Meng Xianchang, an official with the Liaocheng Development Zone in East China's Shandong Province, says the zone has become picky in the kind of investment it wants to attract, selecting only the companies that fit the existing clusters. "Projects related to our major sectors will get priority," he says.

These days the zone mainly focuses on five major industrial chains: food, textile, machinery, steel and information technology.

"In a specific sector, we will boost leading enterprises and stretch the industrial chain upward and downward," Meng says.

The government is encouraging foreign investors to concentrate on high-tech industries and advanced manufacturing in development zones, according to Li Zhiqun, director of the Commerce Ministry's foreign investment administration department.

But as the policy gap for ventures inside and outside the zones narrow, "some zones have prepared for the changes", says Liu of the China Association of Development Zones.

Some zones, he says, see the curbs on land use as an opportunity to streamline their units by cutting down on the less productive operations. "Now they factor in the restrictions and allocate land to only those enterprises that help them optimize the existing industry clusters."

Some, like the Kunshan Development Zone in East China's Jiangsu Province, had actually anticipated the introduction of land-use restrictions and tailored their allotments accordingly as far back as 2002.

"Our land-use growth decreased by 50 percent each year [since], but output continued to grow robustly," says an official with the development zone who refuses to be named.

But even though the Kunshan zone has, for years, made it a policy to select projects that eat up minimum land, it still feels the pinch of land shortage. It has thus called on enterprises deemed at odds with its long-term strategy, such as labor-intensive units, to move out.

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