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skills and in management. It was hoped that the
beneficial impact of foreign investment in the SEZS would spill-over to other parts of the country and help China's Four Modernizations, particularly in respect of
technological transfer. The SEZS were expected to fulfil the function of being botn a window to the outside world and China's access point for foreign capital and technology. Fourth, the SEZS were intended to be earners of foreign exchange. The fifth motive was related to political considerations; the SEZs were effectively controlled experiments intended to be buffer zones cushioning other parts of the country from China's direct confrontation with foreign capital and technology. Such a confrontation was considered beneficial from the economic point of view but not so desirable politically. Thus, the SEZs were to have a role as mediators between socialism and capitalism. The sixth motive might be related to China's desire to use the SEZs for demonstrating that it could handle more than one economic systems. It is worth noting that the three more important SEZs are situated at locations near to China's targets for assimilation. Shenzhen is adjacent to Hong Kong, Zhuhai is adjacent to Macau, and Xiamen is near to Taiwan. The seventh motive was relevant only to the Shenzhen Special Economic Zone (SSEZ) and its inclusion is again somewhat speculative. It relates to the wish to develop the SSEZ to a level which is comparable to that of Hong Kong. It may have been envisaged that, by narrowing the gap in economic prosperity between the two territories, China's political task of re-gaining sovereignty over Hong Kong after 1997 would be greatly facilitated. The erection of the frontier fence to the north of the SSEZ could in due course make the contrast between the SSEZ and other parts
G.F. 326
CONFIDENTIAL #B