Tse-Kang Leng and Jenn-Hwan Wang 20
3. Institutional changes and local state dynamism
3.1 The Beijing Case: ZGC and local state corporatism
Beijing’s ZGC is described as the most innovative region in China. There are 68 universities (including China’s most prestigious universities, Peking and Tsinghua), 213 state-sponsored R&D institutes (including the Chinese Academy of Science, CAS), and over 300 thousand students in Beijing. Moreover, Beijing hosts over 36% of the honorary fellows of the CAS and Chinese Academy of Engineering. These figures all indicate that Beijing has more abundant science and technology personnel compared to all other cities in China.
Together with the high concentration of R&D personnel and institutes in the Beijing area, ZGC has become the most important center for technology innovation in China. Even the biggest domestic firm, Lenovo, has established its R&D center in this area and moved its hardware production and assembly into the Suzhou and Shenzhen areas. Currently, many of China’s most notable ICT companies, such as Baidu (百度) and UFIDA (用友) can be found in this area.
ZGC originally was a marketplace that existed in the Haidian District of Beijing. The emergence of this district was totally an historical incident rather than planned by the state.35 In the early stages of economic reform, many non-state enterprises emerged and increasingly concentrated in Beijing’s Haidian District. Most of these enterprises were spun off from state-owned units, either from the academic institutes or the SOEs.36 By seeing the potentiality of further development due to the high concentration of prestigious universities and R&D institutes, in 1988, the Beijing government decided along with the central government to develop this area as the Beijing Experimental Technology Zone. Therefore, in contrast to other areas where the experimental zones were created by local states, ZGC was unique in that the Beijing government created the
35 Segal, Digital Dragon: High-Technology Enterprises in China.
zone mainly in response to and after the rapid growth of non-state enterprises.
Nevertheless, while the Haidian District of ZGC emerged due to the increasing concentration of non-state technology enterprises, there are many other local districts which are also called ZGC and were well planned by the local states. In 1997, ZGC was expanded to three zones, including Fengtai (豐台) and Changping (昌 平) zones, at the same time the ZGC administrative office, under the Beijing city government, was established to oversee coordination. In the process, the zones continued to expand. Currently, there are ten ZGC zones which are located around the Beijing municipality. These zones were created by local district governments for the purpose of attracting capital so as to create economic growth in the name of high-tech development. These zones, their locations, and major economic functions are described in table 1.
As zones in the ZGC have steadily increased from just Haidian to ten units, the obvious fact is that the ZGC administrative office has had to bear the burden of coordination. On the surface, the functions of the ZGC administrative office are similar to other administrative offices in China, including setting up the target industries to develop, assisting firms in getting more information on financial support, bridging firms with R&D institutes, as well as mediating talents and firms, etc. In reality, what the ZGC administrative office has to do is to negotiate with district governments. One of these tasks has been to collaborate closely with district governments to set up specialized zones. The district government has its own motivation to set up a special zone for a science park, as stated above, but this has to be approved by the city government and ZGC administrative office. Therefore, the district government must convince the city government and ZGC administrative office that its plan can fit the level and types of technology that ZGC needs. Once these have been approved, the district government can then establish a special office run by a semi-governmental company to direct and manage the zone, which, in turn, is also partially monitored by the ZGC administrative office. Since the district government has the incentive to develop the local economy, it has the motivation to collaborate closely with the ZGC administrative office and follow its regulations.
Therefore, it is clear that the development of ZGC has been based on a similar local state corporatist development model as Oi describes.37 The responsibilities of the city government and ZGC administrative office are to set the required policies, to promote the ZGC label, and to attract domestic and foreign
investments. The same measurements were also applied to universities.
3.2 The Shanghai Case: local state initiatives and the realization of scientific parks
Similar to Beijing and other areas, Shanghai also has created many science-based industrial parks in order to attract foreign and domestic high-tech investments. In late 1990s, a new Yangpu project was installed, with the intention of imitating Silicon Valley (or ZGC) to create a new science park that is located in the area where the most prestigious universities and research institutes are based.
Yangpu is among the biggest administrative districts of Shanghai. In the 1960s, Yangpu accommodated more than half a million workers and became the major industrial center in China. The reform of Shanghai and the launch of the Pudong project in 1991 marked the beginning of the decline of Yangpu District. By contrast, the traditional industries in Yangpu failed to upgrade and lost their competitive edge. In the late 1990s, Yangpu accommodated only around sixty thousand workers. The economic output of Yangpu was among the bottom of Shanghai’s ten metropolitan districts.
The major turning point for Yangpu was another attempt by the Shanghai metropolitan government to rebuild Yangpu as the “knowledge-based center” and “innovation hub” at the turn of the century. The idea for transforming Yangpu is based on the design to utilize the intellectual resources of fourteen universities (including Fudan and Tongji) and numerous research institutions located in the northern part of Yangpu. The Yangpu district developed the concept of “tri-parties cooperation” to integrate academic institutions, high-tech parks, and local communities. The tri-parties cooperation thus serves as the engine to boost the high-tech developments, amenities, and urban development of Yangpu.
Given its special historical background and existing burden in urban development, Yangpu is not able to
“build” a science-based park like Zhangjiang in Shanghai’s Pudong District. However, at least at the beginning stage, the local state still intends to take the lead in the tri-party cooperation framework. Reforming an area as complex and burdensome as Yangpu is a tough job. The Yangpu District government thus designs a new concept of a “Central Intelligence District, CID” to distinguish itself from the existing CBD (Central Business District) of the Pudong District. The core of the CID is the integration of universities, high-tech human resources, and community restructuring in the northern part of the Yangpu District. On the other hand,
the old factory buildings along the Huangpu River is planned to be transformed into enterprise incubators and recreation centers such as the Fishermen’s Warf.38
The first institutional establishment as the symbol of a scientific park is the birth of the Shanghai Yangpu Technology Business Incubator, SYTBI. Instead of direct intervention from the city or district government, SYTBI is the product of the cooperation among the Shanghai Start-Up Center of the city government, Yangpu District government, and the Scientific Center of Fudan University. The Shanghai State Property Company and Yangpu District government also created a joint venture, the Yangpu Knowledge Incubator Company, to shoulder major responsibilities in the construction of a new university town in Yangpu. This district-owned enterprise is the combination of constructors, investors, and administrators. The Office of the Leading Group of Yangpu Knowledge-based Park is also located within the enterprise. The major task of this office is to coordinate various sectors to facilitate the growth of the start-ups.
In contrast to the outmoded top-down thinking of “creating” a knowledge-based community, the Yangpu government perceived the need for fostering an innovative culture in the community. In the early stage of the tri-parties cooperation project, the Yangpu leadership indicated the adjustment of the role of the government to one of encouragement instead of guidance. In addition to the improvement of urban infrastructure, the improvement of the regulatory regime is also the core of perfection.
Another salient characteristic of the Yangpu case is the rising role of the district government in economic policymaking and implementation. In contrast to the ZGC and Zhangjiang cases with strong state directives, the district government took the initiative to push the Yangpu case forward. According to the authors’
interviews, the Yangpu District government provided the grand design to reconstruct the region and introduced the concept of tri-party cooperation to elevate the knowledge-based economy. 39Based on the blueprint of the Yangpu project, the Shanghai metropolitan government offered related institutional support.
In addition, the Yangpu District government enjoys more autonomy in public finance. Financially speaking, the metropolitan and district governments are in a situation of being “upside down” (倒掛 dao gua). A leading scholar in a public think tank in Shanghai indicated that the Yangpu District government has reached even
38 Jianqiang Li and Qiyu Tu, Daxue Xiaoqu, keji yuanqu , gonggong shequ liandong fazhan (Cooperative development between universities, high-tech parks, and local communities) (Shanghai: Shanghai Shekeyuan chubanshe, 2007).
outside the Shanghai metropolitan area to expand its influences. Recently the Yangpu District government has reached a deal with the Yancheng City in northern Jiangsu Province. According to the deal, Yancheng City will provide a large piece of land for start-ups from incubators in Yangpu District. This deal was solely negotiated between Yangpu and Yancheng, and the Shanghai Metropolitan government did not intervene.