Major Policy Tools
local governments facilitated access to industrial land throughout the domestic economy. Government entities gradually developed policies that enabled smaller firms to expand organically or through industrial parks that eased land and infrastructure constraints. As local industries grew and paid taxes, local governments could afford to upgrade the industrial infrastructure and expand the area of industrial parks. Local officials exercised their power of eminent domain to take over agricultural land at minimal cost and then resell the land use rights to manufacturing or real estate development firms at a large profit. While providing ample land for business expansion, this approach provoked widespread protests among dispossessed farmers and residents (Hsing 2010).2 Industrialization and urbanization are reducing the land available for production and commerce. Relocating enterprises to industrial parks or economic development zones is the major channel for obtaining new land. Industrial parks, normally developed by local governments, offer roads, utility connections, and standard workshops. By convincing firms to move into industrial parks, local governments also hope to group firms in the same sector so as to reap the benefits of agglomeration and clustering. Finance. China’s banks lend largely to borrowers with strong ties to the
public sector and discriminate against small and privately owned firms of the type found in light manufacturing clusters. Some local governments have used land as collateral to obtain funds for developing light manufacturing.3 Local officials have also used their networks and influence to assist firms in gaining access to external finance.4 Trade logistics. By locating industrial parks in coastal areas with access
to domestic transport and port facilities and with long pre-Communist histories of international trade, China’s rising export sectors enjoyed adequate trade logistics from the start. As manufactured exports expanded, investments in export-related transport and port facilities became more attractive. Industrial park administrations also streamlined customs formalities for entrepreneurs. Entrepreneurial and worker skills. Industrial parks provided permanent
space for overseas and local investors, thus attracting entrepreneurs with
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