Restructuring Global Competition in Industrial Parks from the Perspective of Monetary Policy

Over the past two decades, competition among industrial parks has mainly focused on the "micro-incentive level": tax breaks, land prices, and infrastructure support. However, as the world enters a highly volatile macro-financial cycle, monetary policy is profoundly influencing companies' global deployment decisions through changes in interest rates, exchange rates, and capital costs.

When major global economies enter a cycle of policy divergence, investors' criteria for evaluating a region are shifting from "what incentives can be offered here" to "whether the macro-financial environment here is predictable, capital costs are stable, and exchange rate risks are controllable."

Against this backdrop, the competitive logic of industrial parks is also upgrading from "project attraction capability" to "macro-environment interpretation capability."

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Part 1: Monetary Policy Is Reshaping the Competitive Logic of Industrial Parks

From Micro-Incentives to Macro Constraints

Traditional industrial park marketing typically emphasizes:

• Tax reductions
• Land costs
• Subsidy policies
• Infrastructure levels

These factors remain important, but they are increasingly influenced by a higher-level variable—the capital cost structure determined by the monetary policy environment.

For example:

• Periods of rising interest rates → higher financing costs, higher return thresholds for investment projects
• Increased exchange rate volatility → greater uncertainty in cross-border returns
• Tightening liquidity → lower overall risk appetite for FDI

Therefore, investors no longer just ask "what incentives are here," but are more concerned:

> "Given the current global interest rate and exchange rate environment, is long-term investment here still viable?"

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Common Misconceptions: Emphasizing Only Incentives While Ignoring the Macro-Financial Environment

Misconception 1: Treating the park as a static cost space

Much marketing still focuses on "cost comparisons," but overlooks:

• Financing interest rate differentials
• Local currency depreciation risks
• Global capital reflow cycles

Investors evaluate not static costs, but dynamic capital cost curves.

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Misconception 2: Ignoring the spillover effects of policy cycles

For example:

• Fed rate hikes → global dollar reflow
• Emerging market currency depreciation → reduced foreign capital returns
• Global risk asset repricing → FDI contraction

These changes are often more decisive than local policies.

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Misconception 3: Equating "preferential policies" with certainty

In a highly volatile currency environment:

• Tax incentives are "bonus points"
• Currency stability is the "underlying constraint"

Regions lacking macro stability may not even enter investors' final shortlist, even if their incentives are relatively generous.

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Part 2: Three Major Changes in Global Trends

Trend 1: Monetary Policy Divergence Becomes a Core Variable in Investment Decisions

• Major global economies enter a "policy divergence cycle":- Developed economies: high interest rates maintained for longer cycles
• Emerging economies: facing capital outflows and exchange rate pressures
• Divergence in energy and inflation structures widens policy path differences

The result is:

> FDI is no longer an "industrial choice" but a "monetary environment choice."Industrial parks need to have "financial explanation capability", not just "policy explanation capability".