Analysis on geo-effects of China’s overseas industrial parks: A case study of Cambodia Sihanoukville Special Economic Zone

  • WANG Shufang , 1, 3 ,
  • MENG Guangwen , 2, 1, 3, * ,
  • ZHOU Jun 1, 3 ,
  • XIONG Liran 4, 5 ,
  • YAN Yuxin 1 ,
  • YU Na 1
  • 1. School of Geographic and Environmental Sciences, Tianjin Normal University, Tianjin 300387, China
  • 2. Institute of European Civilization, Tianjin Normal University, Tianjin 300387, China
  • 3. Institute of Free Economic Zone, Tianjin Normal University, Tianjin 300387, China
  • 4. Faculty of Geography, Yunnan Normal University, Kunming 650500, China
  • 5. Center for Cambodia Studies, Yunnan Normal University, Kunming 650500, China
*Meng Guangwen (1960-), PhD and Professor, specialized in free economic zone, regional planning, and German human geography. E-mail:

Wang Shufang (1979-), PhD and Associated Professor, specialized in globalization and geo-environment, overseas industrial parks. E-mail:

Received date: 2020-07-23

  Accepted date: 2021-02-09

  Online published: 2021-07-25

Supported by

Tianjin Normal University Doctoral Fund(52XB1901)

National Natural Science Foundation of China(41701133)

National Natural Science Foundation of China(41971161)

Major Program of National Social Science Foundation of China(20&ZD138)

Tianjin Normal University Interdisciplinary Integration Innovation Team Project(135205RH08)


Copyright reserved © 2021. Office of Journal of Geographical Sciences All articles published represent the opinions of the authors, and do not reflect the official policy of the Chinese Medical Association or the Editorial Board, unless this is clearly specified.


China’s overseas industrial parks contribute to political and economic cooperation, cultural exchange between home and host countries. Current studies mainly discuss the effect of overseas industrial parks from the perspective of institutional and cultural difference, multi-scale coupling, as well as key partnerships, while little attention has been paid to the comprehensive analysis of overseas industrial parks. Based on a theoretical framework, this paper explores the overall effect of China’s overseas industrial parks from the geo-effects perspective by using field interviews and a case study approach. The research shows that: (1) the geo-effects reveal the over effect of overseas industrial parks from the multiple and complementary dimensions of geopolitics, geo-economics, geo-society and geo-culture; (2) the Cambodia Sihanoukville Special Economic Zone, as a flagship BRI project, has produced the prominent and positive geo-effects; (3) the institutional-economic-cultural-environmental adaptability of overseas industrial parks is becoming important. Overseas industrial parks must be rooted in the politics, economy, society, and culture of host country; embedded in local social networks; balance the rights and interests of all stakeholders; and form the community of interests, community of destiny, and community of responsibility with political mutual trust, economic integration, cultural inclusiveness, and social harmony. The paper not only deepens the understanding about the overall effect of overseas industrial parks, but also provides decision support and theoretical reference for government policy makers and the overseas investment of enterprises.

Cite this article

WANG Shufang , MENG Guangwen , ZHOU Jun , XIONG Liran , YAN Yuxin , YU Na . Analysis on geo-effects of China’s overseas industrial parks: A case study of Cambodia Sihanoukville Special Economic Zone[J]. Journal of Geographical Sciences, 2021 , 31(5) : 712 -732 . DOI: 10.1007/s11442-021-1867-3

1 Introduction

Since the Belt and Road Initiative (BRI) was proposed in 2013, the Chinese overseas industrial parks have entered a new era (Michael, 2017). As a regional cooperation platform, the BRI reshapes the economic geography of China and the countries along the Belt and Road (B&R), and facilitates inclusive growth (Aoyama, 2016; Hudson, 2016; Sidaway and Woon, 2017; Shen and Chan, 2018; Lin et al., 2019; Liu and Yao, 2020). The construction of the B&R relies on major international corridors and takes key overseas industrial parks as an important cooperation platform for jointly creating international economic cooperation. According to the statistics from Ministry of Commerce of the People’s Republic of China, there were 113 China overseas economic and trade cooperation zones distributed in 48 countries, among which more than 70% were located in the countries along the B&R in 2018. By November 2019, the total investment of overseas economic and trade cooperation zones had exceeded USD 41 billion with nearly 5400 enterprises entering the parks, about 370,000 jobs created, and USD 4.3 billion in taxation paid to host countries. This provides strong evidence that overseas parks are a key component of the BRI and an anticipated experimental way of advancing inclusive globalization by creating innovative new ways of cooperation (Song et al., 2018), with a positive impact on geopolitics, geo-economics, geo-culture, and community reconstruction for China and countries along the B&R (Bräutigam et al., 2010; Bräutigam and Tang, 2011; Farole, 2011; Zeng, 2016; Liu, 2017; Wuzhati et al., 2017; Liu et al., 2018). Specifically, overseas industrial parks are the significant driver for promoting the five connectivities (policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds), the key platform for international capacity cooperation, an essential way for Chinese enterprises to go global in groups and to integrate into the world,as well as the model of mutually beneficial cooperation among countries (Warr and Menon, 2015; Huang, 2016; Akbari et al., 2018; Pang and Huo, 2019). Considering the importance of overseas industrial parks, it is necessary to conduct in-depth research on overseas parks, focusing specifically on their comprehensive effects.
The existing literature on the development of China’s overseas industrial parks concentrates on two aspects: their strong merits and remaining challenges. Some researchers believe that China’s overseas industrial parks have obtained achievements (Songet al., 2018; Ye et al., 2020). Particularly, the overseas industrial parks with high-profile intergovernmental cooperation have developed rapidly and produced beneficial local effects (Liu Z G et al., 2020). To measure these effects, some researchers have established a model to evaluate 45 industrial parks along the BRI’s six economic corridors (Zeng et al., 2018). Other researchers argue that the intergovernmental cooperation framework and coordination mechanism, in conjunction with the reasonable equity structure of park development companies and the strengths of networking with the global partners, contributes to the project’s success (Liu and Wang, 2020). Moreover, the cooperative partnership between key partners (such as central government, local government and leading enterprises) plays a vital role in policy mobility and the sustainable development of overseas industrial parks (Peck and Theodore, 2010; Temenos and McCann, 2013; Song et al., 2018, 2020). Though China’s overseas industrial parks have merits, there are still a noticeable convergence of challenges, such as poor infrastructure, serious administrative corruption, difficulties in communication between governments at different levels, imperfect legal systems, shortage of talent reserve, the lack of overseas service platforms, weak local embeddedness and integration, and so on (Farole, 2011; Wuzhati et al., 2017; Song et al., 2018; Meng et al., 2019). Liu and Yao et al. (2020) consider that despite the difference of “environmental soil” at home and abroad, some Chinese enterprises are prone to apply China’s operation and management mode to the development of overseas industrial parks, thus ignoring the difference of institution and culture between host and home countries in the process of “going out”, and resulting in environmental inadaptability. In practice, the policies, institutions, and culture of overseas industrial parks are characterized as difficulties to migrate, thus requiring the institutional configurations to adapt to local circumstances (Miao, 2018; Song et al., 2018; Zhang, 2018; Chen, 2019). Furthermore, some overseas industrial parks have little or no demonstrable effect on local economic growth, and become enclaves, more closely integrated with their distant backward and forward linkages than their surroundings (Frick et al., 2019; Frick and Rodríguez-Pose, 2019; Phelpset al., 2009).
To summarize, the research on China’s overseas industrial parks covers various topics, and is rich in content and practicality. Nonetheless, the research is still in its infancy and a unified research paradigm is not yet formed in the academic world. There are two limitations to the existing research. First, the current literature has made only partial evaluations with more attention on economic effects, whereas a little attention has been paid to the comprehensive effects. Second, researchers have concentrated heavily on the perspectives of institution and culture, multi-scale coupling, as well as key partnerships, while neglecting the perspective of geo-effects. The underlying reason for these two limitations lies in the lack of overall consideration on political, economic, social, and cultural factors. Therefore, to deepen the understanding of the effect of China’s overseas industrial parks, the paper aims to fill the above-mentioned research gaps by focusing on geo-effects, which is a comprehensive and strategic perspective (Julie, 2018). Geo-effects analysis explores the effect of overseas industrial parks from the dimensions of geopolitics, geo-economics, geo-society, geo-culture, and therefore has a vital geo-strategic significance. The development of overseas industrial parks has both commercial and public policy values, and is closely related to the complex and changing geo-environment. Furthermore, geo-effects combines the macro and micro effects of China’s overseas industrial parks, which enables the overseas investment projects in a wider context and enables some assessments of individual projects. In short, the perspective of geo-effects is an important supplement to the existing research.
The core scientific question in the paper is how to evaluate the effect of overseas industrial parks from the perspective of geo-effects. Specifically, the paper will answer the following detail questions: What are the geo-effects? How to measure the geo-effects? How do the four dimensions of geo-effects couple with each other to make a difference? To answer these questions, a theoretical framework for geo-effects analysis is proposed. After the research method section, a case study of the Cambodia Sihanoukville Special Economic Zone (SSEZ) is presented. In the last part, conclusions are drawn up. Overall, the paper intends to enrich the theoretical perspectives of overseas parks and provide theoretical reference for the overseas investment of Chinese enterprises and government.

2 Theoretical framework of geo-effects

2.1 The concept and connotation of geo-effects

Presently, the academic community tends to focus on geopolitics, geo-economics, geo-culture and geo-relations as separate dimensions, while the geo-effects as a whole are not so often discussed. Many researchers regard geographic effect as geo-effects and discuss their applications in different fields, including climatic changes (Apaydin et al., 2011), plants and animals (Biddle et al., 2016; Leamy et al., 2016), dispersal rates and routes (Silva and Steele, 2014), epidemic spreading and mental illness (Xu et al., 2006; Griffith and Jones, 2020), complex networks (Lin et al., 2005; Hayashi and Matsukubo, 2006), small-world networks (Yin et al., 2008; Liu et al., 2009), free trade area (Andresen, 2009), currency circulation (Texier and Caruso, 2017), commodities’ super cycle (Daher et al., 2017), regional multiplier analysis (Hanink, 2007), export (Kristjansdottir et al., 2020), and so on. Literature review makes it evident that the fields of research on geographical effect have expanded from nature and environment to the social sciences and humanities. However, the existing research of geographical effect concentrates on “location + influence”, and pays less attention to the spatial relationship and mechanism. Other researchers discuss the spatial effect from the geographical proximity, and analyze the corridor effect generated by high-speed railway network (Jin et al., 2017), the spatial autocorrelation effect, spatial proximity effect by population migration (Zeng, 2017) and the spatial effects in the stock market (Gao et al., 2006). The previous understanding of geographical effect is limited to the proximity of geographical locations, focusing on the discussion of adjacent space effect at the regional scale, while neglecting the effect at the national and global scales. Therefore, this paper attempts to extend the spatial scale and enrich the connotation of geographical effect by examining the comprehensive effects of the movement and association of “spatial flows” among different nations. Based on this analysis,this paper defines the geo-effects as the comprehensive effects of various cross-border spatial flows between enterprises, individuals and factors of production. In this definition, the comprehensive effects include geopolitical effect, geo-economic effect, geo-social effect and geo-cultural effect. Spatial flows include people flow, material flow, capital flow, information flow and technology flow, and so forth (Figure 1). Here, we need to distinguish between geo-effects and geographical effect, along with geo-effects and geopolitical influence. Geo-effects center on comprehensive effects from the political, economic, social and cultural dimensions, while geographical effect pertains to geographic factors and environment. Furthermore, geo-effects are different from geopolitical influence. The former stresses the “comprehensive effects produced by cross-border spatial flows” from the multi-factor perspective, resulting from the interaction of stakeholders; while the latter emphasizes the “national comprehensive foreign capabilities” from the geopolitical perspective, reflecting in the influence imposed by one side on the other (Wang et al., 2015).
Figure 1 The conceptual diagram of geo-effects
In summary, the key ideas regarding geo-effects are as follows: (1) the cross-border spatial flows produce such comprehensive effects as geopolitical, geo-economic, geo-cultural and geo-social effects; (2) the development of overseas industrial parks adapted to the geographical environment of host country is the basis of geo-effects; (3) a shared devotion with the host country to long-term development rather than speculation is the premise of geo-effects.

2.2 Evaluation of geo-effects

The evaluation of geo-effects should consider the multi-agent requirements at different scales (nations, local government, local community, industrial park, enterprise), which covers national strategies, local economic growth, park benefits, as well as the employment and welfare of local community. Therefore, the evaluation is carried out from the four dimensions of geopolitical, geo-economic, geo-social and geo-cultural effects. The geopolitical effect refers to the effect produced by national political behaviors based on geographical elements and political patterns, thus the specific evaluation can be done from the following aspects: the signing of bilateral investments, trade and tax agreements, the establishment of governmental coordination mechanisms, as well as the improvement of investment soft environment and government governance. The geo-economic effect refers to a series of effects produced by trade and investment between economic actors based on geographical environment and resource endowment. The specific evaluation involves the deepening of economic cooperation, the increase of trade and investment, the strengthening of industrial cluster, the sharing of technology and knowledge. The geo-social effect refers to the effect generated by education, medical care, and charity activities. The specific evaluation includes the advancement of local education levels, the enhancement of local living standards, and the improvement of local social welfare. The geo-cultural effect refers to the effect produced by inclusive culture resulting from the influence of geographical conditions on the social group in an area. The specific evaluation covers the integration of ideology and culture, the recognition of value, identity and lifestyle, the localization of management culture and idea, as well as the effective communication.

2.3 The interaction mechanism of geo-effects

Geopolitical, geo-economic geo-social and geo-cultural effects support, promote and interact with each other, forming a virtuous circle (Figure 2). The former two effects are dominant and fundamental effects, and the latter two effects are auxiliary and extended. The four effects are correlated, but not as causal connections. A hot geopolitical relationship does not necessarily lead to the strong association of geo-economics. Nowadays, there exists the phenomena of “political hot and economic cold”, such as China and Russia, and “political cold and economic hot”, such as China and Japan. However, there is a correlation between geopolitics and geo-economics. The friendly geopolitics driven by policy and strategy provide a “protective umbrella” for the development of geo-economics, which is helpful to the stable development of geo-economics. In turn, geo-economics driven by profit and cost acts as the “stabilizer” of geopolitics (Mao, 2014). Economic cooperation and interdependent relationship are the foundation of the geopolitical effect. Similarly, geopolitical and geo-economic effects promote the geo-social and geo-cultural effects. The signing of bilateral economic and trade agreements as well as industrial cluster contribute to the sustainable development of overseas parks, thereby further increasing the income of local residents; improving the local welfare; and promoting the integration of different ideas, cultures, values and lifestyles. Furthermore, favorable geo-social and geo-cultural effects provide the required labor force and unimpeded communication for the long-term development of overseas parks, further create an ideal geo-economy, deepen economic interdependence, stabilize and improve the political relationship between two countries. The combination of the four dimensions in different degrees usually reflects the effect of overseas industrial parks. Only when the four dimensions work together can overseas parks achieve the promising and sustainable development.
Figure 2 The interaction mechanism of geo-effects
At different development stages of overseas industrial parks, the four dimensions of geo-effects play different roles. In the initial stage, geopolitical effect and geo-economic effect are the most important; in the middle and late stages of development, the roles of geo-social and geo-cultural effects have gradually become prominent due to the deep integration into the society and culture of host country. In addition, different investment entities of overseas parks usually generate different geo-effects. Large central government state-owned enterprises pursue strategic objectives while state-owned enterprises situated at the provincial and city levels as well as private enterprises are motivated by economic incentives (Liu Z G et al., 2020). Thus, for the overseas parks invested by large central government state-owned enterprises, their prior goal is to achieve geopolitical effects, deepen the friendly political relationships, and serve national foreign policy strategy. For state-owned and private enterprises at the provincial and municipal levels, priority is given to achieve better geo-economic effects, integrate into the global industrial value chain and supply chain, and create considerable profits. Just as Ye et al. (2020) concludes that some overseas industrial parks are basically market-driven and thus, focus on traditionally advantageous industries coupled with the domestic industrial chain. Meanwhile, overseas investment companies, driven by corporate social responsibility, usually take into account the interests of stakeholders, achieve mutual benefits, and promote the sustainable development of the park. They often do so by carrying out some public welfare activities for the local community, taking some measures to reduce cultural differences, and producing affirmative geo-social effects and geo-cultural effects.
In short, the four dimensions of geo-effects are configuration or even combination. In different stages, the four dimensions of geo-effects play different roles. Meanwhile, different investment entities pay attention to the different dimensions of geo-effects. The combination of four dimensions to varying degrees usually leads to differences in the effect of overseas industrial parks.

3 Research area and method

3.1 Overview of Cambodia Sihanoukville Special Economic Zone

Southeast Asia is an important destination and a concentrated area for the diverse types and models of China’s overseas industrial parks1( By the end of 2018, China had built 113 overseas industrial parks in 46 countries. There are the most China’s overseas industrial parks in Southeast Asia (26), accounting for 23% of the total number.). The number of overseas industrial parks in Cambodia ranks second in Southeast Asia due to its vital location (Ministry of Commerce of the People’s Republic of China website, 2020). As a country along the Lancang River--Mekong River Basin, the geo-strategic location of Cambodia plays a decisive role as an important stage for competition and game between great powers outside the region (Zhang, 2019). Moreover, as a vital channel for trade between the East and West, Cambodia is also a key pivot of China’s 21st Century Maritime Silk Road and a firm strategic cooperative partner for China. The Cambodia Sihanoukville Special Economic Zone (SSEZ) was co-operated by Jiangsu Taihu Cambodia International Economic Cooperation Investment Co., Ltd. and Cambodia International Investment and Development Group Co., Ltd. It is a flagship BRI project, and the only state-level overseas economic and trade cooperation zone with the bilateral governmental agreement and coordination mechanism at vice-ministerial level. On October 12th, 2016, Chinese President Xi Jinping made a signature speech before paying a state visit to Cambodia, in which he pointed out that the flourishing SSEZ was an example of China-Cambodia pragmatic cooperation.
In the typical case study of overseas industrial parks, the effect of the SSEZ is remarkable. The SSEZ creates an “investment garden” for overseas investment of China’s middle- and small-sized enterprises by creating a similar institutional and cultural environment (Chen et al., 2020). Besides, the construction of the SSEZ is highly consistent with the regulatory planning, which plays a large role in guiding construction (Kong et al., 2020). Some researchers argue that the notable effect of the SSEZ also depends on political stability, geographical advantage, attention from the high-level authority of the government, the win-win mechanism for all stakeholders and the integration of industrial planning and national conditions (Wang, 2017; Zhou and Zheng, 2019). An analysis of the 113 overseas industrial parks in 2018 shows that the geo-effects of the SSEZ are significant, and thus this paper selects the SSEZ as an example.
The SSEZ is located in Prey Nob County, 12 km away from Sihanoukville Seaport and 3 km away from Sihanoukville Airport (Figure 3) with favorable location advantages. Preah Sihanouk is an important economic province of Cambodia and has the biggest international deep-water port in Cambodia-Sihanoukville Port. The Sihanoukville Port plays an essential role in reducing the time and cost of circulation and exchanges, driving down the related logistic costs (Dunford and Yeung, 2020). These reductions in freight cost and turnover increase the aggregate trade values and alter the composition of trade (Bensassi et al., 2014; Dunford et al., 2020). Geographically, the SSEZ is close to the Gulf of Thailand in Southwest Cambodia and about 230 km away from the capital of Cambodia-Phnom Penh. In terms of administrative division, Preah Sihanouk Province governs 2 cities and 3 counties, namely Preah Sihanouk City, Gaolong City, Prey Nob County, Stenhau County and Kampong Sila County. Now, many people are confused about the spatial and administrative relations between Preah Sihanouk Province, Preah Sihanouk City, Prey Nob County and the SSEZ. Some people mistakenly believe that the illegal activities such as internet gambling, robbery in recent years occurred in the SSEZ. Actually, these wicked activities happened in Preah Sihanouk City rather than in the SSEZ. The SSEZ is just an investment project in Prey Nob County, 17 km away from the Preah Sihanouk City. Prey Nob County and Preah Sihanouk City are administratively equal, and belong to the Preah Sihanouk Province.
Figure 3 Geographical location of Cambodia Sihanoukville Special Economic Zone (SSEZ)
The SSEZ covers an area of 11.13 km2 and has “One Axis and Three Areas” (namely Hun Sen Avenue, multi-functional area, industrial area, and tourism & leisure resort) regarding spatial distribution. It is a typical export processing and manufacturing park, in which the leading industries include textile and clothing, luggage and leatherware, wood furniture, hardware & machinery, building material and home furnishings and fine chemicals. In 2019, the total import and export volume of the SSEZ reached USD 1.24 billion, an increase of 56.96% compared to 2018, including USD 0.66 billion export, increasing by 56% and USD 0.58 billion import2(2 Import goods include building materials and equipment for self-use by foreign enterprises and partial raw and auxiliary materials used for producing export products, which are deficient in the host country.), increasing by 57.61% (Jiangsu the Belt and Road website).

3.2 Research method and data sources

Face-to-face interviews and a case study were mainly used in this paper. Data and materials were acquired from the field investigation, interviews, and information published by official websites. From January 10 to January 14, 2020, the research team went to Preah Sihanouk Province in Cambodia for field research, investigating the natural and social human geographical conditions, economic development level and infrastructure construction, and obtaining the first-hand information via in-depth interviews with management personnel of the SSEZ Company. We also conducted an in-depth discussion with five researchers from the Royal Academy of Cambodia on the development of the SSEZ. Some of the data and materials regarding China’s overseas industrial parks and the SSEZ in this paper were acquired from the “overseas economic and trade cooperation zone” column in the “going out” public service platform established by Ministry of Commerce of the People’s Republic of China ( and “Jiangsu’s Belt and Road website” ( built by the Jiangsu Provincial Leading Group Office for the Belt and Road.

4 Geo-effects analysis of Cambodia Sihanoukville Special Economic Zone

The development of overseas industrial parks is the coupling of China’s advantageous capacity transfer with the geographical environment of host country, the reorganization of industrial chain and the division of labor regions, as well as the win-win model for China and host countries. It is conducive to building a community of interests with political mutual trust, economic integration, cultural inclusiveness and social harmony. Chinese overseas industrial parks probably are only one of multiple efforts to promote the friendly political relationship and cooperative economic exchange between China and host countries, and perhaps a small driving effort at this early stage. More far-reaching impact of overseas industrial parks will be determined in the future. Therefore, we do not claim that China’s overseas industrial parks are bound to enhance the development of politics, economy and culture between China and host countries at an early stage, but we do consider that China’s overseas industrial parks do play an important role in boosting up the bilateral politics, economy and culture. An example of the SSEZ supports this idea. This is an intriguing point.
The geo-effects of the SSEZ are prominent and positive, and contribute to enhancing the political, economic and cultural exchanges between China and Cambodia. The geopolitical effect serves as the foundation effect for the other effects. It is mainly represented by institutional arrangement and space production. On one hand, the development environment of the SSEZ is rebuilt by the institutionalization of space, namely embedding institutions into the park; on the other hand, the space shaped by the institutions also promotes the generation of new institutions to realize institutional transfer and diffusion. The geo-economic effect is the dominant effect, which is powerful motivation for the sustainable development of parks. The geo-social effect is an extended effect, mainly reflected in corporate social responsibility, education and training, etc. The geo-cultural effect is an auxiliary effect, originating from the deeply embedded in local institution and culture (Figure 4).
Figure 4 Analytical framework of geo-effects of Sihanoukville Special Economic Zone

4.1 Geopolitical effect

In the SSEZ, the geopolitical effect is reflected in “high politics” arising from upscaling politics and “low politics” resulting from downscaling politics (Table 1). The geopolitical effect generated by upscaling politics is mainly embodied in three manners. Firstly, one-stop service with representatives of all relevant government agencies on site is provided, for which the SSEZ operator pays a fee (Asian Development Bank, 2018). The representatives of Cambodia Development Council, Bureau of Customs, Ministry of Commerce, Labor Bureau and Preah Sihanouk Provincial Government were introduced into the SSEZ to provide “one-stop” administrative examination and approval services for enterprises’ investment application, registration, customs declaration, certificate of origin. This process greatly enhanced the investment attraction of the SSEZ. Secondly, taxation, economic and technical cooperation agreements were signed. In October 2016, the government of China and the government of Cambodia signed the Agreement between the Government of the People’s Republic of China and the Government of Cambodia on Avoidance of Double Taxation and Preventing Tax Evasion against Incomes, which effectively lowered the tax risks of Chinese enterprises. In January 2018, the Agreement on Economic and Technical Cooperation between the Government of China and the Government of Cambodia was signed to support Chinese enterprises with strength and prestige to reinforce cooperation with Cambodia in key fields such as infrastructure, energy, communication and industry. Thirdly, the governance level of local government was improved. With the further promotion of2015-2025 Industrial Development Strategy issued by the Cambodian government, Preah Sihanouk Province became more attractive to investors. Some foreign investors started gambling industries in downtown, disturbing the normal social order. Some drivers, translators and cadre employees in factory run off from the SSEZ. Therefore, Cambodia National Police Department set up a special working group to regulate public order in Preah Sihanouk City. In 2019, the government of Cambodia cracked down on illegal internet gambling, and made an intensive effort to stabilize the investment environment, timely prevent chaos, restore the reputation of Preah Sihanouk City, and effectively promote the healthy and long-term development of the SSEZ.
Table 1 The evaluation on geopolitical effect of Cambodia Sihanoukville Special Economic Zone
Evaluation items Specific evaluation Evaluated outcome
Administrative service Convenient service window Establishing one-stop service window
Cooperation agreements Official economic cooperation Singing two agreement about taxation and economic cooperation
Government governance Governance level of local
Setting up a special working group to regulate public order in Preah Sihanouk City
Political relation High-level visits Creating a favorable macro environment due to frequent high-level mutual trust and visits
Coordination mechanism Governmental coordination framework Signing an agreement between the Government of China and the Government of Cambodia on SSEZ
Law enforcement The prohibition of internet
Carrying out joint law enforcement and improving the investment environment of SSEZ
The geopolitical effect produced by downscaling politics is also reflected in three aspects: Firstly, the political friendly relation between China and Cambodia “escorts” the development of the SSEZ. The frequent high-level mutual trust and visits between China and Cambodia create a favorable macro environment. In April 2015, Chinese President Xi Jinping proposed “strengthening the connectivity cooperation on infrastructure within the framework of the Belt and Road, and making Sihanoukville Special Economic Zone run well” when meeting the Prime Minister of Cambodia-Hun Sen at the 60th Anniversary of Bandung Conference in Jakarta, Indonesia. In March 2018, Hun Sen held the workers’ meeting in the SSEZ and strongly affirmed the promotion of local employment as well as the economic and social development. In April 2019, China and Cambodia signed the Action Plan for Building the Community of Common Destiny between China and Cambodia and the bilateral relations entered a new stage of development. Secondly, bilateral governmental coordination mechanism between China and Cambodia was established. On December 13, 2010, China and Cambodia officially signed the Agreement between the Government of the People’s Republic of China and the Government of Cambodia on SSEZ, which established the legal status of the SSEZ as well as the coordination mechanism by bilateral governments. On January 10, 2019, the third meeting of coordination committee for the SSEZ between China and Cambodia was held in Sihanoukville Special Economic Zone. Parties conducted an in-depth discussion and reached an agreement about creating a favorable surrounding environment for the SSEZ, which further promoted the sustainable and healthy development of the SSEZ. Thirdly, joint law enforcement by China and Cambodia improved the investment environment of Preah Sihanouk Province and the SSEZ. In January 2019, Prime Minister of Cambodia-Hun Sen paid an official visit to China. The two countries designated 2019 as the year of law enforcement cooperation between China and Cambodia. In August 2019, Prime Minister Hun Sen ordered the prohibition of internet gambling, and the illegal personnel were repatriated or fled through the joint law enforcement. This not only effectively prevented the illegal activities in Preah Sihanouk City, but also greatly improved the business environment such as traffic jams and poor logistics.

4.2 Geo-economic effect

The geo-economic effect of the SSEZ is reflected at the macro level and micro level (Table 2). At the macro level, it is represented by deepening economic cooperation, obtaining the tax and tariff preferences, and promoting the industrialization of host country. (1) The economic cooperation between China and Cambodia is continuously deepened. With the continuous development of the SSEZ, China and Cambodia have been expanding the pragmatic cooperation in the key areas such as trade and investment, connectivity, energy resources. China has become Cambodia’s largest source of investment, export market and trade partner. In the early stage of the development of the SSEZ in 2008, the trade volume between China and Cambodia was USD 1.13 billion. In 2018, the bilateral trade volume reached to USD 7.39 billion, which was 6.5 times of that in 2008 (statistical data of Ministry of Commerce). In 2008, China’s direct investment flow to Cambodia was USD 204.64 million (SBCFDI, 2008). In 2018, China’s direct investment flow to Cambodia reached USD 640 million, 3.2 times of that in 2008. (2) Tax and tariff preferences are obtained. The “double preferences” for tax and tariff increase the profit of enterprises in the SSEZ. A series of preferential tax policies are implemented. According to the provisions of investment law of Cambodia’s government and administrative law of special zone, the enterprises in the SSEZ can enjoy a package of preferential tax policies, such as free duties for equipment, construction materials, components and raw materials used for production. The profit exemption period can be enjoyed for 6-9 years at most. The value-added tax (VAT) for equipment and construction materials is 0%, and the added-value tax for raw materials serving the export market is 0%, serving the domestic market is 10%, respectively. Furthermore, Cambodia has the favorable trade status. It enjoys Generalized System of Preferences (GSP) and Most Favored Nation (MFN) treatments. The USA provides loose quotas and suspends import customs duty for the textiles and garment imported from Cambodia, while the EU has no limit, and Canada has free import customs duty. (3) Local industrialization is promoted. The SSEZ has not only been built into an international industrial park with perfect supporting facilities for production and living, but also accelerated the industrialization process of Preah Sihanouk Province. In 2007, there were only 18 enterprises in the whole province, yet the number of enterprises reached 160 in 2018. Among them, enterprises in the SSEZ accounted for more than 80%. By the end of 2018, the total number of enterprises in the SSEZ had reached 153, of which 139 were industrial enterprises (data provided by the SSEZ Company).
Table 2 The evaluation on geo-economic effect of Cambodia Sihanoukville Special Economic Zone
Evaluation items Specific evaluation Evaluated outcome
Economic cooperation Pragmatic cooperation in key areas Deepening the economic cooperation between China and Cambodia
Tax and tariff preferences Preferential tax policies and duty exemption Implementing a series of preferential tax policies and enjoying the GSP, MFN
Local industrialization Industrialization process Promoting the industrialization process of Preah Sihanouk Province
Economic development Economic contribution of SSEZ to Preah Sihanouk Province Exceeding 50% in 2018
Industrial cluster Cost saving and economies of scale Saving labor costs and increasing the number of enterprises with174 in 2019
Employment Local employment Creating nearly 30,000 jobs
The geo-economic effect of the SSEZ at the micro level is embodied in the engine of local economic development, the significant effect of industrial cluster, and the increase in employment. (1) The SSEZ is an important driving force for local economic growth. It acts as a growth pole and has significant effects on local economic development, which generates externalities, strengthens input-output relationships, facilitates the growth of value-added, and clearly increases the competition. In 2018, the total industrial output value of Preah Sihanouk Province was USD 341.17 million, twice its value 10 years ago. The economic contribution of the SSEZ to Preah Sihanouk Province exceeded 50%. In 2019, the freight volume of imports and exports of the SSEZ reached to 34,787 TEUs, including 17,375 TEUs of import and 17,412 TEUs of export, with a total volume of USD 1.24 billion. In 2020, the total value of import and export reached USD 1.565 billion, an increase of 26.52% over 2019 (data provided by the SSEZ Company). (2) Obvious industrial cluster effect is released. The SSEZ relies on the industrial and geographical advantages of China and Cambodia to actively promote the development of industrial clusters and continuously improves the carrying capacity and service level. Enterprises in the park can form industrial clusters and benefit from economies of scale (Harrison, 1992; Porter, 1998, 2000). The industrial cluster effect produced by the SSEZ mainly includes cost saving and economies of scale. The cost saving is reflected in low labor costs. In 2020, the minimum wage standard of Cambodia’s workers is USD 190 per month. In terms of scale, the number of enterprises settling in the SSEZ has increased quickly. The SSEZ provides a good investment platform for enterprises “going abroad in groups”. In October 2008, the first enterprise entered the SSEZ. In June 2016, there were 100 enterprises. At the end of 2019, the number of enterprises rose to 174, coming from China, Europe and America and Southeast Asia. (3) Local employment is increasing. The SSEZ creates nearly 30,000 jobs for local citizens and 70% of families in Prey Nob County work in the SSEZ, with equal or better pay and better prospects than the alternatives that would have existed, which greatly improves local living conditions. In 2018, the per capita annual income of Preah Sihanouk Province was USD 3358, ranking first in Cambodia. In 2019, instead of reducing the labor demand of enterprises in the SSEZ due to chaos in Preah Sihanouk City, more than 5000 jobs were created, which not only relieved the worries of local government, but also solved the plight of unemployed workers.

4.3 Geo-social effect

The geo-social effect of the SSEZ is mainly reflected in creating a win-win situation for the stakeholders, implementing the education and training, opening the international routes, and establishing a friendly identity (Table 3). Firstly, stakeholders’ benefits are obvious. The mechanism of “win-win for eight stakeholders” is established in the SSEZ with a harmonious and symbiotic ecosystem for shareholders, employees, customers, suppliers, partners, government, environment and community. The SSEZ has become a model, which roots in public and creates a harmonious and win-win situation. Since the development of the SSEZ, the sense of success, identity and happiness of stakeholders have been continuously improved, and the social welfare of local citizens has increased significantly. Secondly, the SSEZ implements education and training. In 2018, Sino-Cambodian friendship Polytechnic Institution of Preah Sihanouk Province officially enrolled students. The institution was jointly operated by Cambodian Ministry of Labor and Vocational Training, SSEZ Company, and Wuxi Vocational Institute of Commerce. It is a training school aided by the Chinese government and established in the SSEZ, which has enrolled and trained about 1000 students. At the end of 2018, Sihanoukville College of Industry and Commerce, jointly sponsored by SSEZ Company and Wuxi Vocational Institute of Commerce, was officially approved. It is the first Chinese university in Cambodia, which uses Chinese as the main teaching language and can issue bachelor and junior college certificates. In addition, the SSEZ has carried out vocational and technical training together with Wuxi Vocational Institute of Commerce since 2012 for the sake of providing local students and villagers with better training. Up to the end of 2019, the training had been performed for 14 times and 40,000 persons had been trained. This diversified, professional, and international training and education provide a talent pool for the sustainable development of the SSEZ. Thirdly, international route was opened. To facilitate travel between China and Cambodia for Chinese entrepreneurs and employees, the SSEZ Company actively strived for the opening of Wuxi-Preah Sihanouk direct flight. On June 25, 2017, Wuxi-Sihanoukville international route was officially opened. Fourthly, friendly identities were established. The SSEZ has created an investment and trade platform for enterprises “Investment in ASEAN and radiation to the world” to avoid the risk of investment alone and achieve mutually beneficial situation. To further promote the investment and development of Jiangsu Province enterprises in Cambodia, the SSEZ plays the role of “bridge”. Wuxi City and Preah Sihanouk City became sister cities in 2009. Furthermore, Jiangsu Province and Preah Sihanouk Province were officially established as friendly provinces in 2018, with closer cooperation and exchanges.
Table 3 The evaluation on geo-social effect of Cambodia Sihanoukville Special Economic Zone
Evaluation items Specific evaluation Evaluated outcome
Win-win model Stakeholders’ benefits Achieving win-win for stakeholders
Education and training Colleges and vocational training Establishing two colleges and carrying out technical training
International routes Direct flight Opening Wuxi-Preah Sihanouk direct flight
Friendly identity Friendly cities or provinces Establishing sister cities between Wuxi City and Preah Sihanouk City, as well as friendly provinces between Jiangsu and Preah Sihanouk

4.4 Geo-cultural effect

The geo-cultural effect of the SSEZ is reflected in the integration of social culture and localization of culture. This integration is manifested in four aspects, namely, concept culture, institution culture, behavior culture and material culture (Table 4). Firstly, the harmony of concept culture. The dominant culture of Cambodia is Buddhism, and Hinayana Buddhism is the national religion. The core of Buddhism is the golden mean, which refers to being impartial, not going to extremes and maintaining neutrality and balance. The cultural values of Buddhism are equality and inclusiveness. While, Chinese culture advocates self-reliance, hard work, perseverance, collectivism, innovation and creation as well as the pursuit of excellence. In the early stage, Chinese investors and developers in the SSEZ, guided by China’s cultural values and pioneering spirit, transformed the barren land full of thorns and ravines into a modern industrial park. In the middle stage of development, Cambodia’s value of “comprehensive charity” was integrated. The SSEZ Company actively participated in various public welfare activities, including annual donation to the Cambodian Red Cross, donating rice, drinking water and other materials to local disaster victims, donating money for educational activities and carrying out “one-to-one” support activities for poverty students at local school. These activities were welcomed and affirmed by local government and people. Secondly, the harmony of institution culture. On one hand, the SSEZ formulates the management systems that benefit both the company and the local culture, such as hiring local people as lawyers, translators, drivers and front-line managers; on the other hand, the SSEZ carries out the localized training for Chinese management and hires local managers to promote the localization of management. Thirdly, the harmony of behavior culture. The SSEZ pays attention to the role of cultural carrier and takes measures to avoid cultural conflict. For example, Cambodian language training courses are provided to Chinese employees of management company and enterprises in the SSEZ, so as to master the daily spoken language and understand Cambodian culture, narrow the cultural differences among employees, seek common ground while reserving difference and realize mutual understanding. Fourthly, the harmony of material culture. The SSEZ is the disseminator and practitioner of China’s diplomatic principle of amity, sincerity, mutual benefit and inclusiveness. The construction of material culture is conducive to the high unity of corporate philosophy and image. The SSEZ emphasizes the establishment of excellent models at different levels within enterprises, and the establishment of exemplary images of managers and employees, along with the collection, arrangement and promotion of classic cases of corporate culture. Furthermore, it utilizes the newspaper to comprehensively introduce the progress and achievements of the SSEZ.
Table 4 The evaluation on geo-cultural effect of Cambodia Sihanoukville Special Economic Zone
Evaluation items Specific evaluation Evaluated outcome
Concept culture Collision and integration Integrating the Cambodia’s value of comprehensive charity
Institution culture Localized management systems Hiring local people as lawyers, translators, drivers and front-line managers
Behavior culture Seeking common ground Mastering Cambodian language and understanding local culture
Material culture Highlighting corporate culture Establishing excellent models and publishing internal newspaper

4.5 Enlightenments on the geo-effects of Cambodia Sihanoukville Special Economic Zone

The paper concludes the following general and special theoretical knowledge based on the case study of the SSEZ. With regard to the general knowledge, there are mainly three points. Firstly, positively synergistic geo-effects are indicated by the institutional-economic-cultural- environmental adaptability of overseas industrial parks. The “soil environment” of overseas parks is different from China. Therefore, overseas industrial park must adapt local institutional, economic and cultural system to obtain favorable geo-effects (Wang et al., 2020). For example, there are some common problems in the investment climate, such as a weak industrial foundation, insufficient supporting facilities for manufacturing industry, a lack of professional and technical personnel, poor local infrastructure and roads, a lack of specialized logistics enterprises, logistics bottleneck and unsatisfactory administrative service environment, and so on (Warr and Menon, 2015). It is difficult for overseas industrial parks to change the external environment, and thus have to adjust themselves to adapt to local environment for survival and development. Secondly, the investors of overseas industrial parks focus on different geo-effects in different stages. In general, investors pay more attention to geopolitical effect and geo-economic effect in the early stage to achieve government support and economic sustainable development. Because at this stage, the focus of park development is to survive. Thus, some measures such as improving the government friendly communication and enhancing economic benefits should be taken most seriously. In the mid-late stage, investors consider geo-social effect and geo-cultural effect to achieve broader and more sustainable development through embedding the local social network and adapting to the environment of host country. Thirdly, corporate social responsibility is emphasized. Only when overseas industrial parks are popular by local government, can citizens obtain long-term development. Hence, parks should benefit local people in terms of education, health and public welfare charity to build a good image for the sustainable development.
As for the special knowledge of the SSEZ, it is mainly reflected in four aspects. Firstly, the SSEZ improves the importance of park platforms and reduces the geopolitical risk through the high-level negotiations and agreements. The development of the SSEZ highlights a political priority, making the park become an important platform for bilateral governments to strengthen exchange and cooperation. Secondly, the SSEZ adopts the “rolling” development model and explores diversified profit models to obtain more economic benefits, such as leasing out land, factory workshop, lodgings and commercial housing, operating water, electricity and property, as well as charging the additional service fee for catering and entertainment. Thirdly, the SSEZ creates a win-win model and attempts to benefit the stakeholders. The SSEZ succeeds by coordinating the interests of shareholders, employees, customers, partners, governments and communities. Fourthly, the SSEZ emphasizes the harmonious development of human and nature, protecting local ecological environment. It identifies and prevents environmental risks in a timely manner, guide the enterprises in the park to actively fulfill their social responsibilities for environmental protection to establish a good image of Chinese enterprises, and support the sustainable development of host country.

5 Conclusions

Presently, no claims have been made about the all-round evaluation of overseas industrial parks themselves. Therefore, this study identifies the geo-effects from the multi-dimensional perspective, and takes Cambodia Sihanoukville Special Economic Zone as an example. The academic contributions of the paper are mainly reflected in enriching the research of overseas industrial parks and advancing the understanding of overseas investment, establishing a new theoretical framework of geo-effects and summarizing some general and special theoretical knowledge on overseas industrial parks. Furthermore, this research has the potential to contribute to the combination of economic geography and geopolitics in an era of globalization and changing geo-environment. The main conclusions are as follows:
(1) The evaluation of geo-effects is carried out from the four dimensions of geopolitical, geo-economic, geo-social and geo-cultural effects, which are related by correlation rather than causality. The combination of four dimensions in varying degrees usually leads to differences in the effect of overseas industrial parks.
(2) The SSEZ is a landmark project on the Belt and Road and has generated the prominent and positive geo-effects. The geo-effects of the SSEZ are gained by enhancing the importance of park platforms, making the high-level negotiations and agreements, adopting the rolling development model, exploring the diversified profits, benefiting the stakeholders through a win-win approach, and protecting local ecological environment.
(3) The institutional-economic-cultural-environmental adaptability of overseas industrial parks is becoming increasingly important. The development of overseas industrial parks must be rooted in the politics, economy, society and culture of host country, integrate in local social networks, realize the precise integration of economic networks and social networks, occur in accordance with the localized management and operation, balance the rights and interests of all stakeholders, foster the social networks of credit, reciprocity and cooperation to reduce risk and uncertainty of park development (Yeung, 2003; Li, 2018).
In short, the above findings have two implications, one practice-oriented and the other theory-oriented. At the practical level, the SSEZ has achieved initial success and significant geo-effects. The success of the SSEZ provides a good model for other overseas industrial parks. Its rich and successful experience is beneficial to the sustainable development of overseas parks. On a theoretical level, some general theoretical knowledge is summarized, for instance, considering the particularity and complexity of local contexts, adapting to the institutional, economic and cultural system of host country, integrating with local social networks, and conducting the localized management.
This paper redefines the concept and connotation of geo-effects, embodies the originality of theory and enriches the research perspectives of overseas industrial parks. However, there are two deficiencies in this paper: firstly, it focuses on the establishment of theoretical framework and research paradigm by using qualitative method, while lacks quantitative evaluation on geo-effects. Secondly, it selects the remarkably positive case of geo-effects and lacks a comparison of negative case. Therefore, future research is necessary to conduct a comparative analysis on positive and negative cases of overseas industrial parks, and shed light on the quantitative evaluation of geo-effects as well as the formation mechanism of geo-effects.


The authors would like to thank the anonymous reviewers for their valuable and constructive comments. We are also grateful to the editor for her timely feedback and hard work on the paper. Besides, we thank the management personnel of the SSEZ Company for accepting the in-depth interview with the Tianjin Normal University Free Trade Zone research team, providing the latest information and related statistical data on the development of the zone, and reviewing the article to ensure the accuracy of information and data.
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