Suzhou Industrial Park: Sustainability, Innovation, and Entrepreneurship (Social Policy and Development Studies in East Asia) 981166756X, 9789811667565

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SOCIAL POLICY AND DEVELOPMENT STUDIES IN EAST ASIA

Suzhou Industrial Park Sustainability, Innovation, and Entrepreneurship Li Xie · Xiangyun Lu

Social Policy and Development Studies in East Asia

Series Editors Joshua Mok, Lingnan University, Hong Kong Jiwei Qian, National University of Singapore, Singapore, Singapore

“Social Policy and Development Studies in East Asia” aims to provide a platform for academics, researchers and policy analysts to contribute their reflections and analysis of how rapid social, economic, cultural, political and even political economy changes would have affected the formulation, implementation and evaluation of social policy responses in handling/managing rapid changes and risk management issues confronting East Asian governments and societies.

More information about this series at http://www.palgrave.com/gp/series/15726

Li Xie · Xiangyun Lu

Suzhou Industrial Park Sustainability, Innovation, and Entrepreneurship

Li Xie International Business School Suzhou Xi’an Jiaotong-Liverpool University Suzhou, Jiangsu, China

Xiangyun Lu International Business School Suzhou Xi’an Jiaotong-Liverpool University Suzhou, Jiangsu, China

Social Policy and Development Studies in East Asia ISBN 978-981-16-6756-5 ISBN 978-981-16-6757-2 (eBook) https://doi.org/10.1007/978-981-16-6757-2 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

When you walk on the street in Suzhou Industrial Park (SIP), you probably feel that what you see is different from other places in China or even different from Wuzhong District—a territory being 10 km distance from SIP, also affiliated to city of Suzhou. You may wonder why? Since its inception in 1994, Suzhou Industrial Park has become one of the leading economic and development zones (EDZs) in China. Its great success is indeed a miniature of China’s economic achievements over the past four decades. Scholars from regional economics suggest that government/governance quality as a formal institution has been identified as one of the most important factors to shape economic activities and development. According to a recent published Harvard Business Review (May–June 2021), in an article entitled with ‘What the West Gets Wrong About China’, Professor Rana Mitter and Dr. Elsbeth Johnson suggest that “… The critical distinction is that the Chinese system is not only Marxist, it’s Marxist-Leninist. In our experience, many Westerners don’t understand what that means or why it matters. A Marxist system is concerned primarily with economic outcomes. That has political implications, of course—for example, that the public ownership of assets is necessary to ensure an equal distribution of wealth—but the economic outcomes are the focus. Leninism, however, is essentially a political doctrine; its primary aim is control. So a Marxist-Leninist system is concerned not only with economic outcomes

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but also with gaining and maintaining control over the system itself (p45–p46).” From their argument, it can be clearly seen that the success of China’s economy comes from the pivotal role of the central government and local governments as key players in determining economic policies and activities—they are concerned with controlling over the system. Therefore, government quality is a key thing. Indeed, it is the unique institutional arrangement and governance model that make SIP have current success. Thus, this book attempts to explore the role of institutional arrangement and governance model by SIP in shaping economic activities and development, particularly from the perspectives of innovation, entrepreneurship, and sustainability. We focus on such perspectives, mainly because innovation and sustainability have become two main and important themes in both developed and emerging countries, particularly in the aftermath of COVID-19. The completion of this book is not an end. It is a starting point to further conduct a set of SIP-based research projects, which are expected to provide valuable practical implications for local policymakers and practitioners, thereby making local communities and regions better. Suzhou, China

Li Xie

Acknowledgments

We are deeply grateful to the publishing team at Palgrave Macmillan headed by the Senior Editor Jacob Dreyer. It is Jacob who motivated us to conduct a research project related to Suzhou Industrial Park. We are also grateful to other members of the publishing team who have supported this publication. We would also like to thank our three students in Business School at XJTLU as research assistants, i.e., Jianwen Yao, Xinyu Lin, and Yan Cai for their contribution of literature search and material collection. We are deeply grateful to our respective families for their support. Thanks to our colleagues and friends who have supported us in seeing through this publication.

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Contents

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Introduction

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Export-Led Growth Strategy and Government Quality Introduction Export-Led Growth Strategy The Role of Government Quality in Regional Economic Development Institutional Innovation and Arrangements of SIP Stage 1: Industrial Clusters (From 1994 to 2001) Stage 2: High-Tech Industrial Clusters (From 2002 to 2008) Stage 3: Regional Innovation Clusters (From 2009 to Now) Reactions by the Governments to External Shocks or Systemic Risks The 1997–1998 Asian Financial Crisis The 2007–2008 Global Financial Crisis The Trade War Between China and U.S. Covid-19 References

5 6 7

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Circular Economy and Eco-Industrial Park Introduction Circular Economy

9 11 11 15 17 21 21 23 26 28 30 33 33 35

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Definition and Characteristics The Circular Economy in China Eco-Industrial Park Eco-Industrial Park in China SIP as an Eco-Industrial Park (EIP) Concluding Remarks and Implications References

35 37 41 41 47 54 56

Entrepreneurial Ecosystems Introduction Entrepreneurial Ecosystems Definition, Components, and Structures The Role of Institutions and Government in Entrepreneurial Ecosystem The SME-Oriented Institutional Arrangement by SIP Service-Oriented Arrangements and Design Funding-Oriented Arrangements Human Capital- and Research-Related Arrangements The Actions Taken for Resisting COVID-19 Concluding Remarks and Implications References

61 62 63 63

Conclusions

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Index

66 68 68 71 74 76 80 81

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List of Figures

Fig. 2.1 Fig. 3.1 Fig. 4.1 Fig. 4.2

Governance structure of Suzhou Industrial Park (Source Figure 5.1 from Zhao & Farole, 2011) Linear economy and circular economy model (Source Zhu et al., 2019) Relationships among ecosystem attributes (Source Figure 1 of Spigel, 2017) Elements and outputs of the entrepreneurial ecosystem (Source Figure 1 of Stam & van de Ven, 2019)

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CHAPTER 1

Introduction

Abstract This chapter suggests that the export-led strategy has been viewed as one of the leading factors for tremendous economic achievement in China over the last several decades and that industrial parks/economic development zones (EDZs) have become key players in implementing such strategy. Among various industrial parks, Suzhou Industrial Park (SIP) has now developed as a leading and model industrial park/EDZ in China. To well explore the driving force(s) of its excellent economic performance, the chapter suggests that it is important to examine the role of unique institutional arrangements and designs by SIP (as a formal institution to reflect government/governance quality) in shaping economic activities and development, particularly from the perspectives of innovation, entrepreneurship, and sustainability. The chapter also shows the structure of the book. Keyword Export-led strategy · Economic and development zones (EDZs) · Suzhou Industrial Park (SIP) · Government quality · Innovation and sustainability

Since implementing economic reform and opening-up policy in earlier 1980, China has achieved enormous development of economic growth. Particularly, since its accession to World Trade Organization (WTO) in © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2_1

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2001, China has largely relied on the export-led economic strategy for its economic development, i.e., both attracting inward foreign direct investment (FDI) to establishing multinational manufacturing enterprises in China and exporting various products and goods worldwide as a result of such inward FDI. In the process of implementing such export-led strategy, industrial parks located in various regions in China have become very vital players, among which, Suzhou industrial park (SIP) has now developed as a leading and model industrial park in China, since its inauguration in 1994 as a result of governmental collaboration between China and Singapore.1 Over the past two decades and particularly after the 2007–2008 financial crisis, innovation and sustainability have become two main and important themes in both developed and emerging countries. On the one hand, innovative industries/firms, particularly innovative SMEs have been widely recognized as one of the key driving forces of sustained economic growth in a country, mainly because the capacity of an economy to produce innovative and high-tech goods signifies the potential of its innovation and competitiveness, and therefore of its growth in the long run. On the other hand, corporate environmental responsibility and social 1 SIP was launched in 1994 to develop a model industrial township within Suzhou city of Jiangsu province in China. As the first flagship joint project between the two governments, a key feature of the SIP is to bring Singapore’s ‘software’—industrial development model and public-administration experience—to China. At the time, China was keen to study Singapore’s development model, while Singapore cared China as an important market for the country’s economic development. Both governments believed that SIP, with the help of Singapore’s management approach, would be attractive for foreign direct investments. SIP lies along Jinji Lake east of Suzhou, 80 km away from the Shanghai Hongqiao Airport (mainly domestic flights) and 130 km away from the Shanghai Pudong Airport (mainly international flights). SIP covers a total of 288 square kilometers, of which 70 square kilometers are within the China–Singapore cooperation zone. SIP is a large community including production, commercial, and residential sectors. The main industries are electronic information, precision machinery electronics, IT, software, chemical, pharmaceutical, and health care. In 2020, SIP achieved a total regional GDP of RMB 290.709 billion, a total import and export value of USD 94.177 billion, a total retail sales of consumer goods of RMB 93.481 billion, and an urban per capita disposable income of over RMB 77,000. In the comprehensive assessment of national economic development zones announced by the Ministry of Commerce, SIP ranked first for five consecutive years (i.e., 2016, 2017, 2018, 2019, 2020). It ranks fourth in the comprehensive ranking of national high-tech zones and ranks among the world-class high-tech parks constructed by the Ministry of Science and Technology.

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responsibility have become one of the important activities and the priorities of various types of companies to meet their stakeholders’ needs, which has been also regarded as an important factor influencing the long-term economic growth. Indeed, SIP not only is a leading economic and development zone (EDZ), but also one of the leading eco-industrial parks (EIPs) in China, which has been focusing more on high-tech innovation/entrepreneurship and environmental sustainability with the ecological perspective to maintain sustained economic growth in the long run, particularly when the State Council of China approved the SIP’s proposal to become the first experimental zone for economic liberalization and innovation in September 2015. If you are a Chinese or you are familiar with China, you must believe that the current economic achievement that China has accomplished is definitely inseparable from the role of its central government and local governments as key players in economic decisions and activities. This impression is right in line with what has been suggested by existing literature on economic growth theory. Prior literature in this field suggests that conventional wisdom2 neglects one important factor i.e., the role of government/governance quality as a formal institution in shaping economic activity, which makes itself not fully understand and explain the economic trajectories of regions and cities, i.e., why some regions and cities fail while others thrive. SIP, as one of the leading industrial parks in China, has unique institutional arrangements and designs since its inception and high governance quality. Meanwhile, the success of SIP is also inseparable from the role of the SIP local government. Thus, it is important and worthwhile to examine the role of institutional arrangements by SIP in shaping economic activities and development, particularly from the perspectives of innovation, entrepreneurship, and sustainability. However, to the best of our knowledge, existing publications provide little investigation and understanding about these important issues. As a result, this book fills the gap in this void.

2 Conventional wisdom suggests that the main factors influencing economic development are physical capital, human capital or labor, innovation, agglomeration and density. For more details and related references, please refer to section “The Role of Government Quality in Regional Economic Development”.

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In Chapter 2, we will address our arguments that China’s existing economic success can be attributed to two factors: export-led growth strategy and government quality, and that SIP’s development is a miniature of China economy, which great success is able to reflect these two factors. To offer background, facts, and empirical evidence for our arguments, we in this Chapter also review export-led growth strategy of Chinese government and examine the role of government quality in regional economic development, based on which we review key institutional innovation and arrangements across various field by SIP since its inception, and how the governments (the central government and/or the SIP local government) respond external shocks such as potential economic crisis, and trade war and friction. In Chapter 3, to investigate sustainability and eco-related issues of SIP, we firstly address definition and characteristics of circular economy (CE) and CE practices in China and then introduce the content of both eco-industrial parks in China and SIP as a leading EIP, based on which we provide valuable implications for policymakers and practitioners. In Chapter 4, to address innovative entrepreneurship in SIP, we firstly examine definition, components, and structures/frameworks of the entrepreneurial ecosystem, and then identify how government plays a role in such ecosystem. we also review the SME-oriented institutional arrangement and design by the SIP government, including service-oriented arrangements, funding-oriented arrangements, and human capital- and research-related arrangements. We also offer important implications for policymakers of local government. In Chapter 5, we address concluding remarks, which is ended up with showing potential future research directions and agenda.

CHAPTER 2

Export-Led Growth Strategy and Government Quality

Abstract This chapter argues that China’s existing economic achievements can be attributed to two factors: export-led growth strategy and government quality, and that SIP as a leading EDZ is a miniature of China’s economy based on this argument and logic. To offer background, facts, and empirical evidence for our arguments, the chapter (1) reviews export-led growth strategy since economic reforms and opening-up; (2) examines the role of government quality in regional economic development according to the literature; (3) analyzes key institutional innovation and arrangements across various field by SIP since its inception; and (4) firstly provides background of recent financial crises and external shocks faced by Chinese economy, and then investigates how the Chinese central government and/or the SIP local government respond these crises and external shocks. Keywords Export-led growth strategy · Government quality · Institutional innovation and arrangements of SIP · Economic crises and external shocks

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2_2

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Introduction In this chapter, we argue that China’s economic success over the past three decades can be attributed to two factors: export-led growth strategy and government quality, and that, with regards to Suzhou Industrial Park (SIP) as a leading economic and development zone, its great success is able to reflect these two factors. First, since opening up and economic reform in 1978, the Chinese government has been carrying out so-called export-led growth strategy. Based on such strategy, on the one hand, the central government established and promote economic and development zones (EDZs) in coastal provinces to attract foreign direct investment (FDI) for building domestic manufacturing factors, therefore promoting employment and consumption. By such FDI, local governments and companies could also acquire some core technologies and management skills by technology transfer and management-related knowledge sharing. On the other hand, the final products by such FDI would export to the rest of the world, contributing to trade and economic growth. Second, existing literature on economic growth theory argues that conventional wisdom seems not to fully understand and explain the economic trajectories of regions and cities, i.e., why some regions and cities fail while others thrive, suggesting that it is worthwhile to examine one important factor that prior literature has neglected i.e., how government/governance quality as a formal institution shapes economic activity. Indeed, from the past experience of China’s economy, the Chinese government has become a key player in overall economic activities, playing a pivotal role in formulating economic strategies and policies. Therefore, performance outcomes of such strategies and policies would reflect government quality i.e., whether the government’s institutional arrangements and design is effective and efficient or not. In this regard, Suzhou Industrial Park (SIP) is a miniature of China economy based on our arguments and logic. More importantly, SIP as a leading economic zone and industrial park in China, has unique institutional arrangement with high quality of governance, and therefore, has become one of role models of China’s economy. Further, one potential risk of export-led policies is that the economy is subject to external shocks such as potential economic crisis, and trade war and friction. Consequently, one dimension to reflect government quality

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is how the government makes effective and efficient response to such external shocks and remedy negative impacts due to such shocks. To provide background, facts, and empirical evidence for our arguments, in section “Export-Led Growth Strategy”, we review export-led growth strategy of Chinese government over the past four decades. Section “The Role of Government Quality in Regional Economic Development” is to investigate the role of government quality in regional economic development. In section “Institutional Innovation and Arrangements of SIP”, we examine key institutional innovation and arrangements across various field by SIP since its inception. In section “Reactions by the Governments to External Shocks or Systemic Risks”, we firstly provide background of recent financial crises and external shocks faced by Chinese economy, and then examine how the Chinese central government and/or the SIP local government respond these crises and external shocks.

Export-Led Growth Strategy In December 1978, China launched its first program of economic reforms, featuring a bold move to establish a market economy, and the focal point of its economic policy started to shift towards promoting economic growth. Particularly, in 1980, the first four special economic zones (SEZs) were established by the government in southeastern coastal China and consisted of what were then the small cities of Shenzhen, Zhuhai, and Shantou in Guangdong province and Xiamen (Amoy) in Fujian province, for the purpose of attracting foreign investment, boosting exports, and importing high technology products into China. In these areas, local governments have been allowed to offer tax incentives to foreign investors and to develop their own infrastructure without the approval of the central government. These SEZs were thus allowed them to experiment with free-market reforms and to offer tax and trade incentives to attract foreign investment. Since launching its first program of economic reforms in December 1978, China has experienced fast economic growth, with a remarkable 9.5% annual real GDP growth on average from 1979 to 2018. This fact means that China has been able to double the size of its economy on average in real terms each eight years. In 2008, the 2007–2008 global financial crisis had a significant impact on China’s economy. In response to it, the Chinese government launched a 586 billion USD economic

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stimulus package, mainly targeting at funding infrastructure and loosening monetary policies to increase bank lending. Such fiscal policies made China to counter the impact of weakening external demand for Chinese products. As a result, China’s real GDP growth averaged 9.7% from 2008 to 2010. However, because the central government implemented a set of policies related to structural adjustments of economy and industries, the rate of GDP growth declined for the next six consecutive years, falling from 10.6% in 2010 to 6.7% in 2016. Real GDP ticked up to 6.8% in 2017 but declined to 6.6% in 2018 (Morrison, 2019). According to Morrison (2019), there are two main factors explaining this rapid economic growth in China: the first is large-scale capital investment, financed by hefty domestic savings and foreign investment; the second is rapid productivity growth. First, economic reforms gave rise to higher economic efficiency, boosting outputs and resources for additional investment into the economy. The source of such investment is mainly attributed to a high domestic saving rate. This high saving rate is supported by both household savings and corporate savings, thanks to decentralization of economic production by economic reforms. In fact, China’s gross domestic savings levels far exceed its domestic investment levels, which have made China a large net global lender. Second, productivity gains have been identified in the literature as another main factor in China’s rapid growth, which also benefit from decentralization of economic production. One main and direct outcome of such decentralization is the rise of non-state-owned enterprises (i.e., private firms). The rapid development of private firms contributed to more production efficiency and more employment, when compared with state-owned enterprises (SOEs). In addition, foreign direct investment (FDI) in China brought with it new technology and processes that boosted efficiency. In fact, China’s trade and investment reforms and incentives had given rise to a surge in FDI since early 1990s. Such inward FDI have been a major source of China’s productivity gains and rapid economic and trade growth. As of 2010, there were 445,244 foreign-invested enterprises (FIEs) registered in China, which employed 55.2 million workers or 15.9% of the urban workforce. At their peak, FIEs accounted for 58.3% of Chinese exports in 2005 and 59.7% of imports, but these levels have subsequently fallen, reaching 41.7 and 43.7%, respectively, in 2018 (Morrison, 2019).

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The Role of Government Quality in Regional Economic Development Conventional wisdom on economic growth theory suggests that economic growth and changes in employment and productivity are the outcome of a combination of three factors: physical capital, human capital or labor, and innovation (Lucas, 1988; Romer, 1986; Solow, 1956). These three factors, together with agglomeration and density,1 have been identified as the fundamental elements which are widely used to think about and formulate economic development policies and strategies across economies worldwide (Rodríguez-Pose, 2020). However, Rodríguez-Pose (2020) argues that existing literature has neglected one important factor influencing regional economic development i.e., institutions, based on the fact that our existing theoretical toolbox (bolstered by those five fundamental elements) has struggled to properly explain the economic trajectories of regions and cities, particularly why some regions and cities fail while others thrive (i.e., why regional differences in economic growth and development). He, therefore, suggests that it is crucial to focus on how institutions, governance, and government quality shape economic activity, which may not only allow us to understand better the divergence in the economic performances of territories, but also offer the foundation for a sounder and more efficient development policy at subnational level. Compared with their counterparts in Europe and North America, China’s central and local governments have been playing a pivotal role in and been involved more deeply and actively in the overall economic growth planning and implementation (Ma, 2005; Yeh et al., 2015). And more importantly, regional variation at the provincial level and/or the city level in economic and financial development, degree of marketization, and protection of intellectual property rights (IPR) has been viewed as one significant uniqueness of institutional environment/setting in China (Hsu et al., 2013; Li et al., 2019). Combining these two aspects, China, therefore, is an ideal testing bed for how within-country difference in government quality and capacity is associated with economic development. In fact, several recent studies have empirically explored the impact 1 Further, the new economic geography (Fujita et al., 1999; Krugman, 1991, 2011) and urban economics (Glaeser, 2011) suggest the important role of agglomeration economies, externalities and density in economic growth.

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of urban government capacity as an important institution on economic performance and growth and other consequences in China. For example, Rodríguez-Pose and Zhang (2019) suggest that Chinese cities represent a magnet for skills and innovation, and that one significant factor behind the dynamics of urban growth in China is the role of government institutions in generating and enabling the development of economic activity in urban China. Using panel data for 283 Chinese cities over the period from 2003 to 2014, their empirical results suggest that how urban growth in China is not associated to just a single factor, i.e., individual factors—from human capital and innovation to density, agglomeration, the social filter, and FDI, as well as government efficiency and the fight against corruption—can, on their own, not explain Chinese urban economic growth. The growth in the most dynamic Chinese cities is the result of a consequence of a combination of favorable human capital, innovation, density, local conditions, foreign direct investment, and city-level government institutions. They conclude that both government quality—especially for those cities with the best governments—and the fight against corruption at the city level have a direct effect on urban growth. Zhang et al. (2019) investigate the impact of metropolitan government fragmentation on urban economic growth in China. They suggest that spatially decentralised governance under centralised political control plays a crucial role in China’s post-reform economic development. By measuring government fragmentation with the number of districts (i.e., the lowest level urban government in Chinese cities), they find that economic growth increases with the number of urban districts only up to two districts. Their results suggest that the potential tradeoff between the development benefits of political competition in China and the cost of jurisdictional fragmentation on economic growth, especially at the relatively small spatial scale of metropolitan areas. Wang (2020) investigates the direct effect of a city’s government capacity on its economic performance and the indirect effect of the urban government capacity’s size structure among neighboring cities. The author quantifies Chinese cities’ urban government capacity and its size structure in 2010: urban government capacity is measured based on four dimensions i.e., fiscal strength, SOE authority, land commodification capacity, and preferential centrally initiated policy; and the size structure of urban government capacity is measured in terms of the rank-size

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distribution of cities’ government capacity within a predefined “neighboring region” for individual cities. The empirical finding suggests that urban government capacity has a positive and significant effect on urban economic performance, and cities exhibit better economic performance in regions that have a leading city in urban government capacity than in regions where urban government capacity is relatively evenly distributed.

Institutional Innovation and Arrangements of SIP Since its establishment, Suzhou Industrial Park has received institutional attention from the central governments of China and Singapore. Perfect system design and effective implementation are the key factors for Suzhou Industrial Park to become the best industrial park in China. According to the development trend of China’s economy and the stage characteristics of Suzhou Industrial Park, the development of Suzhou Industrial Park can be divided into three stages: industrial clusters stage (1994– 2001), high-tech industrial clusters stage (2002–2008) and regional innovation clusters (2009–present). These stages show obvious different characteristics in the dimension of institutional innovation. Stage 1: Industrial Clusters (From 1994 to 2001) This stage belongs to the initial stage of Suzhou Industrial Park. Compared with Singapore’s leading position in the system innovation of Suzhou Industrial Park, under the background of China’s reform and opening up, China mainly learns from Singapore’s advanced system and management experience. We call this stage the “first entrepreneurship” of Suzhou Industrial Park. At this stage, the Suzhou Industrial Park mainly used top-down system innovation to attract more foreign investment to the manufacturing industry. The Innovation in Governance Structure The governance modes of National Development Zone (NDZ) can be divided into government-led model, government model, market and enterprise hybrid-led mode, and enterprise governance mode. Suzhou Industrial Park is a typical success story under the government-led model (Zhang & Ding, 2018). A prominent feature of the Suzhou Industrial Park project is the continued support of the leaders of China and Singapore. Deng Xiaoping,

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China’s late supreme leader, encouraged Singapore’s experience during a tour of the South in 1992. In October 1992, Singapore’s Lee Kuan Yew visited Suzhou. The Suzhou Industrial Park is a joint initiative of the Governments of China and Singapore initiated by the “Agreement on the joint development of the Suzhou Industrial Park” signed by Chinese Vice Premier Li Rongqing and Singapore’s Premier Lee Kuan Yew in Beijing on February 26, 1994. On the same day, the two sides signed the General Agreement on Suzhou Industrial Park, which laid the foundation for establishing China–Singapore Suzhou Industrial Park Development Group Co., Ltd., a development branch of Suzhou Industrial Park. Since then, SIP has been regarded as China–Singapore’s flagship project and has received high political support (Zhao & Farole, 2011). The China–Singapore Joint Steering Committee (JSC) is responsible for the overall governance of SIP. It holds a meeting every 12–18 months to review progress, resolve major implementation issues, and determine future development goals. The joint committee is co-chaired by the Deputy Prime Minister of China and the Deputy Prime Minister of Singapore. Its members include ministerial officials of the two countries, senior officials of the Jiangsu Province and Suzhou municipal governments, and the head of the Jurong Town Company in Singapore. On a more practical level, the Joint Working Committee was co-chaired by the Mayor of Suzhou and the Permanent Secretary of the Ministry of Trade and Industry of Singapore. The committee played a more active role in the start-up phase of the Suzhou Industrial Park (Inkpen & Pien, 2006). Suzhou Industrial Park Management Committee (SIPAC) is the management and supervision agency of Suzhou Industrial Park and an independent local government agency authorized by the Suzhou Municipal Government. SIP’s total area is 288 square kilometers (of which 80 square kilometers belong to the China–Singapore Cooperation Zone). SIPAC enjoys a high degree of autonomy in policy formulation and enforcement and is currently the primary land development unit in SIP2 (Fig. 2.1). The Innovation of Management and Implementation Since its establishment, SIP has adhered to the principle of separating the main body of administrative management from the main body of 2 For more details about SIP, please refer to the website http://www.sipac.gov.cn/szg yyq/yqjj/common_tt.shtml.

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Fig. 2.1 Governance structure of Suzhou Industrial Park (Source Figure 5.1 from Zhao & Farole, 2011)

infrastructure construction. SIP’s comprehensive economic and social management is under the responsibility of the Shanghai Pacific Economic Cooperation Zone. China–Singapore Suzhou Industrial Park Development Co., Ltd. is a joint venture established by the two parties, responsible for the construction of SIP, investment promotion, property management and other infrastructure construction. Suzhou Industrial Park is one of the first parks in China to implement a more streamlined approach and a more transparent policy framework. It has earned a reputation under SIPAC for its efficient “one-stop” (OSS) service, which provides first-class services, from registration, licensing, license application, taxation to aftercare. SIP has an independent customs and bonded logistics center, with supporting functions such as “inland port” and “24-hour uninterrupted service” (Wei et al., 2009). The cargo turnaround time between SIP and the port (including customs clearance and shipment) has been shortened from the original 3–4 days to the current 3–4 hour.3 The company is also the first to use an electronic data interchange (EDI) system for customs clearance in China. 3 Pan, “The Rise and Implications of the Suzhou Industrial Park” (in Chinese), pp. 41–

42.

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SIP also enjoys certain exclusive rights that other prefecture-level cities do not usually possess: (1) Project approval: SIP has the right to approve all foreign investment projects under US$30 million; (2) Land allocation: Since 1994, SIP has approved amount of land up to 900 mu (0.6 square kilometres), while the prefecture-level city can only approve the maximum amount of 50 mu (approximately 0.03 square kilometres); (3) Foreign affairs management power: that is, SIP can approve overseas official travel applications, issue official passports, and directly apply for visas to foreign embassies. The establishment of SIP management organization follows the principle of “small government”. SIP management committee has eight bureaus under its jurisdiction: the Investment Promotion Bureau, the Economic and Trade Development Bureau, the Planning and Construction Bureau, the Urban Management Bureau, the Finance and Taxation Bureau, the Social Service Bureau, the Local Development Bureau, and the Organization and Personnel Bureau, but the work it is responsible for is equivalent to more than 80 Municipal departments. This total is only one-third of the same party and government agency. One is to greatly reduce the government’s financial burden and ensure the efficiency, transparency, fairness and standardization of SIP government work. At the same time, SIP government selects and recruits civil servants through public examinations, and sends young civil servants to Singapore for professional training every year. These measures ensure that SIP government has a high-quality management team.4 The Innovation of Development Plan At the beginning of the establishment of SIP, drawing on the planning and construction experience of Singapore and advanced international cities, a high-standard overall development plan was compiled, and a series of strict restraint mechanisms were established to ensure the consistency of planning and implementation, and realize the “20-year plan”. Ensure the high level of science and the sustainability of construction and development (Zhang & Ding, 2018). It followed the principles of “the overall plan of the whole district, develop in stages”, “plan first and then build” and other principles (Wei et al., 2009). According to the estimated demand, the land with a total 4 Zhou Xinyue, Fu Zehui, Zhang Yue, Research on the New Mode of High-Tech Park Operation—Take Suzhou Industrial Park as an example (in Chinese).

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area of 70 square kilometers will be developed in three stages: 15.2 square kilometers in the first stage; 16.6 square kilometers in the second stage; and 36.6 square kilometers in the third stage. An important feature of Suzhou Industrial Park is that it was designed from the beginning as part of the development of Suzhou’s new city, and the transportation and public utility network is well connected to the existing urban area. This design has laid a solid foundation for the integration of city and industry. Industrial parks dominate the surrounding area, the middle is dominated by residential buildings, and the interior is dominated by commerce. The central business district is arranged around Jinji Lake and constitutes the city center of SIP. To avoid waterlogging caused by low-lying parks, the total area of about 70 square kilometers has been increased by several tens of centimeters.5 In addition to a good business environment, SIP also provides worldclass hard infrastructure. Infrastructure provision follows the “five connections and one levelling” standard in most areas, and better districts use the “seven connections and one levelling” standard. However, in SIP, the standard used is “nine connections and one levelling” (i.e. roads, Electricity, water supply, drainage, sewage/treatment, natural gas, telecommunications, heating, cable television and land formation). This was the highest standard of the Chinese industrial park at that time.6 Stage 2: High-Tech Industrial Clusters (From 2002 to 2008) In 2001, a Chinese consortium composed mainly of state-owned enterprises obtained a majority stake, with a 65% stake, compared with 35% in Singapore (the previous situation was the opposite) (Wei et al., 2009). After the adjustment of the shareholding ratio of SIP, it has entered an era of major relocation and major development, and has accordingly entered the stage of “second entrepreneurship”. In addition, with China’s accession to the WTO, the government’s economic functions have been given new connotations, which are reflected in the government’s responsibility for guiding, regulating, and supporting enterprises. In 2002, SIP established the development goal of building a “development zone with international competitiveness”. Around this goal, SIP

5 CCTV special report about Suzhou Industry Park. 6 Pan, “The Rise and Implications of the Suzhou Industrial Park” (in Chinese), p. 65.

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began to focus its work on introducing high-tech and capital-intensive radiation-driven projects. In the “second entrepreneurship”, it pays more attention to developing and cultivating high-tech and high value-added manufacturing industries such as electronic information, biopharmaceuticals, precision machinery, and new materials. Consistent with this goal, under the guidance of the pro-business philosophy, its institutional innovation mainly focuses on the continuous expansion of autonomy and industrial upgrading. It is particularly noteworthy that the Suzhou Industrial Park has implemented a strategy of going out from this stage and is able to transfer its successful experience to other countries and regions. The Expansion of Autonomy Since 2001, SIP has gained greater autonomy through ownership reforms and has begun transformation and upgrading. Begin to adjust the phased targets, taking the full launch of the construction of the second and third districts as an important sign. The main directions of its transformation and upgrading are: gradually changing from an export-oriented economy to an inward-oriented economy; from developing manufacturing to promoting manufacturing, R&D and innovation at the same time; from focusing on industry to focusing on industrial and commercial services. While developing, it also attaches importance to the channelling and agglomeration of urban functions. The Implemention of “Going Out” Strategy In 2002, the “going out” strategy was implemented. This strategy has played a positive role in establishing SIP’s brand, the promotion of experience, the expansion of development space, and its own transformation and upgrading through the dispatch of backbones and the output of management experience and participated in the construction of Lhasa Economic and Technological Development Zone (aided construction, 2002), Suzhou Suqian Industrial Park (co-construction, 2007), Suzhou Nantong Science and Technology Industrial Park (co-construction, 2009) and other domestic economic development zones. The development and opening of innovative comprehensive experiments accelerated the pace of SIP’s implementation of the “going out” strategy.

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Stage 3: Regional Innovation Clusters (From 2009 to Now) Especially after the 2008 international financial crisis, the world economy experienced a full-scale recession. Most developed countries have suffered an economic recession, a severe shortage of funds and a sharp decline in foreign investment. As a result, SIP has problems such as increasing difficulty in attracting investment, a severe shortage of land, a rapid rise in production costs, and a widening gap between the level of innovation and development goals. SIP should accelerate transformation and upgrading, adjust development strategies, optimize the industrial structure, and realize innovation-driven development. At this stage, SIP is no longer a purely industrial-led “international competitiveness development zone”, but is constantly transforming into an eco-friendly city. In the second decade of SIP’s development, it adopted a new repositioning strategy, which we usually call the “third entrepreneurship” of SIP. In 2011, the “Twelfth Five-Year Plan” of SIP proposed to build the park into a “three modernizations and three types” new city; in 2016, the “13th Five-Year Plan” of SIP continued to adhere to the development goals of “three modernizations and three types”. The “speed park” will accelerate the transition to an “efficiency park” in line with the country’s new norm. At the same time, compared with the second stage, the pace of Suzhou Industrial Park’s going global has been significantly accelerated, and Sino-foreign cooperative industrial parks have settled in more foreign cities. There are five main paths for the transformation and upgrading of industrial parks. The first path is guided by industrial transformation and upgrading, which can gradually overcome the problems of outdated development methods of many industrial parks in my country, relying on comparative advantages such as land, taxation, and policies, low industrial level, and obsolete industrial structure. It can also enhance the momentum of endogenous growth in SIP. The second is dominated by industrial agglomeration. The healthy development of industrial clusters is the endogenous driving force for SIP’s sustainable development and a key factor for the industrial upgrading in the park. The third path is based on the integration of industry and city, correcting the bias that emphasizes industrial development and neglecting urban construction. It promotes the construction of parks with production and living functions. In addition, there is a method of mechanism innovation and reform. The

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construction of ecological parks guides the final path of transformation and upgrading.7 In the process of transformation and upgrading, SIP emphasizes eclecticism, and realizes coordinated development of industrial structure optimization, industrial agglomeration, industry-city integration, mechanism innovation, and park ecological construction. It provides an upgraded model for the construction of the country’s development zones. The Innovation of Development Strategy and Management System In 2013, SIP established the development goal of becoming a pioneer zone for modernization in southern Jiangsu, and started a new journey of deepening reform and innovation. In October 2015, the State Council approved the “Overall Plan for Comprehensive Experiments on Opening Up and Innovation of Suzhou Industrial Park”, making Suzhou Industrial Park the first park in the country to carry out comprehensive experiments on open innovation. The construction of an open innovation comprehensive pilot zone is conducive to the implementation of innovation-driven development strategies, actively integrating with free trade zones to learn from successful experience, exploring the establishment of a new open economic system, and providing a reference for the transformation and upgrading of national economic and technological development zones. According to the content approved by the State Council, SIP will actively explore the development path of open innovation integration, innovation and industry integration, industry and city integration, and better lead the transformation, upgrading and innovative development of national development zones. In the future, the development goal of Suzhou Industrial Park is to build an upgraded version of China’s development zone, build a world-class high-tech industrial park, and enhance the level of open international cooperation. Build a higher level of open cooperation demonstration zone, industrial optimization and upgrading demonstration zone, global innovation-driven demonstration zone, administrative system reform demonstration zone, and urban comprehensive management demonstration zone five major platforms.8 7 Wu Zhijun and Gu Tangmin. Research on the Path of Transformation and Upgrading of Industrial Parks in China [J]. Jiangxi Social Sciences, 2015 (5) (in Chinese). 8 “Suzhou Industrial Park’s Overall Plan for the Development of a Comprehensive Test of Open Innovation”, http://news.sipac.gov.cn/sipnews/yqzt/yqzt2015/201510kfcxp/ ztfa/201510/t20151013_392716.htm.

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At present, SIP has transferred 114 projects originally allocated by 16 functional departments to the Administrative Approval Bureau in batches in order of priority. At the same time, there were 16 chapters for the original 30, reduced to 3 for 1 chapter, realizing “one window, one approval chapter” and “114 administrative approval chapters.”9 The Innovation in Urban Planning The population gathers in SIP and the diversified development of SIP. On the basis of its “Eleventh Five-Year Plan”: repositioning, the park retains the “high-tech industrial park with international competitiveness”, and it adds a modernization of the positioning of a “new city”, Greening and internationalization. In addition, in Suzhou City’s (2007–2020) overall planning, SIP is also positioned as the eastern new city, and the Jinji Lake area in the park is positioned as the city’s CBD. Subsequently, its administrative center moved to the eastern part of Jinji Lake in the eastern region to promote commercial development, marking the beginning of SIP from a pure production space to a comprehensive space to integrate production and life, so that industrial and social innovation has become real. Today, the SIP hosts six functioning areas: 1. Jinji Lake-Rim Central Business District (CBD) 2. Dushu Lake Innovation District of Science and Technology (11 square kilometres) 3. Eastern High-Tech Industrial Area 4. Integrated Free Trade Zone (5.28 square kilometres) 5. SIP Ecological Science Hub (four square kilometres) 6. Yangcheng Lake Tourism Resort. Continued Expansion of the Going-Out Strategy In order to enable more Chinese enterprises and various service organizations to share overseas investment opportunities, understand and prevent investment risks, and seek sustainable development opportunities for cooperation, the above-mentioned demonstration platform was officially unveiled at the opening ceremony of the 2015 China (Suzhou) Overseas Investment and Services Summit Forum on December 15, 2015. The Suzhou Industrial Park Management Committee and the Singapore 9 Suzhou Industrial Park official website: http://www.sipac.gov.cn/government/tjsj/.

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Development Council signed a letter of intent to establish an overseas investment platform in the Suzhou Industrial Park. According to the contents of this letter, a higher level of open cooperation demonstration platform is established based on the advantages of China–Singapore cooperation, to steadily realize the “going out” development strategy, and better participate in international cooperation and competition in the economic and technological fields. It provides a comprehensive one-stop service for Chinese enterprises to “go global”.10 This is the first and only national-level foreign investment service demonstration platform in SIP. It promotes SIP to actively integrate domestic and foreign superior resources, forms and strengthens the four functions of enhancing public services, talent training, investment and financing services, and international services. The platform can also accelerate its development into a comprehensive one-stop service window with the most complete functions, the most convenient investment, the most complete system, and the most thoughtful service for Chinese companies to “go global”. In addition, to cooperate with the platform and improve the operating mechanism, the Foreign Investment Promotion Committee was established in November 2015, which is responsible for the research and promotion of foreign investment in China. With the help of this platform, enterprises in Suzhou Industrial Park have maintained their enthusiasm for overseas investment. As of September 2016, a total of 239 companies in SIP have invested in 372 projects overseas, and the Chinese side has accumulatively increased the agreed investment amount of 8.27 billion U.S. dollars.11 In addition to encouraging Chinese companies in SIP to actively invest abroad, China has also continuously increased its efforts to export successful experience in the park. At this stage, the China–Belarus Industrial Park is a good example. In March 2010, the leaders of China and Belarus reached a consensus on the establishment of a China–Belarus industrial park in Belarus. In May 2015, the Chinese and Belarusian heads of state reached an agreement to open a new era of comprehensive strategic partnership

10 Zhang Min, Transformation, Upgrading and Innovative Development of Suzhou Industrial Park, 2018.01, Regional Economic Review. 11 Ibid., p. 69.

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between China and Belarus, and proposed to focus on the construction of the China–Belarus industrial park, making the park a pearl of the Silk Road Economic Belt and a pearl of mutually beneficial cooperation between the two sides. In the construction of the Sino–Belarusian Industrial Park, the development experience of the park was used for reference. The President of Belarus signed the “Presidential Decree”, which stipulates the preferential policies on taxation, land and other aspects of enterprises that meet the leading industries in the form of the country’s highest legislation, creating the best policy environment for investors around the world. In the Sino– Belarusian Industrial Park Development Co., Ltd., China accounts for 68% and Belarus accounts for 32%.12

Reactions by the Governments to External Shocks or Systemic Risks One dimension which could reflect government quality is how the government makes effective and efficient response to external shocks, financial crises, and systemic risks. Below we discuss how the Chinese central government and/or the SIP local government respond the recent four main crises or systemic risks. The 1997–1998 Asian Financial Crisis The 1997–1998 Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. It began in Thailand and then quickly spread to neighboring countries. It began as a currency crisis when Bangkok unpegged the Thai baht from the U.S. dollar, setting off a series of currency devaluations and massive flights of capital. In the first six months, the value of the Indonesian rupiah was down by 80%, the Thai baht by more than 50%, the South Korean won by nearly 50%, and the Malaysian ringgit by 45%. Collectively, the economies most affected saw a ‘sudden stop’ i.e., a drop in capital inflows of more than $100 billion in the first year of the crisis. Afterwards, the Asian financial crisis became a global crisis when it spread

12 Ibid., p. 70.

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to the Russian and Brazilian economies, which resulted in fluctuations on the world exchange market and stock market and even set off political turmoil in some countries. Fortunately, China was not directly influenced by this crisis, and it managed to maintain its financial and economic stability, mainly due to the moderate financial policy and a series of measures against financial risks that it took. Another reason is that, unlike investments of many Southeast Asian countries, almost all of China’s inward foreign investment took the form of factories on the ground rather than securities, which insulated the country from rapid capital flight. To mitigate the negative impact of this crisis, the Chinese government took a set of pro-active policy instruments. Specifically, first, it actively participated in the IMF-organized aid projects for some Asian countries. In the wake of the financial crisis in 1997, the government provided Thailand and other Asian countries with over 4 billion US dollars in aid, within the framework of IMF or through bilateral channels. It offered Indonesia and other countries export credit and emergency medicine given gratis. Second, the government decided not to devaluate its RMB in the overall interest of maintaining stability and development in the region. It did so under huge pressure and at a big price. But it contributed considerably to the financial and economic stability and to the development in Asia in particular and the world at large. Third, while sticking to its non-devaluation policy, the government implemented the policy of boosting domestic demand and stimulating economic growth, which played an important role in ensuring a healthy and stable economic growth at home, easing the pressure on the Asian economy and leading it into recovery. Fourth, China actively participated in and encouraged regional and international financial cooperation together with the relevant parties. The then leaders of Chinese government proposed to stop the spread of the crisis through enhanced international cooperation, reform and improve the existing international financial system, and respect the choices made by the relevant countries or regions to overcome the financial crisis, and that East Asian countries should exchange views on financial reform and other macro issues. In this regard,

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an expert group could be set up to study the flow of the short-term capital and specific means to control the flow.13 The 2007–2008 Global Financial Crisis The financial crisis of 2007–2008, also known as the global financial crisis (GFC), was a severe worldwide economic crisis. It is also called subprime mortgage crisis, which is caused by severe contraction of liquidity in global financial markets that originated in the United States as a result of the collapse of the U.S. housing market. In the summer of 2007, the U.S. subprime crisis broke out after the bankruptcy of Lehman Brothers in September 2008. The subsequent liquidity squeeze and credit crunch caused a world-wide economic slowdown. The US, the Euro Zone and Japan all slipped into recession in 2008, a situation that is likely to persist at least into 2009. The emerging countries have faced not only a dramatic decline of economic growth, but also a surge of capital outflows. A financial crisis could break out in the central and eastern European economies, driven by significant current account deficits, heavy debt burdens denominated in foreign currencies and a sudden stop or even reversal of capital inflows. Such global crisis had also negatively affected China’s economic growth. First, due to its export-led growth strategy, external demand become one of the key driving forces for China’s economic growth. However, due to a negative shock caused by the global financial crisis, all external demand for China’s exports slipped into recession. For example, developed economies (such as the U.S., Japan, and European Union) and emerging markets (such as Hong Kong, Taiwan, South Korea and the ASEAN countries14 ) which are China’s major export markets, have also slowed down dramatically. As an outcome of the weakening external demand, China’s exports have declined significantly since the fourth quarter of 2008. Both exports and imports have registered a contraction since November 2008. However, due to the decline in world energy and 13 Please refer to the website https://www.fmprc.gov.cn/mfa_eng/ziliao_665539/ 3602_665543/3604_665547/t18037.shtml. 14 The Association of Southeast Asian Nations (ASEAN) is a regional grouping that promotes economic, political, and security cooperation among its ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

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commodity prices and China’s shrinking internal demand, imports have decreased much faster than exports, causing a surge in the trade surplus. Second, due to weakening external demand, it would cause a large number of export-led private enterprises located in China’s coastal provinces to face bankruptcy risk. Because these enterprises are from labor-intensive sectors, around 20 million unskilled workers lost their jobs. As a result, the slowdown in China’s exports, along with the decline in real estate investments, has led to a decrease in GDP growth from 13% in 2007 to 9% in 2008. Third, this crisis had an indirect but crucial impact on Chinese economy, which is that, to mitigate the negative impact on the economy and stimulate short-term economic growth, the Chinese government tended to postpone or even cancel the planned policies related to adjustments of industry structure and industrial upgrading, although these policies are very important and indispensable for the high quality and sustainable growth in the long run.15 To react and mitigate the negative impacts caused by the crisis, the Chinese government changed its policy focus from curbing inflation to ensuring stable economic growth. A resulting macroeconomic policy combination was released, including an active fiscal policy, a loose monetary policy and a stable exchange rate policy. In terms of fiscal policy, a comprehensive investment plan with RMB 4 trillion (i.e., US$588 billion at the then exchange rate) was released in November 2008, which was one of the largest fiscal rescue packages world-wide. Concerning monetary policy, the RMB’s deposit and loan interest rates have been cut from 4.14 and 7.47% to 2.25 and 5.31% respectively. The required reserve ratio has declined from 17.5 to 13.5%. The credit quota applied by the central bank on commercial banks was cancelled in the fourth quarter of 2008. As an outcome, bank loans increased by RMB 1.62 trillion in January 2009. With regards to exchange rate policy, the Chinese central bank i.e., the People’s Bank of China (PBoC) has increased its intervention in 15 Another important impact is that, because China’s foreign exchange reserves are heavily allocated in US dollar-denominated assets, especially US treasury and agency bonds (e.g., according to the preliminary report on foreign portfolio holdings of US securities at the end of June 2008, China held US$535 billion in US treasury bonds, US$544 billion in US agency bonds, US$27 billion in US corporate bonds and US$100 billion in US equities.), the international purchasing power of China’s portfolio of US dollardenominated assets would shrink markedly, mainly due to depreciation of U.S. dollar against other major currencies caused by this crisis.

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the foreign exchange market since the third quarter of 2008, halting the appreciation of the RMB against the US dollar (Zhang, 2009). In Suzhou Industrial Park, there are more than 12,000 companies, of which more than 1400 are Sino-foreign joint ventures, mainly European and American companies, accounting for more than 50% of foreignfunded companies. The main industries in the park are IT and LCD panels, which are also mainly oriented to the European and American markets, with imports and exports accounting for more than 50%. In addition, the export-oriented dependence of the park exceeds 70%, so the financial turmoil has a greater impact on the enterprises in the park. Although the total number of orders in Suzhou Industrial Park from January to October 2008 exceeded that of 2007, November became a turning point. The orders dropped significantly, with a decrease of about 3–5%. It was expected that the overall economic growth rate of the park in 2008 would slow down to about 15%, while the number reflected in the previous growth rate would be more than 20%. For the three major industries in the park, semiconductors, LCD panels, and automotive and aviation components, the first two were significantly affected. To alleviate the negative impact of the financial crisis on the enterprises in the park, the government of the park launched the “Several Opinions on Promoting the Stable and Rapid Economic Development ” on January 1, 2009. The park has invested a total of RMB 800 million in supporting the industries in the park, allowing enterprises to “survive first, and then maintain growth.” Such RMB 800 million is mainly used in three parts. The first part is used to reduce the burden on enterprises, about 440 million yuan. Among them, 350 million yuan is used to subsidize employees’ provident funds. The park has reduced the corporate contribution of provident fund by 2 points this time. Companies can pay less provident fund, but the employee’s account has no effect, and the government will subsidize the missing part. There is also 50 million yuan as a guarantee fund for processing trade. Enterprises that have actually transferred their processing trade accounts will be guaranteed through a unified special fund to help enterprises reduce capital occupation. The second part of the RMB 800 million fund is to “ensure growth,” about 300 million yuan. Among them, there is a re-guarantee fund of 200 million yuan, which is jointly funded by the park finance and the guarantee agency to encourage the guarantee agency to become bigger and stronger. At the same time, various types of capital will be guided

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to serve small and medium-sized enterprises and reduce their financing costs. The third part is to “encourage enterprise transformation”, which is 60 million yuan. After introducing the new national high-tech enterprise assessment method, only one-third of the over 300 high-tech enterprises in the park reached the new standard. Once the standard is not met, the proportion of corporate income tax payments will increase from 15 to 24– 25%, increasing the enterprise’s burden. Therefore, the park has carried out its own high-tech enterprise evaluation work. On the one hand, it guides the enterprises to comply with the standards set by the state. On the other hand, it also provides a transition period for the enterprises appropriately. For enterprises that fail to meet the national standards but meet the high-tech enterprise assessment standards in the park, the overpaid income tax will be rewarded by the park to help them reduce their burdens. This part is about 40–50 million yuan. In addition, to encourage business transformation, certain incentives are also given to enterprises that promote energy conservation and consumption reduction. The Trade War Between China and U.S. The recent trade war between China and U.S. begun by U.S. imposing tariffs on China’s solar panels and washing machines in January 2018. Trump imposed around 30% tariffs on the solar panels for first year with a plan to reach half of this by the end of the fourth year. Further, he imposed 20% tariffs on the first 1.2 million imported washing machines and the added imports facing around 50% tax and parts facing 50% tariffs. In July 2018, Trump decided to impose heavy tariffs after looking into China’s trade and intellectual property practices under Section 301 of the Trade Act. The total amount of tariffs imposed was around 34 billion dollars. The U.S. imposed further tariffs of 16 billion dollars in August and then 200 billion dollars in September 2018. In return for this, China imposed tariffs of about 110 billion dollars and the 25% tariffs on soybean imports from the U.S. In May 2019, China and the U.S. held the first round of negotiations, reaching no consensus. This suggested that the negotiations were not in the direction expected by the U.S. even when Beijing had made some compromise. Then, even after 11 rounds of negotiations, there was no substantial progress.

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By June 2019, Beijing had started planning to stop the export of rare earth minerals to the U.S. These minerals are vital for a number of industries to manufacture defense equipment and chips. China was the largest exporter of rare earth minerals to the U.S. in 2018. As per the U.S. International Trade Commission, almost 59% of these minerals came from China. However, the issue of rare earths is not simple. Beijing has managed to mine them because of its lax environmental and safety norms that are in process of changing. China also needs to continue mining these for its own development, and some reports suggest that by 2025, China may even start importing rare earth minerals. The Chinese Vice Minister of Commerce Wang shouwen expressed his concern regarding the trade war in a press conference, arguing that the trade war will hamper global economic growth in addition to harming American farmers and consumers; while Vice Premier Liu He made a keynote speech during the Lujiazui financial forum on June 13, 2019, stating that the external pressure will help us improve innovation and self-development, speed up economic reform and opening up, and push forward with high quality growth. Similarly, some Chinese officials also expressed that there is a need for proper economic reforms and the short-term stimulus packages should not be the choice of the government. In the U.S. side, there was a growing concern that the trade war may push the U.S. economy into recession. Prominent American retailers such as Walmart and Target signed letters that called for ending the trade war, arguing that the proposed tariffs of 300 billion dollars can cost 2 million jobs in the U.S. Around 320 officials from various American manufacturers and retailers would be appearing before the U.S. International Trade Commission, calling for the end of trade war and imposing further tariffs. They had been arguing that importers and consumers are also the ones who are paying the added tariffs. The tariffs imposed on the soybeans by China had also affected the U.S. agricultural sector. To mitigate the negative effect of Sino-U.S. trade war, both local government and local companies took a set of actions to respond. First, with regards to local government response, the SIP government and other governments within the Suzhou city attached great importance to the impact of Sino-US trade frictions and have taken various measures to help companies deal with the challenges. For example, they are to establish a dynamic monitoring system for key enterprises, formulate and implement

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overall plans and special response plans for foreign trade, investment, industry, and employment. By Deepening the reform of ‘streamlining government and delegating authority’, they are to simplify the government service process and reduce enterprises’ time and capital cost. In addition, they are to improve the customs clearance efficiency for and reduce customs clearance costs for export enterprises, and to optimize the business environment and create fair conditions for foreign-funded enterprises to expand into the domestic market. They also support enterprises to establish overseas marketing networks, comprehensively use domestic intensive foreign trade export service platforms, and encourage enterprises to actively participate in the ‘Belt and Road’ initiative, and continuously expand emerging markets. Lastly, they would increase support for original innovation, promote the development of industrial innovation clusters, enhance the overall innovation capabilities of enterprises, promote international scientific and technological cooperation, and support enterprises to establish overseas R&D centers. Second, enterprises were taking five main measures and actions. First, they are to export goods in advance, reduce production capacity and exports to the United States. Second, they are also to actively communicate with U.S. trade partners, split customs declarations to avoid taxation, strive for tax exemptions. The third is to increase innovation, develop new products, improve the market competitiveness of export products, and reduce the substitutability of export products. The fourth is to open up new international and domestic markets. The questionnaire survey shows that more than 60% of enterprises will ‘expand export markets and find new export targets’ as a measure to deal with export taxation. More than 50% of enterprises will ‘expand the domestic market and reduce dependence on the external market’ as a response. The fifth is to actively expand procurement channels. The questionnaire shows that about 44% of the companies will expand the import market and find alternative sources of imported goods’ as a measure to respond to China’s additional tariffs. Covid-19 In January 2020, Wuhan’s sudden outbreak of the Coronavirus disease (COVID-19) gave rise to the lock-down of the city and seriously disrupted the operations of almost all cities in China by the spring of 2020. Undoubtedly, The COVID-19 epidemic spanning to all over the

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world in 2020 has a severe impact on both China’s national economic and social development and other countries’. In response to the COVID-19 pandemic, the local government in SIP had taken several actions and measures for local companies’ resilience. First, The Suzhou Municipal Government and the SIP government have issued ten policy instruments (referred to as the ten “benefits”), which is a pioneer responding to the COVID-19 pandemic. The ten “benefits” aim to support SMEs to tide over the difficulties.16 Second, on March 17, 2020, the SIP one-stop integrated financial service platform—“Yuan Yirong” was officially released. To actively respond to the Pandemic, the SIP Development Service Center responded to the park’s “15 benefits for enterprises” and launched the “Yuan Yirong” in advance. “Yuan Yirong” is characterized by platformization, marketization and digitization, which expands the funding supply side. Its service area has expanded from “Technology Finance” to “Inclusive Finance”, and its service targets cover all industrial and commercial registered enterprises in the park. Its service supply has expanded from a bank-based institution to multiple financial sectors including equity institutions, insurance, guarantees, and financial leasing, providing a one-stop comprehensive integration of “debt + equity”, “online + offline” Financial Services. To a certain extent, it can alleviate the problems of corporate financing constraints. Third, in April 2020, the local government officially issued the ‘Suzhou City Smart Manufacturing Three-Year Action Plan (2020–2022)’. The action plan pointed out that Suzhou will build an effective smart manufacturing ecosystem in five major areas: basic capability improvement, system solution supplier cultivation, diagnostic service leadership, smart manufacturing promotion in key industries, and smart manufacturing demonstration applications. In the post-epidemic period, it is necessary to achieve rapid software development and deployment, achieve deep flexibility and high applicability, and meet the needs of “special customization”. In response to the problems faced by manufacturing enterprises under the epidemic, the launch of quality control cloud services based on AI model will help the manufacturing industry achieve comprehensive automated inspections in the product defect inspection link, and improve 16 For details about such ten “benefit”, please refer to section “The Actions Taken for Resisting COVID-19”.

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inspection efficiency and accuracy. The core of the manufacturing industry is cost, quality and efficiency. Taking advantage of the industrial Internet can better play its role and promote the intelligentization of the entire manufacturing service system. Fourth, a so-called ‘Suzhou Science and Technology Finance Project’ was launched, which aims to promote integration of science and technology finance, facilitate the multiplier effect of improvement of technological innovation capabilities, and strive to solve the financing problems of science and technology enterprises and reduce their innovation.

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Rodríguez-Pose, A., & Zhang, M. (2019). Government institutions and the dynamics of urban growth in China. Journal of Regional Science, 59(4), 633–668. Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. Wang, J. (2020). Urban government capacity and economic performance: An analysis of Chinese cities. Environment and Planning A: Economy and Space, 52(5), 981–1004. Wei, Y. H., Lu, Y., & Chen, W. (2009). Globalizing regional development in Sunan, China: Does Suzhou Industrial Park fit a neo-Marshallian district model? Regional Studies, 43(3), 409–427. Yeh, A. G., Yang, F. F., & Wang, J. (2015). Economic transition and urban transformation of China: The interplay of the state and the market. Urban Studies, 52(15), 2822–2848. Zhang, M. (2009). The impact of the global crisis on China and its reaction. Elcano Newsletter, 55, 7. Zhang, M., & Ding, Y. (2018). Forty years of China’s reform and opening policy: Innovative transformation of Suzhou Industrial Park and its connection with the One Belt and One Road Initiative. Global Economic Observer, 6(2), 212–225. Zhang, T., Sun, B., Cai, Y., & Wang, R. (2019). Government fragmentation and economic growth in China’s cities. Urban Studies, 56(9), 1850–1864. Zhao, M., & Farole, T. (2011). Partnership arrangements in the China–Singapore (Suzhou) Industrial Park: Lessons for joint economic zone development (ch. 5). In T. Farole & G. Akinci (Eds.), Special economic zones: Progress, Emerging challenges, and future directions (p. 104). Washington, DC: World Bank.

CHAPTER 3

Circular Economy and Eco-Industrial Park

Abstract Construction of ecological civilization has been viewed as one of the most important priorities of development strategy of Chinese government. To accomplish it, implementation of circular economy (CE) is an essential way and eco-industry parks (EIPs) have been playing a vital role in implementing and promoting CE practices. To well understand the concept of CE and EIPs and these practices in China, this chapter (1) reviews definition and characteristics of circular economy and CE practices in China and (2) introduces and analyzes development of both eco-industrial parks in China and SIP as a leading EIP. The chapter highlights the important role of government in CE implementation and provides practical implications as concluding remarks. Keywords Ecological civilization · Circular economy vs. linear economy · Eco-industrial park (EIP)

Introduction Construction of ecological civilization was formally proposed by Chinese government during the 17th National Congress of the Communist

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2_3

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Party in 2007, which marks the beginning of era of ecological civilization. The term—ecological civilization is the synthesis and refinement of concepts of circular economy, environment friendly society and low carbon economy. At the 18th National Congress of the Communist Party of China (NCCPC), the central government gave priority to promoting ecological progress by deepening and accelerating institutional reform. As a result, the government formulated and revised a series of relevant laws such as the Environmental Protection Law, the Environmental Protection Tax Law, the Law on the Prevention and Control of Air Pollution, the Law on the Prevention and Control of Water Pollution, and the Law on Nuclear Safety. Ecological civilization not only focuses on the quantity, scale and speed of economic development, but also pays more attention to its quality, efficiency and sustainability. Implementation of ecological civilization is conducive to strengthening the ability of regional sustainable development and complementing deficiency caused by the traditional linear economy. Thus, contrary to linear economy, implementation of circular economy (CE) is an essential way to accomplish the so-called ecological civilization. CE implementation can be executed in three levels, i.e., the micro level (i.e., the individual firm level), the meso level (i.e., the eco-industrial park level), and the macro level (i.e., the eco-city or national level). Among these levels, eco-industry park (EIP), as the meso level, has been playing a vital role in implementing CE practices, which not only links business individual firms and entities clustered in the EIP, but also has spillover effect on the city or region it locates. Therefore, whether efficient management of EIPs will determine the success of CE promotion, and thus the accomplishment of ecological civilization. In this chapter, we will firstly address definition and characteristics of circular economy and CE practices in China in section “Circular Economy”. We then introduce the content of both eco-industrial parks in China and SIP as a leading EIP in section “Eco-Industrial Park”. In section “Concluding Remarks and Implications”, we conclude and offer valuable implications.

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Circular Economy Definition and Characteristics Circular economy (CE), in contrast to the concept of linear economy,1 is a relatively new model and economic paradigm that has obtained momentum over the past decades. The concept of CE is transformation of the status quo where production and consumption remain based on a linear economy towards closing the loop of an industrial ecosystem and circular flows (Larsson, 2018). In other words, a circular economic system is the one that imitates the function of natural ecosystems and fulfill sustainability by the closed-loop process for material or energy flow, and the essential objective of a CE economy is to minimize the consumption of resources and environmental costs for the purpose of maximizing economic benefits (Feng & Lam, 2021), which also attests to boost an economy development pattern harmonious with the environment (Murphy & Gouldson, 2000). Figure 3.1 (suggested by Zhu et al., 2019) displays the whole process of both the traditional linear economy model and the circular economy model through product and waste flow. According to the Figure, the

Fig. 3.1 Linear economy and circular economy model (Source Zhu et al., 2019)

1 According to Murray et al. (2017), a linear economy is the one referred to as converting natural resources into waste, via production. The waste production gives rise to the deterioration of the environment in two ways: (1) by the removal of natural capital from the environment (through mining/unsustainable harvesting) and (2) by the reduction of the value of natural capital caused by pollution from waste.

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traditional linear model employs a “take-make-waste” approach, whereas the CE economy model uses the closing loop of resources, suggesting decomposing and re-adjusting the use of waste disposal (Feng & Lam, 2021). Stahel (2016) suggests that a linear economy flows like a river, while a circular economy is like a lake. Specifically, a linear economy is to turn natural resources into base materials and products for sale through a series of value-adding steps. After sale, ownership and liability for risks and waste pass to the buyer (who is now owner and user). The linear economy is driven by ‘bigger-better-faster-safer’ syndrome—in other words, fashion, emotion and progress (Stahel, 2016). On the contrary, in a circular economy, the reprocessing of goods and materials offer job opportunities and saves energy when reducing resource consumption and waste.2 Because in the real world we have without unlimited supply of natural resources and our environment has without unlimited capacity to absorb waste and pollution, the traditional linear economy model seems not be sustainable in the long run. Therefore, from the perspective of sustainability development and practice, Murray et al. (2017, p. 377) define the CE as “the Circular Economy is an economic model wherein planning, resourcing, procurement, production and reprocessing are designed and managed, as both process and output, to maximize ecosystem functioning and human well-being.” According to the definition, humans, their activities, and their environment are all loci on the one circle, thus a circular economy recognizes this association. As a result, compared with the traditional linear economy model, the CE model could produce more flows and consumer products with less waste and emissions without exploring more natural resource, thus generating greater potential to sustainable economic growth.

2 For example, cleaning a glass bottle and using it again is faster and cheaper than recycling the glass or making a new bottle from minerals. Vehicle owners can decide whether to have their used tyres repaired or re-grooved or whether to buy new or retreaded replacements—if such services exist (Stahel, 2016). Thus, the CE economy model has large potential to creating service-based jobs and commercial opportunities.

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The Circular Economy in China Inspired by implementation of the CE economy model in the U.S. and European countries, China is a pioneer nation that has most fully embraced the implementation and development of circular economy concepts (Feng & Lam, 2021; Murray et al., 2017). Since the implementation of economic reform and opening-up policy in 1978, China has experienced tremendous growth and economic success over the last several decades. However, such economic success is mainly attributed to the traditional linear economy model, coupled with excess production with enormous waste, misuse of resources, and the resulting environment (water and air) problems. Therefore, the central government realized that the old economic model is not sustainable and had to establish its economy into a CE economic model and integrate it as a part of the national economic strategy (Feng & Lam, 2021). Skene and Murray (2017) suggest that the adoption of the Circular Economy in China can be traced to 1973, when the first National Environmental Protection Conference formulated environmental protection policies and guidelines, and that by 2002 an ambitious development plan was set out in the 16th National Congress of the Communist Party, which involves in economic growth, social equality, and environmental protection, known as a ‘circular economy’. This terminology is expected as a means of reducing, reusing, and recycling activities conducted in the process of production, circulation, and consumption (Geng et al., 2012; Murray et al., 2017). Afterwards, the central government incorporated a circular economy into the Outline of the 11th and 12th five-year plans for national economic and social development, allowing much greater support and focus on sustainability (Su et al., 2013). Particularly, in 2008 China promulgated the Circular Economy Promotion Law, implying that China had become a frontrunner in the circular economy legislation. In 2009 the ‘Circular Economy Promotion Law’ came into effect, aiming ‘improving resource utilization efficiency, protecting the natural environment and realizing sustainable development’ (Geng et al., 2012, p. 216). The law declared that the CE economic model was a major strategy for enhancing the national economy and social development. Meanwhile, the law formulated the 3R principles to explain how to implement and act CE, i.e., reduce, reuse, and recycling (Feng & Lam, 2021).

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Thus, the implementation of CE is often discussed and achieved through the so called 3R principles (Feng & Yan, 2007; Ranta et al., 2018; Reh, 2013; Sakai et al., 2011; Su et al., 2013). First, the reduce principle denote the use of minimal inputs of energy, raw materials, and waste by, for example, the implementation of better technologies and the use of more power-efficient appliances (Feng & Yan, 2007; Su et al., 2013). Second, the reuse principle declares that “products or components that are not waste are used again for the same purpose for which they were conceived” (The European Parliament & the Council of the European Union, 2008, p. 10). Third, the recycling principle implies “any recovery operation by which waste materials are reprocessed into products, materials or substances whether for the original or other purposes. It includes the reprocessing of organic material but does not include energy recovery and reprocessing into materials that are to be used as fuels or for backfilling operations” (The European Parliament & the Council of the European Union, 2008, p. 10). Ranta et al. (2018) suggest that the discussion of recycling is equivalent to discussing the circular economy, and that waste policies have included a strong concentration on improvement of recycling rates (see, e.g., The European Parliament & the Council of the European Union, 2008). Over the last few decades, the Chinese government has been playing a crucial role in determining a series of institutional arrangement for implementation and action of CE. The CE-related law promulgated by the government is designed to influence all levels of business activities and behavior from the micro, or individual firm level, through meso or the eco-industrial park level, to the macro or national level (Murray et al., 2017). First, the micro level involves individual firms which are encouraged to engage in eco-design and cleaner production approaches. In the light of the legislations, an eco-design approach is to maintain a product’s entire lifecycle, the core of which is to enhance environmental performance by integration of more environmental-friendly technology and innovation under the “top-down” and “bottom-up” strategy. CE implementation in the micro level is mainly initiated by manufacturers and corporates at the township or village level in China (Feng & Lam, 2021). Second, the CE implementation in the meso level refers to participations from more firms and entities within eco-industrial parks (EIPs). EIPs nowadays have become the most important main force to execute the CE and sustainability development strategy, which we will focus on in section “The Role

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of Government Quality in Regional Economic Development”. Third, the CE execution in the macro level is to promote eco-cities, and sustainable production and consumption, ultimately with the intention of facilitating a ‘recycling orientated society’ (Geng et al., 2012, p. 217). It expounds CE practice as a more complex and comprehensive plans in the provincial and prefectural level in China (Feng & Lam, 2021). Su et al. (2013) imply that, in the macro level, the regional eco-industrial network is formed by “the co-operative networks between industries and industrial parks from primary, secondary and tertiary sectors emerging in the production area.” Local governments, together with local firms, need to initiate their own eco-industrial development (EID) projects (Geng et al., 2007). Consequently, the National Development and Reform Commission (NDRC), as a key player for implementing and monitoring CE practices, has promoted pilot CE projects involving participation by 178 entities, which includes 109 firms, 33 industrial parks, 17 provinces, and 19 cities (see Geng et al., 2012). Further, to monitor the process of CE implementation, the NDRC invited academic scholars and policymakers in the field to develop a set of CE-oriented indicators based on the 3R principles, which can be classified into two groups of indicators—one aimed at the macro or regional and national level, and the other at the meso- or industrial park level. Both are used to measure resource output, consumption, and utilization, as well as waste, pollution, and emissions (Geng et al., 2012). In addition, a recent study by Wang et al. (2018) argue that the city is a significant component for implementing CE practices, playing a crucial role in national sustainability. They, therefore, develop a new comprehensive indicator system i.e., an urban circular development index (UCDI), based on a sample of the first 40 Chinese pilot CE cities over the period between 2012 and 2016. According to calculation of UCDI, they find that China’s urban CE development is significantly bolstered by national policies, and that the east and central regions have a higher UCDI than the western areas, suggesting that cities in western China should also focus on education and implementation of the CE concept. Different from developed countries, the CE economic model in China is promoted as a top-down national political objective and a sustainable development strategy. Ranta et al. (2018) conduct a multiple case study covering China, the U.S., and Europe by employing institutional theory to identify and compare the drivers and barriers to their

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CE implementation. They follow Scott (2013)’s framework of institutional theory i.e., three pillars of institutions—regulative, normative, and cultural-cognitive—to analyze the drivers and barriers. Concerning case selection, for China, Huawei Corp. (CE recycling system for electronics) and Suzhou city (recycling of household waste in China) are selected and evaluated; for the U.S., they choose Dell (use of closed-loop plastics), Republic Services (recyclables separation in facilities after curbside collection); and for Europe, UPM (turning a company’s own waste stream into a new product) and Ekokem (CE Village waste utilization concept) are identified and evaluated. They find that, taking Suzhou as an example, its drivers and barriers are as follows: from the regulative perspective, the drivers are highlevel regulation supporting CE initiatives (e.g., grant-based subsidies and investments) and CE and Cleaner Production Promotion laws; while the barriers are environmental sustainability practices ineffectively implemented and enforced in regional legislation. From the normative view, the drivers are long-lasting products and resource efficiency being valued and manufacturers accredited for using recycled materials; whereas the barriers are that reducing the role of informal scavengers in the system is seen as taking away their livelihood. From the cultural-cognitive perspective, the drivers are that recyclables are seen as valuables from the beginning, while the barriers are that informal system reduces formal recycling system’s effectiveness and that food-heavy, difficult-to-sort waste reduces recycling potential. To summarize, Ranta et al. (2018) suggest that (1) the general drivers of the CE from each institutional environment/country support recycling as the primary CE action, whereas support for other CE types appears to be lacking; (2) regulatory factors have primarily driven increased recycling efforts on both the integrator and manufacturer sides; and similarly, identified normative indicators overwhelmingly point toward recycling, while increasing reuse faces cultural-cognitive barriers; and (3) among these countries, China differs due to its informal sector and strong regulative institutional support.

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Eco-Industrial Park Eco-Industrial Park in China According to the United States President’s Council on Sustainable Development (USPCSD, 1996), an eco-industrial park is defined in two ways: (1) “a community of businesses that cooperates with each other and the local community to efficiently share resources (information, materials, water, energy, infrastructure, and natural habitat), leading to economic gains, environmental quality improvement, and equitable enhancement of human resources for the business and local community” and (2) “an industrial system of planned materials and energy exchanges that seeks to minimize energy and raw material use, minimize waste, and build sustainable economic, ecological, and social relationships ”. Eco-industry park (EIP), as business behavior at the meso level, has been playing a crucial role in implementing CE practices, which not only links business activities at the micro level i.e., individual firms and entities clustered in the EIP, but also has spillover effect on the city or region it locates, which will facilitate the eco-transformation of that city/region. Indeed, the literature has suggested that EIP is to achieve eco-industrial initiatives, which close industrial loops by turning wastes at one point in a value chain into inputs at another point, and eventually establish a socalled circular economy (Mathews & Tan, 2011); and it also represents a practical way to apply the concept of industrial symbiosis (IS), which is essentially a form of eco-industry that operates by cooperative management of the resource flows of geographically clustered firms (Zhang et al., 2010). In China, the eco-industrial parks (EIPs) program was firstly promoted in 1997, when the United Nations Environmental Programme (UNEP) first published a special issue on EIPs in its Chinese Journal Industry and Environment (Geng and Cote, 2004). This has been taken as an essential component of implementing the CE strategy, covering more than 1568 national and provincial-level industrial parks in China until these days (Fang et al., 2007; Shi et al., 2012). EIP is mainly promoted by the former Ministry of Environmental Protection (MEP), Ministry of Commerce (MOC), and Ministry of Science and Technology (MOST). Its development process can be divided into four stages. The first stage is the pilot exploration stage from 2000 to 2006. In 2000, the former State Environmental Protection Administration (SEPA) began to conduct pilot exploration of EIPs. Guangxi Guigang, Inner

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Mongolia Baotou (aluminium), Shandong Lubei (salt chemical) and other parks started the construction of EIP. SEPA initiated and took charge of both the EIP program and CE program in 2001.3 These are called the National Pilot EIP Program (NPEIPP) and the National Pilot Circular Economic Zone Program (NPCEZP). After a period of exploration, in 2003, the “Regulations on the Declaration, Naming and Management of National Eco-industrial Demonstration Parks (Trial)” and “EIP Planning Guidelines (Trial)” were released. Under the overall objective of promoting the construction of EIPs, the two documents consider that the main features of EIPs are “maximizing the utilization of resources and minimizing waste discharge through the exchange of by-products and waste, the rung utilization of energy and wastewater and the sharing of infrastructure”. They also provide for the process, supervision and management, organization, planning methods and evaluation indicators of the construction of EIPs. The construction of EIPs has initially formed a process of application for construction-planning-demonstrationconstruction-naming, annual summary—regular assessment and inspection supervision and management mechanism, including economic development, ecological industrial characteristics, ecological environmental protection, and green management, four aspects of the evaluation system. Regarding the classification of EIPs, the two documents vaguely define parks with industry and regional characteristics and parks with a good foundation, parks that have not yet been built, parks with a large number of enterprises, and virtual parks. In the following CE practices, the central government mainly focused on economic development but neglected environmental maintenance and development; as a result, the National Development and Reform Commission (NDRC) was appointed by the State Council in 2004 to take responsibility for CE promotion and the NDRC took over NPCEZP in 2005 (Zhang et al., 2010). In 2006, EIPs were divided into three categories: industry, comprehensive and intravenous industrial parks. “Industry EIP Standards (Trial)”, “Comprehensive EIP Standards (Trial)”, and “Venous Industrial EIPs Standards (Trial)” was promulgated, and the construction of EIPs has entered a stage where there are standards to follow.

3 In August 2001, SEPA approved the Guangxi Guigang Sugar-making Complex as the first National Trial EIP.

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It is worth noting that in these three standards, although the definition of EIPs still closely follows the concept of industrial symbiosis, the assessment indicators of the three types of parks are divided into four aspects: economic development, material reduction and recycling/recycling/resource recycling, pollution control, park management, which are no longer directly related to the concept of industrial symbiosis. Afterwards, the NDRC implemented the NPCEZP at the three levels in terms of CE implementation, i.e., (1) incentivizing cleaner production and eco-design at the firm level; (2) facilitating EIPs and the resulting industrial symbiosis at the industrial cluster level; and (3) setting up regional eco-industrial networks at the regional level (Geng et al., 2009). Therefore, EIPs become a primary force for implementing the NPCEZP, while the SEPA still coordinates the NPEIPP.4 The second stage is the refinement stage of management regulations from 2007 to 2010. Since 2007, additional ministries were required to take part in the following implementation of national EIP development. The central government recognized that technology development and upgrade was a vital issue for EIP development. Consequently, the Ministry of Environmental Protection (MEP; which is predecessor of the SEPA), together with the MOC (who is to supervise the development of National Economic and Technological Development Zones), and the MOST formed the National Eco-Industrial Demonstration Park Construction Leading Group and issued the “Notice on Carrying out the Construction of the National Eco-Industrial Demonstration Park” and the “Management Measures for the National Eco-Industrial Demonstration Park Trial)” (hereinafter referred to as “Administrative Measures (Trial)”). The involvement of the MOC and the MOST means that economic and technological development zones and high-tech industrial development zones will become the main positions for the construction of EIPs. The “Administrative Measures (Trial)” defines an EIP as “a new type of industrial park designed and created based on the concept of circular economy, principles of industrial ecology and cleaner production requirements”, and cleaner production is also included in the construction of EIPs. The process of EIP construction is further

4 To seek the details about important documents released on NPEIPP and NPCEZP at the earlier stage, please refer to Tables 1 and 2 of Zhang et al. (2010).

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refined into application-preparation of planning and technical reports-preaudit-formal review-approval of construction-assessment and acceptancepublicity-naming-research and spot check; the supervision and management mechanism is also refined into the submission of annual work reports. The named park has a performance evaluation every three years. In 2009, an official document (No. 1359) entitled with “Notice on Promoting the Development of a Low Carbon Economy in National Demonstration EIPs ” was launched on 21 December, proposing to improve energy efficiency and improving energy structure as important goals in the construction of EIPs, and to include low-carbon economy work in key assessments Content (Zhu et al., 2015). The third stage is the improvement stage of standards and regulations from 2011 to 2015. In 2011, the “Guiding Opinions on Strengthening the Construction of National Eco-industrial Demonstration Parks” was released, proposing that the construction of EIPs should adhere to the principles of reduction, reuse, resource utilization and harmlessness, and form a way to promote the construction and development of eco-industrial demonstration parks. Long-term mechanism. In order to promote the formation of a long-term mechanism, the former Ministry of Environmental Protection initiated the revision of the EIP management measures and standards in 2013. After more than two years of research and demonstration, the “National Eco-industrial Demonstration Park Management Measures” (hereinafter referred to as “Management Measures”) and the National Eco-industrial Demonstration Park Standard (hereinafter referred to as the “Standard”) were promulgated at the end of 2015. Since 2006, the concept of industrial symbiosis has been ignored in the policy documents of various eco-industrial demonstration parks. The management measures and standards promulgated this time once again emphasized the concept of industrial symbiosis: “The comprehensive use of technology, economy and management measures, The energy and materials remaining and produced in the production process are transferred to other production processes to form a collaborative chain network for the efficient transmission and utilization of energy and materials within or between enterprises”. Among the evaluation indicators of the eco-industrial demonstration park, “industrial symbiosis” once again occupies a place. The responsible parties, requirements, and time limits for each link of the EIP’s declaration and acceptance have been clarified, the authenticity of the data in the supervision and management process has been emphasized, and the importance of targeted support policies has

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also been highlighted. The document also requires the park to set up a special department to undertake the EIP construction work to form a long-term mechanism. Stage four is the regular operation stage since 2016. In 2016, the “Administrative Measures” and “Standards” began to be implemented, and the construction of the EIPs has passed the stage of exploration and adjustment and entered the stage of regular operation. Thus, over the last two decades, it can be clearly seen that the central government has stipulated a series of policies and regulatory instruments to promote the EIP development and implementation. Yu et al. (2015a) investigate the impact of the effects of policy instruments for developing viable eco-industrial parks (EIPs) in China, providing the understanding of how policy instruments facilitate eco-transformation of industrial parks. The research characterized and compared the cases of Tianjin Economictechnological Development Area (TEDA) and Dalian Development Area (DDA) to elucidate the effectiveness and performance of EIP management at the park level. Their empirical findings suggest that diverse strategies and instruments have been implemented by their local authorities to promote EIP development, and these have had different levels of effectiveness. Specifically, the planned EIP model is useful in the early stage of EIP development and, subsequently, it should be combined with a facilitated model to achieve long-term goals for eco-transformation. Thus, A policy package by combining economic, regulatory, and voluntary instruments should be integrated and tailored by local government in alignment with the local situation. Although eco-industrial initiatives have been promoted over the past decades as policy and commercial instruments for accomplishing industrial sustainable development, studies such as Zhu et al. (2015) suggest that few EIPs have seen successful operational implementation, especially if they begin as standard industrial parks. Using survey data from 210 senior officials at 51 national industrial parks in China, they use resource dependence theory and the resource-based view to identify barriers, both external and internal, to developing Chinese EIPs from industrial park senior manager perspectives. By using factor analysis and cluster analysis, their findings suggest that the most significant internal barriers are firms lacking capabilities on developing technology for energy saving and pollution reduction. In other words, barriers related to technological development and capacity building are the most prevalent among the surveyed industrial parks. In

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addition, most surveyed industrial parks also lack both human capital resources and financial resources to support EIP development, i.e., special financial funds and training programs are lacking to educate all stakeholders in the industrial parks, building knowledge, and human resource capabilities. Concerning external barriers, the most important one is related to informational support barrier i.e., lack of information about international and domestic benchmarking eco-industrial parks and lack of ways to learn from benchmarking eco-industrial parks. They also suggest that these internal and external barriers are more pronounced in the less-developed regions. To overcome these barriers, Zhu et al. (2015) imply that EIP development requires integrated effort by many stakeholders, and that innovation diffusion or a learning system is useful for capability building. Specifically, a comprehensive driving or motivation mechanism is needed. For example, indicators of efforts and performance improvements about EIP development by officials in the industrial parks should be developed and implemented in the first place. Meanwhile, responsibilities and/or KPI should be clearly allocated to involved bureaus in the industrial parks, typically including the environmental protection bureau, the planning bureau, and the financial bureau. Further, good communications and extensive interactions between different agencies and levels are essential requirements. Finally, international collaboration efforts should be encouraged so that the park administrative authority could receive both financial and technological supports from various international agencies (Zhu et al., 2015). A latest research by Zeng et al. (2021) investigates whether the construction of EIPs (e.g., EIP-related policy interventions by the government) can enhance environmental performance as well as competitiveness, and the correlation of these two dimensions, by using case studies, official statistics, correlation analysis of selected EIPs. The industrial parks or economic zones (EZs) include Fuzhou High-Tech Zone in Jiangxi Province, Suzhou Industrial Park, Chongqing Liangjiang New Area, Chengdu High-Tech Zone, Chengdu Economic and Technology Development Zone, and Changsha High-Tech Zone, etc. Their findings suggest that there is a positive effect of EIP-related policy interventions on both environmental performance and competitiveness performance, and that there exists a more complex relationship between competitiveness performance and environmental performance (i.e., a small sample of

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earlier EIPs did not show a significant positive or negative correlation between the two dimensions). The findings by Zeng et al. (2021) also offer the key lessons learned in implementing China’s green transformation strategy through EIPs, towards international development community and other developing countries. They are (1) strong government support with concrete standards; (2) streamlining the institutional framework and implementation procedures in line with international good practices; (3) industrial park could be an effective vehicle to pursue a country’s green transformation strategy; (4) strengthening local capacities and incentive regimes; (5) promoting green innovation and building green supply chains; and (6) developing a well-functioning green finance market. To conclude, the authors believe that EIP interventions contribute to both the green transformation and improvement of the competitiveness of existing industrial parks and special economic zones (SEZs), challenging the conventional wisdom that investing in green technologies and ensuring compliance with eco-industrial standards generally gives rise to cost increases and loss of economic competitiveness for both individual firms and industrial zones. Thus, their findings are of importance to strengthen the evidence base for Chinese policymakers and the business case for entrepreneurs when considering green investments. SIP as an Eco-Industrial Park (EIP) Three Policy Instruments by SIP In China, according to Zhang et al. (2009), the industrial system can be categorized into Economic and Development Areas (EDA), Hightech Development Zones (HTDZ), and National Ecological Industrial Demonstration Parks (NEIDP). Among these, the EDA was set up by the State Council of the People’s Republic of China (SCPRC, 2007) in 1984, which primarily contains labor-intensive firm with low level inputs of technology that often lead to serious environmental pollution. Fiftyfour EDAs at the national level have been established since the first Dalian Development Area in September 1984. HTDZs include high-tech firms that generate minimum environmental pollution, which are also ratified by the SCPRC. The first Beijing Z-park was established in 1988. EIPs are categorized in terms of their physical structures and industry types. The main two types of physical structure are (1) EIPs with an existing physical structure (i.e., consisting of EDA, HTDZ, and NEIDP)

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and (2) EIPs with new physical structure (Cheng & Zuo, 2006). Based on such categorization, EIPs with existing structures are those that have been upgraded with new technologies along with the improvement in the waste and energy transformation systems, while EIPs with new structures are based on the circular economy model, having a well-designed structure and forming a series of eco-chains (Zhang et al., 2009). EIPs can be also divided into sector-specific, sector-integrated, and venous EIPs according to the industry type in the Chinese NEIDP Progress Report (SEPA, 2007). According to Zhang et al. (2009), SEPA approved the construction of 26 EIPs during the period from 2001 and 2007, among which 9 are sector-specific EIPs, 16 are sector-integrated EIPs, and 1 is a venous EIP. Geographically, 4 EIPs in the western region, 3 EIPs in the central region, and 19 EIPs in the eastern region.5 Based on performance evaluation according to the Chinese NEIDP Progress Report, the top four EIPs were then Yantai Economic and Technological Development Zone, the Suzhou Industrial Park (SIP), the Suzhou High-Tech Park, and the Tianjin Economic Development Area. SIP is an EDA, which is classified into the EIPs with existing physical structure. Since it was established, SIP has considered principles of environmental protection for planning and policy making. SIP was picked up as the top of “China’s 20 Most Attractive Comprehensive Developments for Foreign Investors” by the Chinese Academy of Social Sciences (CASS, 2006). Many industrial parks across the country have followed SIP’s management model for their implementation (Zhang et al., 2009). Concerning EIP development, SIP obtained the label of ISO14000 National Demonstration Zone in 2001. As the national EIP program was launched, SIP was approved as a pilot in 2004 and began to implement EIP planning in accordance with the guidelines of national EIP development. In 2008, SIP passed the evaluation and obtained the label as one of the first three National Demonstration EIPs (Yu et al., 2015b). Indeed, policymakers in SIP have taken a series of regulatory actions and policy instruments for facilitating EIP development. Yu et al. (2015a) suggest that there are three types of policy instruments to promote EIP development in SIP i.e., regulatory instruments, economic instruments, and voluntary instruments. First, with regard to regulatory instruments,

5 For details about these EIPs, please refer to Table 1 of Zhang et al. (2009).

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the first eco-oriented regulation in SIP’s history was the Measures on Environmental Protection for Construction Projects in 1995. Afterwards, SIP promulgated the regulations on hazardous waste and wastewater in the late 1990s. The purpose of these measurement is to guide and supervise environmental performance in the early stage of SIP’s construction and industrial production. Further, when the new firms or projects apply for operating in SIP, the environmental impact and energy consumption must be evaluated by its Environmental Protection Bureau (EPB) in SIP for approval. Practically, SIP conducts strict enforcement of the rule of one-vote veto in line with the environmental and energy inspection, which implies that potential firms or projects will be rejected if their environmental performance does not meet the requirements, no matter how much these firms or projects are attractive. Without the approved environmental assessment, the business license will not be issued.6 If potential firms or projects are approved, the construction of facilities is required to follow the principles of “three synchronization” required by Ministry of Environmental Protection (MEP) for preventing and controlling pollution i.e., related environmental protection facilities must be simultaneously designed, constructed and operated together with the whole project (Yu et al., 2015a). After the environmental inspection of construction, EPB will approve the operation and install real-time systems to monitor the pollutant emissions. Since 2007, the standards of freshwater consumption and wastewater discharge for new projects have been required to be in line with the national EIP benchmark. For the existing firms located in SIP, energy audits are mandatory and coal-fired boilers are forbidden, except for the co-generation plant. Further, in 2010 the range of mandatory energy audits has been enlarged to all firms whose energy consumption is larger than 3000 tce/year.7 Also, since 2007, a water quota pricing system has been used to reduce water consumption i.e., A firm whose freshwater consumption of exceeds the national EIP benchmark has to be punished by paying a rate with 50% higher than the regular water rate (Yu et al., 2015b). 6 As suggested by Yu et al. (2015b), from 1995 to 2012, around 400 projects were rejected by SIP due to the environmental entry rule, involving the investment of 3 billion US dollars. 7 Tce stands for tons standard coal equivalent.

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Second, concerning economic instruments, funding is mainly used as a reward after the performance evaluation rather than direct subsidies. For example, some monetary incentives are as follows: the EPB and Financial Bureau could award a maximum of 10% of the actual cost to firms, hinging on the outcome of environmental assessment. The funding for energy saving could subsidize at most 20% of the investment in equipment or technology. Energy audit fees can be reimbursed for up to 50% (Yu et al., 2015a). In addition to both regulatory and economic instruments, some instruments on a voluntary basis have been employed in SIP to promote EIP development. For example, the labels of circular economy and environmental protection have been granted since 2005 towards the entities and/or individuals who made progress on reclaiming water, waste recycling and environmental awareness. To facilitate the dissemination of eco-solutions, these entities not only include firms, but also schools and residential neighborhoods; and by the year 2012 about 200 entities had acquired such labels. Further, there are two non-government associations being active with promoting environmental protection in SIP. The first is called Environment Health and Safety (EHS) Association, who plays an active role as an informal networking event organized by firms located in SIP since 2005. It then was registered as a non-profit organization in 2009, whose main function is to offer training and networking opportunities to follow up actions to accommodate environmental regulations and organize assessments, as well as providing feedback to the EPB. The second is called the low carbon business association, which was established by 36 energy-related firms in 2010. This organization mainly provide consulting services for new energy-oriented technologies and policies, in addition to offering relevant trainings and workshops. Moreover, in 2012 the EPB in SIP promulgated the first guideline of environmental information disclosure, which involves 20 local firms to help them for voluntarily disclosing the information about resource consumption, types and amount of pollutants, waste disposal and treatment equipment (Yu et al., 2015b). Low Carbon Governance in SIP In addition, as a leading industrial park in China, SIP is designing and planning the peak carbon emission target and the path to achieve it, striving to ensure that the overall carbon peak will be achieved by the end of the “14th Five-Year Plan” period.

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The working mechanism of low carbon governance in China is based on the target responsibility system (TRS) (Wang et al., 2015). Lowcarbon development targets, such as CO2 reduction per unit GDP, renewable energy sharing ratio and CO2 peak time etc., are decomposed from the national level to city level and then to the county/enterprises level. After Receiving supports from upper-level government, local governments can publish their policies and carry out their practice, and, finally, these targets are assessed after policy implementation. Therefore, the government can be regarded as the driving force for sustainable urban development by guiding other participants, such as enterprises, citizens, and NGOs. According to the Strategy for Revolution in Energy Production and Consumption (2016–2030), China’s central policies to promote energy transformation are: based on China’s national conditions, China will implement energy supply-side structural reform, promote the transformation and development of coal, increase the scale of unconventional oil and gas development, vigorously develop non-fossil energy, improve the transmission, distribution network and storage system, optimize the energy supply structure, and form a multi-wheel driven, safe and sustainable energy supply system. In September 2020, President Xi Jinping announced that China would increase its national contribution and strive to peak its carbon dioxide emissions by 2030 and become carbon neutral by 2060. This announcement is a strategic move by China to devote itself to the construction of its ecological civilization. It is also a significant announcement that China is willing to make new contributions to the development of human society. China will overcome all difficulties, take strong measures to fulfil this commitment, promote the “green revolution” of development methods and lifestyles, realize the “green recovery” of the world economy after the pandemic, and take good care of the common home of our humankind in the development process. The specific target is: by 2030, carbon dioxide emissions per unit of GDP will be reduced by more than 65% compared to 2005, non-fossil energy will account for about 25% of primary energy consumption, forest stock will increase by 6 billion cubic meters compared with 2005, and the total installed capacity of wind power and solar power will reach 1.2 billion kilowatts or more. On March 5, 2021, Premier Li Keqiang said in his government working report that the government would do a solid job in carbon peaking, carbon neutrality and work to formulate a plan of

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action for carbon emissions peaking by 2030, and optimize industrial and energy structures. In order to promote the construction of ecological civilization, promote green and low-carbon development, and ensure the achievement of the goal of controlling greenhouse gas emissions, the China’s National Development and Reform Commission organized two batches of lowcarbon provinces and cities in 2010 and 2012, respectively. Suzhou is the second batch of national low-carbon pilot cities, and Suzhou Industrial Park is included in the national low-carbon industrial park pilot. In the new stage of ecological civilization park and regional integration construction, the park adheres to the development positioning of “reform and opening test field, international cooperation demonstration zone”, actively carries out the creation of national low-carbon industrial park, and organizes experts to compile the “Suzhou Industrial Park Creation National Low-Carbon Industrial Park Pilot Implementation Plan” and passed the national review in October 2014, officially becoming the first batch of national low-carbon industrial park pilot units. To further guide enterprises in the park to tap the potential of energy conservation and carbon reduction, improve resource conservation and energy management, and promote the transformation and upgrading of the park, the park has formulated the “13th Five-Year Plan for Energysaving and Low-Carbon Development of Suzhou Industrial Park” and “Energy-saving Cycle of Suzhou Industrial Park” “Measures for the Management of Special Guidance Funds for Low-Carbon Development” and other documents. These encourage companies to conduct voluntary clean production audits, carbon emission inventories, energy management system construction, and the creation of four energy-saving and lowcarbon capacity building projects for Suzhou Industrial Circular Economy Demonstration Enterprises. After the Jiangsu Provincial Government issued the energy-saving emission reduction low-carbon development action implementation plan (2014–2015), SIP government immediately followed with measures such as new energy vehicles subsidies, old car recycling subsidies, Energy conservation and emissions reduction low-carbon development action plan (2015). Besides, in order to push and assess the policy implementation, SIP has set up a series of low-carbon development or energy-saving targets higher than the national average level. The Energy intensity &carbon intensity, and total CO2 amount are the binding targets, and other indicators are non-binding. Moreover, different types of policy tools

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have been implemented, such as command-control tools and marketincentive tools (Liu et al., 2018). The sector structure adjustment, energy structure adjustment, and consumption style adjustment are the most crucial CO2 mitigation measures in SIP, accounting for around 70, 8, and 7.5% of the CO2 mitigation measures, respectively. The park carried out “Oil to Gas” projects and set “No coal-burning area” to achieve the target to adjust the energy structure. Besides, Suzhou city has established low carbon development funds to stimulate participation. Until 2014, SIP has 70 million RMB for environmental protection, 15 million RMB for energy saving, and 4 million RMB for green construction. In its industry enterprises, low-carbon technologies are applied widely, including Combined Cooling Heating & Power (CCHP), Distributed Photovoltaic (DPV), smart grid, demand-side power management system and centralized heating and cooling projects. It also carries out carbon inventory assessment of products’ plants and carbon footprint by applying life cycle assessment in electronic enterprises in the core area. Till 2013, there have been around 70 buildings with a green certificate, which is more than 7 million square meters, accounting for half of the whole province. By 2015 and 2020, the sharing ratio of new green buildings must be 80 and 100%, respectively. Transportation Department set a series of reduction targets, too. For example, it aims to install 50% smart bus stations in 2015 and 100% in 2020. It also tries to increase the public transportation sharing ratio to 80%. The hybrid buses will be used to replace previous buses. The bicycle renting system will be applied much widely to improve its convenience. “Energy efficiency star” has been implemented among the service sector, especially in hotels and restaurants, which will receive subsidies, tax duty or other financial assistance from the government. The Park also hopes to increase carbon sink through green balcony and walls. The covering ratio of green area in the built area has reached 46% and been satisfied with the requirements of the “Low-carbon economy development plan of SIP”. The Park also has policy innovation. It has established many systems, including GHG data management system, carbon assessment system, carbon reporting system, carbon reduction performance assessment system, climate change adaptation mechanism, carbon information disclosure system and decision making-feedback system. The policy is carried out through the TRS system, and the Park Council’s reduction targets

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are decomposed into departments or enterprises. Expected for TRS, the carbon reduction has been combined with the government officer’s performance assessment system, increasing the participation of different departments by rewarding and punishment mechanisms. To further deepen the construction of the national low-carbon pilot park, advocate a low-carbon lifestyle, and promote the low-carbon development of communities, the park management committee issued the “Suzhou Industrial Park Low-carbon Community Pilot Construction Work Implementation Plan.” The SIP government guides residents to establish the concept of ecological civilization and form a social fashion that prides itself on low-carbon life and a community culture that builds a harmonious and low-carbon home. Carry out low-carbon family creation activities, formulate and publish community low-carbon decoration and low-carbon living guidelines, advocate clean stoves, low-carbon cooking, healthy eating, and reduce food waste. Encourage the use of low-carbon, energysaving, water-saving home appliances and simple packaging products, and encourage the use of low-carbon travel modes such as walking, bicycles, and public transportation. Improve community residents’ low-carbon life service facilities, organize various forms of publicity, education, and practical experience activities to effectively control greenhouse gas emissions in urban construction and residents’ lives, and explore low-carbon based on ecological civilization, green development and regional integration. The community development model helps the park to become a “livable resort”. In 2019, Suzhou Industrial Park issued the “Suzhou Industrial Park Construction Project Environmental Impact Assessment Document Approval and Notification Commitment Reform Pilot Work Plan” to fundamentally solve the “slow”, “difficult” and “complex” problems of environmental impact assessment, reduce enterprise costs and administrative costs, and promote high-quality economic development.

Concluding Remarks and Implications Circular economy has been proposed as very promising concept to guide the achievement of sustainability. CE adoption will stimulate cleaner production, prevent pollution and control waste, thus facilitating quality and sustainable growth in the long run. In China, there has been certain achievements made by a series of current CE practices, however, some

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barriers and challenges exist, which could potentially impede its implementation and promotion. Existing literature such as Kirchherr et al. (2018) and Feng and Lam (2021) suggests four dimensions of barriers i.e., technological, financial, cultural and regulatory factors. Specifically, first, concerning technological factor, it is vital for the CE economy model because CE implementation requires advanced technology and updated infrastructure and facilities to improve its efficiency and effectiveness. However, the overall level of technology participation into CE practice is relatively low, and the environment-related technology could not satisfy the actual need due to limited financial support (Su et al., 2013). Second, concerning financial factor, the investment in environmental pollution control in China is only 1.5% of GDP by 2013, which is far lower than other developed countries (Liu et al., 2017). Such low level of investment is partly due to severe information asymmetry between high-tech SMEs and potential investors/lenders. Third, cultural factor denotes consumer awareness and interest of concept of CE. CE practical experience in developed countries such as Germany and Japan suggests that public participation is vital to CE promotion, and in Tianjin—one of CE pilot cities—public has limited awareness and understanding on the CE-related projects (Govindan & Hasanagic, 2018). Fourth, although Chinese government has promulgated a set of CE-related regulations and laws over the past two decades, ineffective law enforcement has been a major impediment to implement CE (e.g., it impedes the progress toward promoting CE to community and organizations) (Feng & Lam, 2021). In addition, EIP implementation in China is important, because, as suggested by existing literature such as Hong and Gasparatos (2020), EIP development and operation will have sustainability impacts in various dimensions i.e., economic, environmental and social impacts, respectively. First, the literature has suggested that the economic impacts of EIPs consist of (1) economic performance at the park level; (2) technology adoption; (3) industrial transition; and (4) broader regional economic effects. Second, the environmental impacts include (1) resource use savings; (2) waste and pollution prevention; and (3) land use change and biodiversity loss. Third, EIP implementation has social impacts due to both economic impacts and environmental impacts. Specifically, social

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impacts consist of health, social services, and social conflicts (Hong & Gasparatos, 2020).8 Thus, to overcome these barriers and further promote CE practices in China, we suggest that it is vital for efficient implementation and management of current EIPs, due to EIPs be a main force to accomplish the 3R principles of CE. One of unique institutional environment in China is regional variation in governmental governance quality and the resulting economic development. Due to its unique governance structure, existing operation of SIP has displayed high level of both governance quality and administrative efficiency. Therefore, SIP should further establish a systemic institutional arrangement and design by addressing technological, financial, cultural and regulatory factors, attempting to set up a feasible CE ecology and provide a reference towards other EIPs.

References Cheng, H., & Zuo, T. (2006). Developing recycling economy, establish eco-industrial parks with Chinese characteristics. World Review of Science, Technology and Sustainable Development, 28(1), 1–7 (in Chinese). Chinese Academy of Social Sciences. (2006). China’s 20 most attractive comprehensive development for foreign investors. Beijing. (In Chinese). Fang, Y., Côté, R. P., & Qin, R. (2007). Industrial sustainability in China: Practice and prospects for eco-industrial development. Journal of Environmental Management, 83(3), 315–328. Feng, K., & Lam, C. Y. (2021). An overview of circular economy in China: How the current challenges shape the plans for the future. The Chinese Economy, 1–17. Feng, Z., & Yan, N. (2007). Putting a circular economy into practice in China. Sustainability Science, 2(1), 95–101. Geng, Y., & Cote, R. (2004). Applying industrial ecology in rapidly industrializing Asian countries. The International Journal of Sustainable Development & World Ecology, 11(1), 69–85. Geng, Y., Fu, J., Sarkis, J., & Xue, B. (2012). Towards a national circular economy indicator system in China: An evaluation and critical analysis. Journal of Cleaner Production, 23(1), 216–224.

8 By comprehensively reviewing 41 EIP-related studies, Hong and Gasparatos (2020) suggest these three impacts of EIPs. For detailed information of these impacts, please refer to Section 4 of their research.

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Geng, Y., Haight, M., & Zhu, Q. (2007). Empirical analysis of eco-industrial development in China. Sustainable Development, 15(2), 121–133. Geng, Y., Zhang, P., Côté, R. P., & Fujita, T. (2009). Assessment of the national eco-industrial park standard for promoting industrial symbiosis in China. Journal of Industrial Ecology, 13(1), 15–26. Govindan, K., & Hasanagic, M. (2018). A systematic review on drivers, barriers, and practices towards circular economy: A supply chain perspective. International Journal of Production Research, 56(1–2), 278–311. Hong, H., & Gasparatos, A. (2020). Eco-industrial parks in China: Key institutional aspects, sustainability impacts, and implementation challenges. Journal of Cleaner Production, 122853. Kirchherr, J., Piscicelli, L., Bour, R., Kostense-Smit, E., Muller, J., HuibrechtseTruijens, A., & Hekkert, M. (2018). Barriers to the circular economy: Evidence from the European Union (EU). Ecological Economics, 150, 264– 272. Larsson, M. (2018). Circular business models: Developing a sustainable future. Springer. Liu, L., Liang, Y., Song, Q., & Li, J. (2017). A review of waste prevention through 3R under the concept of circular economy in China. Journal of Material Cycles and Waste Management, 19(4), 1314–1323. Liu, T., Wang, Y., Song, Q., & Qi, Y. (2018). Low-carbon governance in China– Case study of low carbon industry park pilot. Journal of Cleaner Production, 174, 837–846. Mathews, J. A., & Tan, H. (2011). Progress toward a circular economy in China: The drivers (and inhibitors) of eco-industrial initiative. Journal of Industrial Ecology, 15(3), 435–457. Murphy, J., & Gouldson, A. (2000). Environmental policy and industrial innovation: Integrating environment and economy through ecological modernisation. Geoforum, 31(1), 33–44. Murray, A., Skene, K., & Haynes, K. (2017). The circular economy: An interdisciplinary exploration of the concept and application in a global context. Journal of Business Ethics, 140(3), 369–380. Ranta, V., Aarikka-Stenroos, L., Ritala, P., & Mäkinen, S. J. (2018). Exploring institutional drivers and barriers of the circular economy: A cross-regional comparison of China, the US, and Europe. Resources, Conservation and Recycling, 135, 70–82. Reh, L. (2013). Process engineering in circular economy. Particuology, 11(2), 119–133. Sakai, S. I., Yoshida, H., Hirai, Y., Asari, M., Takigami, H., Takahashi, S., Tomoda, K., Peeler, M. V., Wejchert, J., Schmid-Unterseh, T., Douvan, A. R., Hathaway, R., Hylander, L. D., Fischer, C., Oh, G. J., Jinhui, L., &

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Chi, N. K. (2011). International comparative study of 3R and waste management policy developments. Journal of Material Cycles and Waste Management, 13(2), 86–102. Scott, W. R. (2013). Institutions and organizations: Ideas, interests, and identities. Sage. Shi, H., Tian, J., & Chen, L. (2012). China’s quest for eco-industrial parks, part I. Journal of Industrial Ecology, 16(1), 8. Skene, K., & Murray, A. (2017). Sustainable economics: Context, challenges and opportunities for the 21st-century practitioner. Routledge. Stahel, W. R. (2016). The circular economy. Nature News, 531(7595), 435. State Council of the People’s Republic of China. (2007). List of development zone. SCPRC, Beijing. (In Chinese). State Environmental Protection Administration. (2007, May). List of national ecological industrial demonstration park in China. SEPA, Beijing. (In Chinese). Su, B., Heshmati, A., Geng, Y., & Yu, X. (2013). A review of the circular economy in China: Moving from rhetoric to implementation. Journal of Cleaner Production, 42, 215–227. The European Parliament and the Council of the European Union. (2008). Directive 2008/98/EC of the European Parliament and of the Council on waste and repealing certain Directives. Official Journal of the European Union, 50, 3–4. United States President’s Council on Sustainable Development. (1996, October 17–18). In: Eco-Industrial Park Workshop Proceedings. Washington: USPCSD. Wang, N., Lee, J. C. K., Zhang, J., Chen, H., & Li, H. (2018). Evaluation of urban circular economy development: An empirical research of 40 cities in China. Journal of Cleaner Production, 180, 876–887. Wang, Y., Song, Q., He, J., & Qi, Y. (2015). Developing low-carbon cities through pilots. Climate Policy, 15(1), S81–S103. Yu, C., Dijkema, G. P., & de Jong, M. (2015a). What makes eco-transformation of industrial parks take off in china? Journal of Industrial Ecology, 19(3), 441–456. Yu, C., Dijkema, G. P., de Jong, M., & Shi, H. (2015b). From an eco-industrial park towards an eco-city: A case study in Suzhou, China. Journal of Cleaner Production, 102, 264–274. Zeng, D. Z., Cheng, L., Shi, L., & Luetkenhorst, W. (2021). China’s green transformation through eco-industrial parks. World Development, 140, 105249. Zhang, H., Hara, K., Yabar, H., Yamaguchi, Y., Uwasu, M., & Morioka, T. (2009). Comparative analysis of socio-economic and environmental performances for Chinese EIPs: Case studies in Baotou, Suzhou, and Shanghai. Sustainability Science, 4(2), 263–279.

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Zhang, L., Yuan, Z., Bi, J., Zhang, B., & Liu, B. (2010). Eco-industrial parks: National pilot practices in China. Journal of Cleaner Production, 18(5), 504– 509. Zhu, J., Fan, C., Shi, H., & Shi, L. (2019). Efforts for a circular economy in China: A comprehensive review of policies. Journal of Industrial Ecology, 23(1), 110–118. Zhu, Q., Geng, Y., Sarkis, J., & Lai, K. H. (2015). Barriers to promoting ecoindustrial parks development in China: Perspectives from senior officials at national industrial parks. Journal of Industrial Ecology, 19(3), 457–467.

CHAPTER 4

Entrepreneurial Ecosystems

Abstract Entrepreneurial activity has been identified in the literature to play a vital role in contributing economic growth and job creation in the long run in both developed and emerging economies such as China. In SIP, high-tech SMEs has become an important main force for economic development. Entrepreneurial ecosystem (EE), recently coined, is a cutting-edge and important concept and framework to guide entrepreneurial practices from a stakeholder viewpoint. To facilitate SIP’s entrepreneurial development in an ecological way, this chapter (1) explores definitions and frameworks of EE and identify how government plays a role in such ecosystem; (2) examines the SME-oriented institutional arrangement and design by the SIP government; and (3) reviews the actions taken by the SIP government to resist COVID19. The chapter also addresses practical and policy implications towards policymakers of local government. Keywords Entrepreneurial ecosystem · The role of institutions and government · SIP’s SME-oriented institutional arrangement

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2_4

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Introduction Entrepreneurial activity has been identified in the literature to play a vital role in contributing economic growth and job creation (Audretsch & Link, 2012). Thus, policymakers are often concerned with quantity and quality of entrepreneurial activity in a society. In spirit of biology, a terminology—entrepreneurial ecosystem is created, which can be traced to two sources, i.e., Feld’s (2012) book Startup Communities and Isenberg’s (2010) work in the Harvard Business Review. The idea of entrepreneurial ecosystems was then quickly adopted by governments and non-governmental organizations (NGOs) such as the Kauffman Foundation, the OECD, and the World Economic Forum (Wurth et al., 2021). The entrepreneurial ecosystem consists of a set of interdependent actors and factors that are governed in such a way that they enable productive entrepreneurship (Stam, 2015). In other words, an entrepreneurial ecosystem is an interactive network of actors who influence each other and the chances of survival of a venture creator and his firm in a region or country. If such ecosystem functions well for entrepreneurs, it will achieve high quality growth and innovation. Thus, having a good understanding of this ecosystem in particular regions or countries is vital, because it is context dependent. Two very recent studies (i.e., Cao & Shi, 2021; Chen et al., 2020) provide a comprehensive review of the literature on entrepreneurial ecosystems in emerging economies such as China, highlighting the importance of such ecosystem in non-developed countries and identifying research gaps and challenges when directly applying the model vis-àvis advanced economy entrepreneurial ecosystems to emerging economy entrepreneurial ecosystems. In China, according to the International Finance Corporation Report in 2017, it has the largest number of SMEs within developing economics. There are 21 million SMEs in developing countries, of which 12 million are Chinese SMEs, accounting for 56% of the total number of SMEs in developing countries (MSME Report, 2017). SMEs are the backbone of China’s economic development, as they comprise 97% of all enterprises in the country, accounting for 80% of urban employment and 60% of total GDP in 2013 (OECD Report, 2016).

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In SIP, high-tech SMEs has become an important main force for economic development, cultivating reserve forces for high-tech enterprises. Recently, the Provincial Department of Science and Technology announced the second batch of high-tech SMEs in the database in 2021. Among them, 907 enterprises in SIP were selected as high-tech SMEs. Up to now, the two batches of warehousing enterprises in the park have reached 1418. Since the start of the evaluation of technology-based SMEs in 2021, there have been a total of 6302 companies in Suzhou, with parks accounting for 23%, ranking first in the city.1 Thus, it is worthwhile to perceive and explore current SMEs’ development and behavior and institutional arrangement and design of local government from the entrepreneurial ecosystem perspective. In section “Entrepreneurial Ecosystems”, we firstly examine definition, components, and structures/frameworks of the entrepreneurial ecosystem, and then identify how government plays a role in such ecosystem. Section “The SME-Oriented Institutional Arrangement by SIP” will investigate the SME-oriented institutional arrangement and design by the SIP government, including service-oriented arrangements, funding-oriented arrangements, and human capital- and research-related arrangements. We also review the actions taken by the SIP government to resist COVID-19 in this section. Section “Concluding Remarks and Implications” concludes, addressing valuable implications for policymakers of local government.

Entrepreneurial Ecosystems Definition, Components, and Structures Dubini (1989) originally developed the term—ecosystems, which are characterized by the presence of family businesses and role models, a diverse economy, a strong business infrastructure, available investment capital, a supportive entrepreneurial culture, and public policies that incentivize venture creation. The terminology—business ecosystem was coined by James Moore in 1996, who referred to it as ‘an economic community supported by a foundation of increasing organizations and individuals—the organisms of the business world’ (Moore, 1996, 26). 1 For more detailed information, please refer to the website http://www.sipac.gov.cn/ szgyyq/mtjj/202104/1150a2a35f234e6eb88ceeb925249423.shtml.

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Concerning the definition of an entrepreneurial ecosystem, a broadly agreed notion among researchers refers to it as ‘a community of multiple coevolving stakeholders that provides a supportive environment for new venture creations within a region’ (Cao & Shi, 2021). Isenberg (2010) introduced the framework of an entrepreneurial ecosystem by focusing the concept ecosystem specifically on start-up firms, in which he developed six components i.e., a conducive culture, enabling policies and leadership, availability of appropriate finance, quality human capital, venture friendly markets for products, and a range of institutional supports. An entrepreneurial ecosystem occurs when a set of start-ups, organizations, institutions, and entrepreneurship stakeholders form a munificent environment ripe to foster entrepreneurship (Spigel, 2017). Mason and Brown (2014) developed its framework from the perspective of interconnected stakeholders i.e., in an entrepreneurial ecosystem, a set of interconnected entrepreneurial actors (both potential and existing), entrepreneurial organizations (e.g., firms, venture capitalists, business angels, banks), institutions (universities, public sector agencies, financial bodies) and entrepreneurial processes (e.g., the business birth rate, numbers of high growth firms, levels of ‘blockbuster entrepreneurship’, number of serial entrepreneurs, degree of sellout mentality within firms and levels of entrepreneurial ambition) formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment. Further, Spigel (2017) suggest that ecosystems represent the presence of multiple overlapping sets of attributes and institutions that encourage entrepreneurial activity and provide critical resources that new ventures can draw on as they expand and evolve. Specifically, an ecosystem’s attributes are sustained and reproduced through their relationships with other attributes. In ecosystems with dense relationships between attributes, this reproduction occurs by the interplay between a supportive entrepreneurial culture; networks of entrepreneurs, workers, and investors; and effective public programs and organizations. In sparser ecosystems, one attribute drives the production of the other attributes, such as a large local market that creates multiple opportunities for entrepreneurs to exploit, grow, and profitably exit. Figure 4.1 shows the relationship among ecosystem attributes developed by Spigel (2017). In emerging economies such as China, because new ventures and the SME sector/entrepreneurial firms have been identified as a key driver of job creation and the resulting fast economic growth (Ahlstrom &

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Fig. 4.1 Relationships among ecosystem attributes (Source Figure 1 of Spigel, 2017)

Ding, 2014), it is important and indispensable to call for research linking entrepreneurial ecosystems and China. Consequently, two very recent studies explore the issues of how entrepreneurial ecosystems can be relevant to emerging economies like China. Chen et al. (2020) provide a comprehensive review of the literature on entrepreneurial ecosystems research in leading international journals (i.e., the Financial Times 50 journals plus 4 leading entrepreneurship journals) and 24 leading Chinese journals in management and economics over the years of 2000 through 2017. They integrate articles from a wide range of disciplines beyond entrepreneurship including the literature from regional development and economics to identify four important themes in entrepreneurial ecosystems i.e., nature, networks, institutions, and dynamics. Among these four themes, institutions mainly denote the role of government, which is very important factor influencing economic growth in China.

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Cao and Shi (2021) systematically review empirical research on emerging economy entrepreneurial ecosystems to build a theoretical framework that highlights their salient features. They explore three key findings that challenge the direct application of the model based on advanced economy entrepreneurial ecosystems to emerging economy entrepreneurial ecosystems i.e., resource scarcities, structural gaps, and institutional voids. Based on such findings the authors develop three corresponding logics to analyze the issue of emerging economy entrepreneurial ecosystems i.e., resource logic—resource allocation system, interaction logic—structural interaction system, and governance logic—ecosystem policy approach. Among these three logics, governance logic is very important, because entrepreneurial ecosystems include various different stakeholders or supporting programs which consist of those backed by regional/subnational/national governments, public sector bodies such as universities, and private bodies. Each actor possesses different or related goals and functions, so the governance mechanisms of entrepreneurial ecosystems need to guide concerted instead of isolated actions (Spigel, 2016). Within governance logic, Cao and Shi (2021) highlight the importance of the role of government. Specifically, the literature suggests that, after accepting the importance of entrepreneurship in stimulating economic growth, from the policymakers’ perspective, entrepreneurship is a highly context dependent activity and government actions have significant impacts on effective outcomes i.e., the different government principles or designs of entrepreneurial ecosystems will affect different firm outcomes. This is particularly true in China, as the Chinese government has been playing pivotal role in overall economic development. The Role of Institutions and Government in Entrepreneurial Ecosystem With regards to the role of institutions, existing literature suggests that entrepreneurial ecosystems and entrepreneurial activities can be beneficial from the effective formal institution as well as informal institution supportive of entrepreneurship (Armanios et al., 2017). As North (1990) and Williamson (1991) argue, environments with limited institutions will exhibit voids in their ability to support entrepreneurial formation and growth, therefore inhibiting the development of local ecosystems. This perspective gives rise to the focus on specific agent and/or government to

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bridge the voids and public funds, and thus, create the appropriate institutions for the ecosystem (Dutt et al., 2016). Thus, the major concern in this line of research is whether and how governments as a formal institution affect relevant stakeholders in entrepreneurial ecosystems. Researchers have argued that governments need to play a comprehensive and holistic role if they are to create a favorable environment for entrepreneurial ecosystems (Huggins & Williams, 2011; Parker, 2008). Governments, consequently, employ the policies or regulations to bridge entrepreneurs with sufficient tangible resources and intangible resources (Samila & Sorenson, 2010), thus enhancing the stability of regulations, and ensuring that necessary financial supports and culture of entrepreneurship are present to improve the sustainability of entrepreneurial ecosystems (Li et al., 2016). Compared with providing tangible resources, it is more important that the government could offer intangible supportive resources for entrepreneurial firms to create a munificent environment for entrepreneurial ecosystem. For instance, the informal government support has helped to create such an environment in Singapore (Bruton et al., 2002; Lerner, 2009). Existing literature has documented the evidence based on developed economies about supporting the ability of the government to address both tangible and intangible support for an ecosystem (Heidenreich, 2005; Huggins & Williams, 2011; Mueller & Jungwirth, 2016; Pergelova & Angulo-Ruiz, 2014). The literature has also paid attention to investigate institutions on the ecosystem in non-Western settings (Armanios et al., 2017). While institutional voids are common in emerging economies’ ecosystems, the government typically takes an active role to address such institutional failures that affect entrepreneurial ecosystems (Amezcua et al., 2013; Dutt et al., 2016; Naude et al., 2008). In China, the government role has been typically viewed as a means to provide financial and/or physical resources such as providing tax incentives and/or land for incubators and scientific/industrial parks. The logic behind this review that the absence of tangible resources such as infrastructure and financial capital is the greatest barriers to new ventures in China as the largest emerging countries. However, the evidence is suggested that governments in emerging economies have limited capabilities to remedy such barriers (Heidenreich, 2005; Naude et al., 2008) such as building the networking connections and providing the needed resources (e.g., entrepreneurial training, VC funding, advice, and mentorship) necessary for ventures in entrepreneurial process (Cheng & Cui,

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2016; Cui & Cheng, 2016; Xiang & Huang, 2016). Thus, even though existing literature has demonstrated that the Chinese government’s strong intervention has a positive effect on high-tech start-ups (e.g., Liu & Zhao, 2015; Niu & Gao, 2006; Xiang & Huang, 2016), this recognition is yet to be widely applied in the broader ecosystem research. One of the key elements that become clear in examining China’s entrepreneurial ecosystems is that the role of government must be considered as a major characteristic of Chinese entrepreneurial ecosystems. There is a recognized role for the government in the West in providing services for entrepreneurship such as establishing infrastructure and driving the supportive entrepreneurial culture that could encourage risk-taking within ecosystems (Spigel, 2017). However, in China the government plays a far larger role. The literature has suggested that the government has become a partner with business entities in China, mainly because the government plays a pivotal role in the economy overall (Ahlstrom et al., 2014; Buckley et al., 2006; Dong & Glaister, 2006; Lau & Bruton, 2008). While the government does not expect direct returns from firms in China, the government will be far more active than the government in the West in shaping the entrepreneurial venture’s success. Thus, rather than simply a force that provides infrastructure such as roads the government would more accurately be seen as a more active main force in the ecosystem, in order that it can determine the success or failure of a venture.

The SME-Oriented Institutional Arrangement by SIP Service-Oriented Arrangements and Design Over the past two decades, the SIP government has executed a series of service-oriented institutional arrangement and design to enhance the development and upgrades of local SMEs. The main arrangements are shown as follows: SMEs Service Center SMEs Service Center was initially set up by the SIP government in 2007, which is an innovative service organization established to serve the transformation and upgrading of the park and the leap-forward development of technological innovation. Its aim is to integrate government and social

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service resources, innovate corporate service mechanisms, enhance corporate service efficiency, and serve technological innovation enterprises in key areas to promote the rapid growth of SMEs. Recently, this center has been upgraded by moving all government approvals and social services into ‘online’ model to create the “most powerful brain” for SMEs. One of the new features in the center is the introduction of social forces to participate in services. Firms log on to the platform to release financing, legal consultation, talent recruitment and other needs, and marketoriented institutions take the initiative to connect and provide services. Nowadays, more than 200 service organizations have started gaining connection via it. The center also established “enterprise spaces” for 9261 enterprises in the park, which is to integrate enterprise files, including industrial, commercial, and financial data, declaration and participation information. It is developing a targeted push function by analysis based on big data, the purpose of which is to automatically match projects that can be declared for each company, and recommend appropriate activities or actions for them.2 Statistics show that in 2016 the center handled 19,300 authorized businesses, 32,000 settled businesses, and 16,368 corporate inquiries. In response to the relatively concentrated needs and problems of SMEs, the center has set up a “one-stop service” hall and opened 7 business acceptance windows for project declaration and enterprise identification. The online information platform could manage 100% of the business online acceptance, and real-time disclosure of the progress of the work, making the service more concise and efficient. Nowadays, the Enterprise Development Service Center has achieved full coverage of nearly 50,000 enterprises in the area.3 SMEs Service Alliance “SIP has built a convenient platform for us to easily participate in technology services”, said by Xiang Wu, deputy manager of Zhonghong Tax company, when he was invited by the SME Service Alliance of the park to deliver about technology companies’ policy analysis and risk management skills to high-tech firms. “The alliance has introduced more 2 For more detailed information, please refer to the article in Chinese entitled《苏州园 区中小企业服务平台上线 引社会力量打造 “最强大脑”》 3 For more detailed information, please refer to the article in Chinese entitled《苏州工 业园区企业发展服务中心: 打造全生命周期”服务链 “! 》

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than 210 professional institutions. Enterprises have business outsourcing needs in terms of capital, management, talents, information, etc., and we can solve them in the first time” said Luwei Shao, chairman of the SME Service Alliance in SIP. This organization is composed of scientific and technological consulting agencies, law firms, talent service agencies, accounting firms, financing agencies, intellectual property agencies and other units, fulfilling the function of serving SMEs in the form of government procurement of services.4 Jinji Lake Entrepreneurship Mentor Program In September 2016, the SIP launched ‘Jinji Lake Entrepreneurship Mentor Program’. By focusing on three major emerging industries, this program is to hire angel investors, successful entrepreneurs, financial experts, and business management experts who are enthusiastic about entrepreneurial counseling, and have experience as entrepreneurs mentors, and select service targets from projects such as “Jinji Lake Double Hundred Talents” to provide a full range of services. In addition, the center has also planned a number of service brands such as private board of directors, face-to-face government and enterprise services, and leading industry salons.5 Financing Through Train For high-tech SMEs, SIP has launched a “financing through train” service. By establishing credit standards for them, an open and shared credit system and financial service platform will be built to help the development of high-tech firms in the park. According to the SME credit database, basic credit files have been established for 9515 warehousing companies, involving 51 types of credit records and credit indicators with 116,000 records in total. The main functions in this service platform is as follows: sorting out the credit files of enterprises, issuing credit reports for them, directly linking with banks on enterprises’ credit indicators and development conditions, simplifying the investigation process of their financial needs, shortening the time for bank-enterprise docking, and fulfilling financing needs. This system is expected to reduce information 4 For more detailed information, please refer to the article in Chinese entitled《中小企 业服务联盟, 创投引导基金》 5 For more detailed information, please refer to the article in Chinese entitled《周到服 务, 优化创新创业生态》

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asymmetry between banks and potential borrowers. The total amount of financing credit has now exceeded RMB 100 million.6 Internet of Things and Fintech Research Institute In spirit of the mechanism of Internet of Things (IoT) technology, which is mainly serving finance and the real economy, an organization—Internet of Things & Fintech Research Institute has been established in 2020 in SIP. The objective of this research institute is to establish and bridge credible relationship between financial institutions and SMEs/start-ups. The bridge to the real economy has opened up a safe and efficient channel for financial funds to be invested in the real economy. The Institute will leverage the core team’s 20-year IoT technology accumulation and 10-year IoT financial technology research outputs to serve financial institutions and entities such as banks and insurance companies, prevent and control financial risks, and assist financial institutions in solving physical manufacturing in the park and even Suzhou.7 Funding-Oriented Arrangements In addition, because one of the major obstacles to the proliferation and growth of Chinese entrepreneurial firms (particularly innovative ones) is financial constraints, i.e., limited access to external finance (i.e., banking finance in China) (Li et al., 2019), it is important for how the government mitigate such market failure. As a local government, the SIP government has established various funding-oriented institutional arrangements that provide funding channels and opportunities towards local SMEs. The main arrangements are shown as follows: Stated-Owned Fund With the support of government, SIP has set up several funds to invest in S&T, innovation and education. The biggest one is GuoChuang Fund (a fund of funds) jointly established with the National Development Bank with a registered capital of RMB 60 billion. With these investments, SIP built 20 state-level innovation bases and over 20 public technology service 6 For more detailed information, please refer to the article in Chinese entitled《激活信 用资产让银行 “看得清”企业 “贷得到”——江苏省苏州市信用服务中小企业融资发展观察》 7 For more detailed information, please refer to the article in Chinese entitled《苏州工 业园区感知物联网金融科技研究院》

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platforms, which spread across several cluster-type of sub-parks within SIP, including Biobay (i.e., biotech), Nanopolis (nanotech), Creative Industrial Park (i.e., software, game development and animation), DuShu Lake Innovation District of Science & Technology (i.e., education & training, R&D), and Genway I-Park or ‘Suzhou 2.5 Industrial Park’ (i.e., business services). These bases and platforms help to attract many high-tech firms and R&D institutions (Zeng, 2016). Sci-Tech Banks Sponsored by the government, Bank of Communications set up its first branch of Sci-Tech Branch in SIP, as the outcome of replicating the mode of Silicon Valley Bank which integrated the commercial banking, investment banking, venture capital and underwriting company. By the end of 2012, the Sci-Tech Branch of Bank of Communications had provided over 600 firms with financial services, making that the scale of loan had grown up to nearly RMB 8 billion. The Bank of Jiangsu and Agricultural Bank of China then followed it to set up their branches of Sci-Tech banks. In practice, the Sci-Tech banks in SIP mainly focus on the loans for R&D institutions and high-tech SMEs. The government of Suzhou backs up these Sci-Tech banks by providing special funds for their risk compensation. These special funds are distributed in two ways. One is so called “Science Loan Facilities”, which covers all the loss and requires stricter authentication on high-tech firms, serving them in their expansion stage. The other is a risk pool, which will cover 80% of the loss. The loans backed by the risk pool are relatively flexible in their conditions. Since the high-tech firms in their early and growth stage usually have little fixed asset and much intangible asset, the Sci-Tech banks can innovate on the collateral by evaluating the technique, risk and value of their intangible asset, thus increasing the probabilities of liquidity of the intangible asset (Liu, 2013). State-Owned Venture Capital Oriza Holdings (the former Suzhou Venture Capital) is the largest venture capital in SIP, with registered capital of RMB 3 billion and asset of tens of billion. The business of Oriza Holdings covers equity investment, liability investment and services of equity investment. The core business involves the first national FOF of equity investment and the largest platform of angel investment in China. Oriza Holdings is an SOE,

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but its operation is in a market-driven manner. To diversify the financial risk for different stages, Oriza set up several subsidiaries8 (Liu, 2013). Small-Sum Loan Companies Suzhou Rongda Sci-Tech Small-sum Loan Company is the first smallsum loan company, which is specialized in Sci-Tech financing in Jiangsu Province, and alternative name of this kind of company are called “rural small-sum loan company”, which could lend money to SMEs. The smallsum loan company is more flexible in the loan condition and process. While commercial banks require borrowers to provide tangible assets as collateral, which those asset-light start-ups often cannot afford, small-sum loan company just requires some collaterals, offering an alternative way for the startups to get their liquid liability financed (Liu, 2013). Suzhou Equity Exchange Center To mitigate financial constraints faced by SMEs, the Suzhou local equity investment institution—Yuanhe Holdings, as the main sponsor, built an equity fund financing trading platform-Suzhou Equity Exchange Center in 2016. The establishment of this platform provides a convenient channel for solving problems such as the unblocked financing channels and information asymmetry between private equity institutions and SMEs. In 2017, Yuanhe Chenkun Equity Investment Fund Management Center (which is referred to as Yuanhe Chenkun) entered the top 30 limited partners of China’s private equity investment market, indicating that the strength and potential of private equity funds in Suzhou would play an active role. Suzhou M&A Fund Town In 2018, SIP signed a contract to establish the first domestic M&A fund town. The scale of regional equity investment funds exceeded RMB 120 billion, and various types of private equity such as venture capital, equity investment, industrial investment, and securities investment were introduced. Funds are mainly used to serve firms in real sectors, aiming to optimize the entire financial ecological environment, and to make in-depth reforms in the construction of multiple financial factor trading markets. At present, private equity funds in the Suzhou area

8 For details of these subsidiaries, pleas refer to Liu (2013).

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are mainly investing in innovative or emerging industries such as new energy and consumer services, which have played a role in promoting the development of SMEs. Yuanke Loan Initiated by the SME Service Center in SIP, this business adopts the risk sharing model of “fund pool + bank” or “fund pool + insurance/guarantee company + bank”. It provides loan support to technological enterprises and give priority to supporting small and micro technological enterprises. Unified Loan Platform To back up financing needs of innovative and entrepreneurial firms, since 2007, SIP has established a unified loan platform to provide loans with no more than RMB 1 million to SMEs or start-ups located in the park in their early stage. Till now, this platform has supported more than 600 firms, with a cumulative loan of more than RMB 740 million and a loan balance of RMB 120 million. In 2012, it established a pool of financing risk compensation funds for emerging industries, and cooperated with banks through special risk compensation funds to provide credit protection for technology-based SMEs in obtaining financing. As of the end of August 2015, it has helped over 500 high-tech SMEs in the park to obtain loans of RMB 1.473 billion, and the current loan balance exceeds RMB 600 million. It explored and established a policy-based science loan company with a registered capital of RMB 200 million, mainly focusing on providing comprehensive financial services such as loans, investment, and guarantees for science and technology small and micro enterprises in the park during their seed and start-up periods. Human Capital- and Research-Related Arrangements Labor force as human and social capital is a vital factor for sustainable economic growth. To secure qualified labor for companies located in the park, SIP established a market-based labor market system since its inception. Consequently, a human resource corporation is formed, which is working with dozens of HR intermediaries including headhunters, to provide advertisement, recruitment, information, and match-making services. If firms need large numbers of specialized skills not available locally, the Suzhou Industrial Park Administrative Committee (SIPAC)

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will work with relevant colleges and universities nation-wide to arrange targeted recruitment activities (Zeng, 2016). Via the talent recruitment program such as the “thousand talents program” at the national level and the ‘Jinji Lake two-hundred talents program’ and ‘leading S&T talents entrepreneurship program’ at the city level, SIP has attracted over 11,000 high-end talents (including more than 7000 foreign talents and 4000 Chinese returnees). They either worked full-time or part-time in the park or set up their own firms. SIP employed various incentives, including seed money, housing subsidies, education allowance, research grants, and preferential treatment for “hukou” registration for spouses and dependents (Zeng, 2016). Since 2020, SIP has seized the opportunity of free trade zone construction and successively introduced a series of new talent policies such as high-end and urgent-need talent awards i.e., ‘Talent New Deal 30’, and special talent policy for the biomedical industry. The aim is to build the first foreign high-end talent job cluster at the province level and gather high-end talents from around the world. In the first half of the year 2020, the new talent policies attracted 2 top talents (accounting for 2/3 of the city), 3 innovation teams (accounting for 100% of the city), 39 leading entrepreneurial talents (accounting for 1/3), and 127 new leading talents of Jinji Lake science and technology.9 Further, SIP set up its own technical and vocational college. In 1997, it established the SIP Institute of Vocational Technology, which has over 60 majors (including electronics, machinery, engineering, etc.) with more than 10,000 students. The college developed its own curriculum and training materials based on the firms’ needs and set up internship and joint teaching programs with firms located in the park. Some firms even offer scholarships to the college’s top performers. As a result, the students from the college are almost 100% employed after graduation and the school is recognized as a “model school” by the Ministry of Education and Ministry of Finance. Afterwards, SIP also established a service outsourcing college, an S&T vocational college and two secondary vocational schools (Zeng, 2016). In addition, universities as research-based institutions have been identified to play an active role in advising firms’ and businesses’ operation, due to the spillover effect of their knowledge advantage. Indeed, SIP 9 For more detailed information, please refer to the website https://www.sohu.com/ a/412362430_120083328.

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has actively taken measures to attract well-known research university and research institutions domestically and internationally. Specifically, SIP has focused on introducing well-known institutions with dominant disciplines to match major industries located in the park, to cultivate high-quality talents. There are 23 famous domestic or international universities, including Renmin University, Xi’an Jiaotong-Liverpool University, University of Hong Kong, National University of Singapore and University of California, Berkeley. On September 17, 2018, the Cold Spring Harbor Laboratory and SIP signed a new 10-year cooperation agreement to build an Asian academic center on top of the existing Asian conference center in Cold Spring Harbor. Known as the Holy Land of the world’s life sciences and the cradle of molecular biology, the Cold Spring Harbor Laboratory has so far produced eight Nobel laureates. In addition, Apple, Baidu, Didi, iFLYTek, and Shanghai Jiaotong University have set up R&D Innovation Centers in SIP. By 2018, SIP had introduced 42 new research institutes in total into the park.10 The Actions Taken for Resisting COVID-19 Due to the Pandemic in 2020, all SMEs in China have been affected to varying degrees. The Ministry of Industry and Information Technology then issued the ‘Notice on Responding to the Novel Coronavirus Pneumonia Epidemic to Help Small and Medium-sized Enterprises Resuming Work and Resuming Production and Overcoming the Difficulties’. The Notice clearly stated that the government would make every effort to ensure the orderly resumption of production of enterprises. The government would further strengthen fiscal support, financial support and innovation support for SMEs to help them firm their confidence. Many supporting policies have been issued in other parts of the country and localities to help SMEs tide over the difficulties. The Suzhou Municipal Government and the SIP government have issued ten policy instruments (referred to as the ten “benefits”), which is a pioneer responding to the pneumonia epidemic caused by the new coronavirus. The ten “benefits” aim to support SMEs to tide over the difficulties. The ten “benefits” mainly include several measures such as 10 For more detailed information, please refer to the website http://www.huaxia.com/ js-tw/jsxw/2018/09/5892188.html.

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reducing corporate financing costs, rent reduction, tax reduction and exemption, etc., to help SMEs encountering difficulties in production and operation. These benefits are shown as follows: (I) Increasing financial support 1. To ensure that the credit balance of SMEs does not fall. All banking institutions should increase their support for SMEs to ensure that their credit balance in 2020 would not be less than the balance in the same period in 2019. For SMEs greatly affected by the epidemic and have development prospects but are temporarily stranded, banks institutions must not blindly draw, cut off loans, or press down on loans. 2. To ensure the reduction of financing costs for SMEs. Encourage all banking institutions to increase their support for SMEs by reducing cost rates, especially those in “three necessaries and one important” industries and those with financial difficulties. Defloat the original loan interest rate by more than 10% to ensure that the financing cost of SMEs in 2020 will not be higher than the financing cost of the same period in 2019. 3. To give full play to the role of the “national team” of policy banks. Support the China Development Bank, Agricultural Development Bank, Export–Import Bank, Export Credit Insurance Corporation and other branches in the Soviet Union to increase service connection and fully meet the financing needs of epidemic prevention and control. Implement the first batch of 2 billion yuan emergency financing line of China Development Bank Suzhou Branch, and promote Bank of Suzhou and Suzhou Rural Commercial Bank to issue special project loans. Lower the interest rate level to ensure that the loan interest rate is lower than the quoted interest rate on the loan market during the same period. Deflate more than 30% for those included in the list of key enterprises of relevant departments such as Ministry of Industry and Information Technology. 4. To encourage financial institutions to provide safeguard financial services. Financial institutions should continue to carry out the “Hundreds of Banks and Thousands of People into

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Ten Thousand Enterprises” activity, organize financial institutions to provide consulting services to loan-free SMEs, especially those affected by the epidemic, through visits, online consulting, remote services, etc., learn about the impact of the epidemic situation and financial service needs of enterprises on a household-by-household basis, so as to achieve precise matching and efficient transformation of corporate needs and financial supply. In accordance with the principle of special affairs, special affairs and urgent affairs, all financial institutions have opened up fast approval channels to provide high-quality and efficient comprehensive financial services. (II) Stabilize the workforce 5. To implement the policy of assisting enterprises to stabilize jobs. For insured companies that do not lay off or have fewer layoffs, 50% of their actual unemployment insurance premiums paid in the previous year can be refunded. For insured companies that face temporary production and operation difficulties and are expected to recover, and insist on no layoffs or fewer layoffs, the return standard can be determined based on six months of local monthly unemployment insurance per capita and the number of insured employees, and the policy implementation period shall be implemented following national regulations. 6. To defer the payment of social insurance premiums. For SMEs affected by the epidemic and face temporary production and operation difficulties and are indeed unable to pay social insurance premiums in full, they can defer payment of pension insurance, unemployment insurance and work-related injury insurance premiums after approval under regulations, with a maximum deferment period of six months. After the expiration of the deferred payment period, the enterprise shall pay the deferred social insurance premiums in full without affecting the personal rights and interests of the insured persons. (III) Reduce the burden on enterprises 7. To reduce or exempt the rent of SMEs. For SMEs that rent state-owned assets for business use, one month’s rent is exempt, and two months’ rent is halved. For renting other

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premises for business use, the landlord (landlord) is encouraged to reduce or exempt the rent for the tenant, and both parties shall negotiate the specific settlement. 8. To tax reduction and the exemption for SMEs. Due to the epidemic, the company has suffered significant losses, and its normal production and operation activities have been significantly affected. If it is really difficult to pay real estate tax and urban land use tax, they can apply for real estate tax and urban land use tax relief. 9. To delay in paying taxes. For SMEs that have difficulties applying for declaration due to the epidemic’s impact, the enterprise shall apply for an extension of the declaration according to law. For enterprises with particular difficulties and cannot pay taxes on time, the enterprise shall apply for an extension of tax payment following the law, and the maximum period shall not exceed three months. 10. To support small and medium-sized entrepreneurial parks. Priority will be given to policy support for various carriers such as entrepreneurial parks, technology business incubators, and entrepreneurial bases that reduce or exempt rents for SMEs during the epidemic. Since the outbreak of the epidemic, the Financial Management Service Bureau of SIP has closely monitored the economic condition, actively connected with banks and other financial institutions. The resulting ‘green channel’ for financial services such as credit and exchange for firms are equipped with special personnel and special affairs, by arranging specific credit lines, simplifying the credit approval process, and effectively addressing the liquidity needs of related enterprises. The Enterprise Development Service Center also works with banks to investigate the credit situation of SMEs, establish a credit enterprise library, and encourage financial institutions to work hard to guarantee credit lines under such unusual situation. Further, by optimizing the risk compensation fund pool, the Center ensures that there is no loan withdrawal, loan suspension, and loan suppression, to maintain regional financial ecology. For enterprises producing epidemic prevention and control materials in SIP, comprehensive financial support will be provided, and green approval channels will be established.

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Concluding Remarks and Implications As a typical example of entrepreneurial ecosystems, Silicon Valley, located in San Francisco Bay Area, represents an agglomeration of semiconductors manufacturing companies and computer companies; and these firms benefit from various stakeholders and actors, including venture capital, human capital, universities and research institutions, and professional service infrastructure interconnected with each other. The interconnection of these various organizations has helped to support the founding of many world-leading high-tech companies including Google, Intel, Facebook, Apple, and Cisco Systems, etc. (Chen et al., 2020; Zacharakis et al., 2003). In China, according to Chen et al. (2020), the idea of entrepreneurial ecosystems originally started in China in 1988 when the Beijing local government began to build Zhongguancun Science Park (ZGC). The aim of such park was to house not only firms but to ensure that various necessary supports such as financing, accounting, and legal supports are located in one location, therefore creating an ecosystem for entrepreneurship. As a state-level economic and technical development zone (ETDZ), since its inception SIP has launched and taken a series of policy instruments and institutional arrangements towards SMEs, particularly hightech SMEs, and key stakeholders surrounding them, the aim of which is to boost their rapid development and promotion and thus to contribute to high quality and sustainable economic growth and job creation in the park and the region. Although the SIP local government has made huge efforts for promoting its high-tech SMEs discussed above, it seems to be lack of a tailored entrepreneurial ecosystem for SIP, based on its history, background, and unique institutional setting. Thus, an entrepreneurial ecosystem in the context of SIP is called for. A recent study by Stam and van de Ven (2019) has propose an integrative model of entrepreneurial ecosystems consisting of ten elements and entrepreneurial outputs, as shown below in Fig. 4.2. According to the Figure, the ten elements are operational constructs of the broader concepts of institutions and resources of an entrepreneurial ecosystem. Such entrepreneurial ecosystem consists of the institutional arrangements and resource endowment components of the infrastructure. The institutional arrangements component is reflected by the formal institutions, culture and network elements; while the resource endowment

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Fig. 4.2 Elements and outputs of the entrepreneurial ecosystem (Source Figure 1 of Stam & van de Ven, 2019)

component is reflected by the physical infrastructure, finance, leadership, talent, knowledge, intermediate services and demand elements. The third component—the output of the entrepreneurial ecosystem is conceptualized as new value creation and captured by productive entrepreneurship (Stam & van de Ven, 2019). Thus, the entrepreneurial ecosystem like the one shown in the Figure could be as a useful reference for local scholars and government to customize their own entrepreneurial ecosystem.

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CHAPTER 5

Conclusions

Abstract This chapter firstly analyzes internal and external circumstance surrounding Chinese economy, particularly when Chinese central and local governments have proposed their 14th Five-Year Plan (from 2021 to 2025) and the Long-Range Objectives Through the Year 2035 and in the aftermath of COVID-19. The chapter then implies that, to provide a valuable and useful practical implication towards local policymakers and practitioners in such ‘new circumstance’, a research-oriented counsels and suggestions should be called for. Keyword Internal and external circumstance · Post COVID-19 · Future research directions

Over the past several decades, China has witnessed tremendous achievement of economic growth and social development, become the second largest economy in the world, and been narrowing the GDP gap with the U.S. In this process, local economic and development zones (EDZs) and industrial parks across the country has been a main force for such achievement. Suzhou Industrial Parks, as a leading EDZ and eco-industrial park (EIP), has been making its own contribution to rapid economic growth and high-quality development towards local communities and regions.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2_5

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However, it can be clearly seen that, in the aftermath of COVID19, policymakers, practitioners, and academia should re-think economic development model and ways of doing things from a stakeholder perspective in a sustainable manner i.e., in a long-time horizon. In this regard, SIP has great potential and room for further development. To do this, we need to accurately grasp the overall situation based on internal and external circumstance. Concerning external circumstance, although there seems to be trend with deglobalization, the recent effort by the Chinese government has made China continue to play vital role in the process of globalization and regional economic cooperation and development. For example, since Belt and Road Initiative launched by China in 2013, it has now entered into a relatively mature stage. The hallmark of it is the popularity of the ‘China – Europe Railway Express’ [Chinese: 中欧班列], which is a regular rail container transportation service linking China and European countries. The China–Europe Railway Express went into operation in March 2011. After launching Belt and Road Initiative in 2013, the performance outcome of such express was only 1.5 services a week, with 90 trains for the year. But this grew explosively with 308 trains in 2014, 815 in 2015, 3673 in 2017, and 6300 in 2018. Such performance outcome continued to increase sharply during and post the COVID-19. Such express has a total of 61 service routes and connects 56 cities in China with 49 cities in 15 European and Central Asian countries. Suzhou is one of the departure stations in China, and the others are Chongqing, Chengdu, Xi’an, Zhengzhou, Wuhan, and Yiwu. Thus, by China–Europe Rail Express, Belt and Road Initiative has exerted an important influence on globalization and regional economic promotion. Further, on 15 November 2020, 15 countries signed the Regional Comprehensive Economic Partnership (RCEP), including Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Vietnam, South Korea, and Thailand. This Agreement itself seeks to unify and deepen economic activities among the existing ten-member ASEAN trade bloc with five other East Asian economies, including China, Korea, and Japan, and Australia and New Zealand. Upon ratification, it will become the largest preferential trade agreement by economic output in the world, with the potential to increase trade and integration among the economies of East Asia. The objective of the agreement is to establish a modern economic partnership agreement to facilitate trade and investment focusing in particular on

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trade in goods and services liberalization and working towards a competitive investment environment. A famous thinktank—Brookings commented that RCEP will become a new trade agreement that will shape global economics and politics. With regard to internal circumstance, in 2020 the Chinese central government proposed the 14th Five-Year Plan (from 2021 to 2025) and the Long-Range Objectives Through the Year 2035 (‘the Proposals’). The Proposals is very important, as it serves as a significant guideline for China’s social and economic development in the five to fifteen years to come. Compared with previous medium-to-long-term development plans, the Proposals reflects noteworthy new development philosophy, mindset and policies. Specifically, the following economyrelated highlights are weighted with greater importance: (1) Shifting from quantity-focused development to all-round development; (2) Upholding the central role of innovation in the modernization drive; (3) Attaching more weight to the build-up of a modern industrial system; (4) Fostering a “dual circulation” development model relying on the strong domestic market; (5) Deepening reform continuously in pursuit of a high-level socialist market economy; and (6) Breaking new ground in high-level opening-up and mutually beneficial cooperation. Accordingly, SIP as local government has also stipulated its own version of the Proposals. The objective of SIP Proposals is to play a pilot and demonstration role in open innovation and comprehensive reform, speed up the construction of world-class high-tech park and world-class free trade test area, and strive to build a new center for the future of Suzhou city, to show the world as Suzhou socialist modernization pioneer city. In SIP Proposals, the word ‘innovation’ has become the most frequently mentioned keyword, which is closely linked with ‘sustainability’ ‘green’ and high-tech firms/high-tech SMEs.1

1 For example, with regard to implementing green and low-carbon strategies, Proposals suggests that “We will promote green and low-carbon manufacturing. To promote the green development of the whole industrial chain and the whole life cycle of products as the main goal, we will promote the construction of an efficient, clean, low-carbon and circular green manufacturing system, encourage manufacturing enterprises to participate in the construction of green factories, green products and green supply chains, strive to create demonstration enterprises of green design of industrial products, continue to promote the construction of national green demonstration parks, and establish the park brand of green development”.

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Under on current circumstance (both internally and externally), thus, a research-oriented counsels and suggestions are called for, to provide a valuable and useful practical implication towards local policymakers and practitioners. Thus, based on the focus of the book, we address several potential future research directions and agendas. First, although SIP as an EIP has implemented a series of policy instruments related to 3R principles of Circular Economy and has made certain achievement, it seems to be lack of a feasible theoretical framework i.e., an ‘green ecosystem’ from a stakeholder perspective to further guild local government well and efficiently implementing green-oriented instruments and actions. Therefore, one direction for future research is to propose an ‘green ecosystem’ based on the SIP’s case. Second, although SIP has made various institutional arrangements and design for enhancing SMEs’ development and upgrading, an entrepreneurial ecosystem based on the SIP’s case is lacking. Thus, construction of an entrepreneurial ecosystem of SIP is another future research agenda. Third, because both eco-transformation and entrepreneurial development are highly related to and supported by innovation and new technologies and the government has been a key player in all economic activities, construction of a ‘government – innovation – eco-transformation – entrepreneurship’ nexus i.e., construction of an ‘organic framework’ under current circumstance is another future research direction.

Index

B Belt and Road Initiative, 86 C China–Europe Railway Express, 86 Circular economy (CE) the macro level, 34, 39 the meso level, 34, 38, 41 the micro level, 34, 41 COVID-19, 28, 29, 63, 76, 86 E Eco-industrial parks (EIPs), 3, 4, 33, 34, 38, 41–48, 55, 56, 85 Ecological civilization, 33, 34, 51, 52, 54 Economic and development zone (EDZ), 3, 6, 85

Entrepreneurial ecosystem, 4, 62–68, 80, 81, 88 Export-led strategy, 2 F Foreign direct investment (FDI), 2, 6, 8, 10 G Government quality, 4, 6, 7, 9, 10, 21 L Linear economy, 34–37 S Suzhou Industrial Park (SIP), 2–4, 6, 7, 11–21, 25, 27, 29, 34, 46–50,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 L. Xie and X. Lu, Suzhou Industrial Park, Social Policy and Development Studies in East Asia, https://doi.org/10.1007/978-981-16-6757-2

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52–54, 56, 63, 68–76, 79, 80, 85–88 T The 14th Five-Year Plan, 87

The Long-Range Objectives Through the Year 2035, 87 The Regional Comprehensive Economic Partnership (RCEP), 86, 87