TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 10

The

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At the national level there is a Special Economic Zones office of the State Council. Its functions include: "a) investigating and studying the policies being carried out in the SEZS; b) relaying the practical situation in the zones to higher levels and communicating between higher and lower levels; and c) helping the local authorities in the Zones in solving some pending problems". policy making and coordinating body for the SEZS and the 14 open coastal cities and the island of Hainan (see below) is the China Coastal Cities Economic and Technical Development Corporation. This is currently headed by Gu Mu, a State Councillor and former member of the Chinese Communist Party Politburo. The SEZS are important enough for China's top national leaders to take a close interest in them and changes in policy on the Zones have in the past come from their direct intervention.

Relations with Hinterland Provinces

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13. Government organisations and enterprises have been quick to establish relations with the SEZS in order to share the advantages they enjoy. This is in line with the aim of using the SEZs to disseminate advanced methods and ideas to other parts of China. provincial-level units and 27 central departments have established over 2,000 enterprises and organisations in Shenzhen with a total investment of 5.6 billion yuan. 500 of these are industrial enterprises which account for nearly 20 per cent of Shenzhen's total industrial value. 576 ventures in Xiamen have been established in cooperation with local governments and enterprises from other parts of China. These involve direct investment, manufacturing components assembled elsewhere and exchange of technological information. About 68 per cent of Xiamen's construction work is done by workers from other parts of China.

PAST PERFORMANCE AND FUTURE PLANS

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In 1985 the SEZS came under considerable criticism for their performance up to that time*. They, and particularly Shenzhen, the most prominent of them, were criticised for not having achieved what they had been set up to do:

(1) Shenzhen had not developed an outwardly orientated economy. In 1984 over 70 per cent of its production was sold on the domestic market. The volume of imports exceeded greatly the volume of its exports and it was a drain on China's foreign exchange

* China's relations with the West remain a controversial subject and the SEZ policy is a political as well as an economic one. Their greater openness to Western "bourgeois" influences and the comparison that can be made with the foreign concessions established in China in the 19th century make them prime targets for critics of the open-door policy. The opportunities for corrupt practices which their privileged position affords them were highlighted by the exposure in 1985 of a motor vehicle import and foreign exchange scandal in Hainan which involved huge sums and the island's top administrators.

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