CHINA'S SPECIAL ECONOMIC ZONES AND OPEN COASTAL CITIES
BACKGROUND
1. The Special Economic Zones (SEZ) were officially established in August 1980 when the National People's Congress (NPC) Standing Committee approved regulations for the setting up of three SEZS in Guangdong Province. These were at Shenzhen, Zhuhai and Shantou. Similar regulations regarding the Xiamen SEZ in Fujian Province were adopted later. Guangdong and Fujian Provinces have an outward-looking tradition: most Chinese emigrants come from these provinces and large amounts of investment are made there by Overseas Chinese. A year before the SEZs were set up, it was decided that Guangdong and Fujian should adopt "special policies and flexible measures" giving them more power to carry out foreign trade and establish links with the outside world. These two Provinces were therefore obvious locations for the SEZs, which have been the spearhead of China's "open-door policy". An important additional consideration in the choice of Shenzhen, Zhuhai and Shantou was their proximity to Hong Kong and Macau. Xiamen is separated from the island of Taiwan by only a 200 kilometre stretch of water.
2. The SEZs offer preferential treatment to foreign investors in order to attract foreign funds for the setting up of technologically-advanced, export-orientated industrial enterprises. This is aimed not only at facilitating technology transfer and increasing foreign exchange earnings but at acquiring knowledge of modern management techniques which can be applied in the rest of China and a pool of trained people who can be transferred later to inland enterprises. They are also looked upon as testing grounds for economic reforms. Some elements of China's current reforms, such as labour contracts and wage reforms, were first tried in the SEZS. It is also hoped that the successful development of the SEZS would "produce positive influences for the cause of the complete reunification of the Motherland".
THE FOUR SPECIAL ECONOMIC ZONES
Shenzhen
3. Shenzhen is the largest of the SEZs in terms of output, foreign investment and area. It covers 327.5 sq kilometres of land adjacent to Hong Kong. Its population has increased more than ten-fold to 400,000 since it was established as a Special Economic Zone, although this figure may be swollen by the inclusion of temporary construction workers from other areas. It has easy access to Hong Kong, and takes 50 or 60 minutes by electric train to Kowloon. Plans exist for a motorway to connect Hong Kong, Shenzhen, Canton, Macau and Zhuhai. A feasibility study for the construction of an airport has been completed and submitted to Peking for approval. firm date for a start to work has been announced. The main ports are Chiwan and Shekou. Others are planned for eastern Shenzhen. There are 21 foreign banks and branch offices in Shenzhen. Between 1 July 1986 and the end of 1995, branches of foreign banks in Shenzhen will be exempt from industrial and
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