TNAG-1239-FCO40-1552-Future-of-Hong-Kong-1983 — Page 180

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3.

b) Special Economic Zones.

Four Special Economic Zones

were established in 1979 at:

i) Shenzhen (Guangdong, adjacant to Hong Kong);

ii) Zhuhai (Guangdong, adjacent to Macao);

iii) Shantou/Swatow (eastern Guangdong);

iv) Xiamen/Amoy (Fian).

SEZS, like Chinese counties, are at present under the administrative control of provincial governments. (There have been reports that the local administering authorities in the zones may soon become directly accountable to the central government.) The purpose of SEZS is to provide, on favourable terms, focal points for foreign investment and commercial cooperation. Concessions offered to foreign companies include:

i) A low rate of tax.

ii) Freedom from customs duty for materials imported

for processing.

iii) The option of 100% foreign-owned ventures.

iv) Easier access for foreign businessmen.

So far the only one of the zones where significant development has taken place is Shenzhen.

c) Special Administrative Regions. Article 31 of the 1982

constitution provides for Special Administrative Regions in which the operative ''systems'' (implicitly economic and social) will be determined by laws to be enacted (implicitly in due course) by the National People's Congress. In a statement which followed publication of the constitution, Peng Zhen, now Chairman of the Standing Committee of the National People's Congress, said that Special Administrative Region status was intended for ''Taiwan and similar situations'' and referred to, a flexible'' approach to detailed arrange- ments.

This new provision in the 1982 constitution had been fore- shadowed in September 1981 by a 9 point proposal by the then Chairman of the NPC Standing Committee, Ye Jianying, for the reunification of China and Taiwan. The package put forward by Ye included ''a high degree of autonomy''; non-interference in local affairs; retention of Taiwan's armed forces; preservation

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