, trade openness is able to improve the quality of the environment through the introduction of cleaner technologies and stricter environmental standards. Su et al. [28] explored the effect of natural resources on sustainable trade in the BRICS countries using long term panel data for 1988–2021; the results show that while mineral and natural resource rents have a positive contribution to sustainable trade, oil rents have a negative effect on sustainable trade, and expenditures on renewable energy have a negative impact on sustainable trade in the long run. Sudsawasd et al. [29] studied the impact of trade liberalization policies on sustainable development in Thailand. The results show that international trade helps developing countries to reduce poverty, increase productivity, reduce unemployment, and promote economic growth, income, and consumption.

3. Overseas Economic and Trade Cooperation Zones

Overseas economic and trade cooperation zones can be categorized as special economic zones (SEZs) that have facilitated the process of globalization since the last century, from the perspective of their essential attributes. The United Nations World Investment Report 2019 defines SEZs based on three key criteria: having clearly demarcated geographic areas, enjoying special administrative systems, and receiving infrastructure support. The sources of benefits include direct economic benefits (foreign exchange income, foreign direct investment, fiscal revenue, export growth) and indirect economic benefits (technological innovation, demonstration effect, export diversification) [30]. Establishing SEZs usually aims to achieve one or more of the following policy objectives [31][32][33][34][35]: attracting foreign direct investment, alleviating mass unemployment, implementing more open economic reform strategies, and serving as a testing ground for new policies and approaches. Empirical studies show that many SEZs have achieved success in attracting foreign direct investment, creating employment and exports [36][37][38][39]. Existing research also considers SEZs as an effective way to achieve national industrial development. Parks can provide bundled public services in concentrated areas, improve the utilization efficiency of government infrastructure budgets under limited conditions, and promote industrial agglomeration and cluster development [40].
In recent years, China’s overseas economic and trade cooperation zones have also attracted a large number of domestic and foreign scholars’ attention. Bräutigam et al. [5] discussed China’s special economic zones and their role in attracting foreign investment to help the country industrialize, as well as the overseas trade and cooperation zone program initiated by Beijing in 2006, which assists Chinese companies in investing abroad while also building China’s soft power through the transfer of a key component of China’s development success. Zhang et al. [2] showed that the establishment of COCZs significantly promotes the economic development of host countries. Meng et al. [1] showed that COCZs play a crucial role in fostering inclusive and sustainable industrialization and urbanization of the host countries under the Belt and Road Initiative, but there is a lack of exploration of the mechanism, as well as questions and concerns from overseas scholars, issues of sustainable development, and other problems. Li et al. [41] found that the construction of offshore zones can significantly promote China’s direct investment in host countries. Lu et al. [42] analyze the successful development mode of existing overseas economic and trade cooperation zones and found that actively playing the main role of enterprises in building zones, paying attention to the orderly integration of the motives for building zones and industrial positioning, clarifying the balanced relationship between the needs of development of multiple parties, and adhering to the concept of diversified development are important ways to promote the high-quality development of overseas economic and trade cooperation zones.
In addition, some other scholars have conducted case studies on some specific Chinese overseas trade parks. Meng et al. [43] study the impact of China’s establishment of overseas parks in Vietnam on Vietnam, and the study showed that China’s investment in Vietnam has led to Vietnam’s economic growth. Chen et al. [44] examine the role of overseas parks in Chinese enterprises’ outbound investment by taking Sihanoukville Special Economic Zone in Cambodia as an example, and the results showed that the overseas parks play an important role in promoting Chinese SMEs’ outbound investment, providing buffer space and development soil for them to overcome the institutional and cultural differences in their overseas investment, and acting as the role of an “investment garden”. Zheng et al. [45] analyze the role of international cooperation zones (IZAs) in promoting the coupling of regional development strategies in the global production network by taking the example of Rayong Industrial Zone in Thailand and China. The study shows that international cooperation zones as intermediaries have the functions of attracting investment and promoting business linkages between regional economies and global production networks.

References

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