The potential of China’s free economic zones and their role in the global economy

Abstract

This thesis examines the development and role of free economic zones in China and their impact on the global economy, with a particular focus on China-Mongolia economic coopera-tion. The research provides a comprehensive analysis of China's FEZ system evolution from its inception in 1980 to 2024, exploring the theoretical foundations, regulatory frameworks, and current challenges facing these zones. Through extensive literature review and case study analysis, including the examination of the Altanbulag Free Trade Zone, the study demonstrates how FEZs have served as crucial instruments for China's economic transfor-mation, attracting foreign direct investment, promoting export-oriented industrialization, and fostering technological innovation. The research highlights both the successes and limitations of China's FEZ model, particularly in addressing regional disparities, environmental sustaina-bility, and the balance between foreign investment attraction and indigenous innovation pro-motion. The findings reveal that while FEZs have been instrumental in China's economic growth, their future effectiveness depends on their ability to adapt to changing global eco-nomic conditions and support the country's transition toward an innovation-driven economy. The thesis concludes with recommendations for leveraging FEZs to enhance economic co-operation between China and Mongolia while ensuring more equitable distribution of benefits and sustainable development practices.