China SEZs

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ASIAN JOURNAL OF PUBLIC ADMINISTRATION

THE POLITICAL ECONOMY OFCH INA S SEZs

Victor C. Falkenheim

Assessing the SEZsIn China's dramatic post-Mao opening to the west, no single initiative appearedmore radical or problematic than the 1979 decision to establish four foreigninvestment enclaves in China's southern provinces of Guangdong and Fujian.Avowedly capitalist, uncomfortably reminiscent of their treaty port precursors,the Special Economic Zones (SEZs) symbolized the boldness of China's breakwith the autarchic policies of the past. Equally, however, the controversial natureof the programme made its success an acid test both of leadership's politicalresolve and of its ability to surmount substantial economic and bureaucraticobstacles to create an investment setting conducive to significant foreignparticipation.With Deng Xiaoping's celebratory tour of the SEZs in early1984,a majorpolitical milestone, if nothing else, appeared to have been reached. Proclaimingthe five-year experiment a success, Deng and the Party leadership called uponthe nation to learn from Shenzhen , the largest of the SEZs, and authorizedboth the expansion in size of the smaller existing zones and the opening offourteen additional coastal cities as preferred sites for foreign investment.1Further, Gu Mu, China's senior SEZ policy spokesman, described the newfourteen city decision as the second stage of a planned three-phase territorialbroadening of zone-type policies from south to north, east to west and coastto interior with the upcoming third stage to be marked by the opening of entirecoastal regions to relatively unrestricted foreign economic interaction.2 Amajor spurt in foreign investment in the SEZs in 1984, in response to theseand other legal and policy changes, suggested that the foreign businesscommunity was ready to concede some substance to Deng's pronouncements.

Yet many analysts remained sceptical about these claims of success,viewing the 1984 coastal city expansion more as a response to the limitationsand shortcomings of the initial stage of enclave development than a measureof its successes.3 In particular, questions were raised concerning the cost-effectiveness of the zone option, given the high cos ts of zone capital construc-tion, the relatively modest level of foreign investment through 1984 and theabsence of significant linkage effects. Further, the virtual universaHzation ofzone privileges independent of location for large-scale, technologically advancedVictor Falkenheim is Chairm an of the Depa rtment of East Asian Studies and AssociateProfessor of Political Science at the U niversity of Toronto

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joint ventures provoked fears that the effect would be to blur the boundariesbetween zone and non-zone jurisdic tions, undercutting the appeal of zone-basedindustrial development. Finally, the authorization of separate Economic andTechnical Development Zones in the fourteen coastal cities threatened thepossibility of damaging inter-zone competition for limited investment funds,resulting potentially in uneconomic concessions to foreign investors orinvestment shortfa lls in the weaker zones. The decision in mid-1985 to restrictthe open city programme by concentrating investment in four priority cities,and Deng's publicly expressed misgivings about the st ill unproven prom iseof the zones, suggests that these concerns were shared even by theprogramme's firmest boosters.4Assessing the achievements and future prospects of the SEZs in lightof these questions, however, is by no means easy. Data and methodologicalproblems aside, the SEZs are st ill in their infancy and it is too early to arriveat any firm judgement about their success. Moreover, the multiple nature ofthe goals embodied in the zone strategy make the development of appropriatesuccess criteria difficult. As described byXuDixin, these include not only suchstandard Export Processing Zone (EPZ) goals as generating foreign exchange,creating employment, attracting foreign investment, and facilitating technologytransfer, but in add ition serving as labora tories for reform of the economy.5And beyond these economic goals were a set of implicit political objectivesrelated to the future of Hong Kong and Taiwan.Any full evaluation even of the economic importance of the SEZs wouldthus have to include consideration of their impact on local industrial growth,employment, and export earnings as well as evaluations of their importanceas a laboratory for economic reform and their contribution to the diffusion offoreign technology and management methods to the domestic economy. Noeffort at such comprehensiveness will be attempted here. Instead, the essaywill attempt to gauge the achievements of the SEZs by comparing the initialinvestment and growth objectives of zone planners to actual performance,where possible in relation also to the costs incurred by Chinese national orregional authorities.SEZ GoalsDespite the political boldness of the zone initiative, the scope of the newprogramme at the outset was limited by design. Zone advocates were aware,on the basis of a careful survey of extant zones, of the economic risks inherentin such export promotion vehicles. Thus while they were attracted by thesuccesses of the Korean and Taiwan EPZs, they were determined to limit theirown risks. Hence, despite widespread pressures from numerous aspirantcoastal cities, the decision was taken to restrict the experiment to four zones,

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in areas where suitable pre-conditions gave a reasonable assurance of success.A combination of economic and political logic and forceful local advocacy madethe case for siting the zones in Guangdong and Fujian provinces a plausibleone.6 Already beneficiaries of a decentralization reform which gave themadded trade and financial flexibility, these two provinces were natural candidatesforanenclave type experiment by virtue of physical loca tion, access to funds,expertise and markets, previous experience with foreign investment joint stockcompanies and close ties to overseas Chinese investors. To be sure, two ofthe zones, Zhuhai and Shenzhen, on opposite banks of the Pearl River estuary,were economically under-developed and infrastructurally weak, but they werepowerfully compensated for this deficiency by their prox imity, respectively toMacao and Hong Kong. Shantou, on the north Guangdong coast, and Xiamenin southern Fujian as m edium-sized c ities, offered the potential advantage ofan existing commercial, industrial and educational foundation on which to basean export promotion programme, and, more important, large and loyalconstituencies of overseas Chinese to tap for investment and expertise.While this cautious selectivity reduced the risk of failure, it offered littleguarantee that local authorities would proceed equally prudently, hence centralpolicy guidelines set sharp limits on the permissible scope of zone develop-ment. Only Shenzhen was mandated to establish a large-scale comprehensivezone involving across-the-board development of industrial, commercial, propertyand tourist-related undertakings. The other zones were, to varying degrees,sharply hedged in by policy d irectives which called for limiting zone size andfor gearing zone objectives to local resources.

The May 1980 Central Committee guidelines (Document 41) on theplanning of the Shantou and Xiamen zones directed zone authorities to layprimary emphasis on utilizing their existing industrial foundation and capitalstock to accelerate export production of light industrial goods, particularlymachinery. Zone authorities particularly were charged with the task of securingthe use of foreign capital for renovation of old factories for this purpose. TheCentral Committee specified further in July 1981 in Document 17 (1981) thatthe two cities should accord priority to export processing while simultaneouslydeveloping tourism . Overall development strategy was to be dictated by eachcity's fundamental character .7 The result was a series of localized plans thatcalled for quite limited and concentrated development programmes as thefollowing zone by zone review will show.Shantou SEZShantou in 1980 was a medium-sized city, its greater metropolitan areacontaining 720,000 people on 245.5 square kilometres and its urban core(Shantou proper) containing 416,000 people on 7.25 square kilometres. With amodest old portarea,Shantou had been involved in international trade for over

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a hundred years and120of its352factories and enterprises (1983) were engagedin production forexport.Shantou's labour force in1983totalled 132,000 of whomthe bulk (over 100,000) were employed in251 collective sector enterprises (totalassets 68 million yuan) and 30,600 worked for the remaining 101 larger state-sector factories (total fixed assets 180 m illion yuan). Total industrial output in1981 was valued at over 800 million yuan.8In the in itial stage of zone planning three proposals were brought forward.The first advocated developing an industrial zone on the southern tip of DahaoIsland at Guangao, across the Rongjian River, later proposed as a site for amajor petrochemical development. The main advantage of this location wasthe availability of a stretch of deepwater shoreline at Chiwang Bay which,following harbour development, could be constructed to accommodate10,000-ton sh ips. The disadvantages were the lack of w ind-shelter and the lackof adequate water supplies which would have to be piped from neighbouringChaoyang county. The minimum projected costs of constructing adequate waterfacilities was 5 million yuan and estimated costs of wharf and harbour develop-ment were put at 200 million yuan, expenditures deemed well beyond thefinancial resources of the locality. A second proposed site was in the easternsuburbs of Shantou at Zhuchidu, a10square kilometre underdeveloped parcelof low-lying land near Maiyudao. The estima ted costs of landfill work howeverwas put at 40 million yuan and the problematic weightbearing capacity anddrainage properties of the finished site ultimately ruled out any significantindustrial development on th issite.The final choice was a small parcel of landnear Longhu village in the northeast section of the city. Although the landavailable for development was more limited, ease of port access (7 kilometresfrom the old wharf, 17 kilometres from the fishing port and 2 kilometres fromthe planned new wharf) proved decisive. While critics pointed to constraintsimposed by poor long-term potential of the new port because of unresolvabledrainage and silting problems, a 1.6 square kilometre site at Longhu was chosenby the Provincial CCP Committee in late 1980. A Planning Office of the SEZAdministrative Committee was established in September1981and in Octoberit decided to expand the scope of the zone by developing an additional 1.7square kilometre site of sandy, uncultivated land near the fishing port to meetthe projected transport requirements of the zone. The Committee also acquiredcontrol of an adjacent 10 square kilometre parcel of farmland for future develop-ment ofanagricultural processing base. Over the three months from Septemberto December1981 the Adm inistrative Committee of the Zone, with assistanceof a staff of surveyors and planners from the Beijing Iron and Steel SurveyInstitute (Beijing Gangtie Shejiyuan) produced a provisional GeneralPlan .Theplan was amended in early 1983 and given provincial assent in June 1983 atwhich time zone plans were incorporated into the broader city developmentplan.9

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As specified in theplan,Shantou was not to build a comprehensive zoneas was being undertaken in Shenzhen and in particular was to avoid any focuson property development.10 Rather, its main emphasis was to centre ondeveloping a processing industry in conjunction with the development of itsagricultural site to the southeast. The key to the zone's further developmentwas the industrial processing area at Longhu village where, on a core industrialsite of 1.6 square kilometres and an adjacent warehousing and residential areaof 1.2 square kilometres, it was proposed to build 200,000 square metres ofmulti-purpose, multi-story industrial bu ildings (four to six stories high), expectedto accommodate a total of 250 light industrial enterprises, employing 50,000staff and workers and producing an annual output valued at 380 million yuanupon completion. The site was to be developed in two stages, with the firstphase involving the development by 1986 of a .55 square kilometre site with100,000 square metres of administrative, residential and factory floor space atwhich time fifty factories were expected to be under construction or inoperation, with up to 25,000 employees. In this first stage, the em phasis wasto be on labour-intensive industries, particularly electronics and textiles. In thesecond stage of development after 1986, the remaining 1.05 square kilometresite was to be developed, with a simultaneous emphasis on the 1.7 squarekilometre port zone sou th of Longhu and the gradual but non-priority develop-ment of the agricultural zone as well. In this later stage, some appropriatedevelopment of scenic spots for tourism was mandated as well as attentionto the broader renovation of old enterprises in the city proper, financed withforeign funds. These goals were given a sharp boost in March 1984 with theformal designation of Shantou as China's 33rd comprehensive exportcommodity base. In November 1984, for reasons to be discussed below, theShantou SEZ was dramatically expanded in size to 52.6 square kilometres,initiating a process of plan revision just now underway.Xiamen SEZXiamen was one of two sites in Fujian province initially considered for exportzone development. The second, Langqi Island in the mouth of the Min Rivernear Mawei, the port city of Fuzhou, was the subject of an elaborate planningexercise in cooperation with consultants from Millie's Group (Hong Kong)focusing on the development of a petrochemical complex. However, highinfrastructural costs associated w ith the development of adequate port fac ilitiesat Mawei led to the decision in October1980to limit authorization to the Xiamensite.11 Ground-breaking began in October 1981 following a year of planningand preparation. The assets of Xiamen were clear. It was an old trading port,with agoodnatural harbour, rail links to the interioranda modest light industrialbase consisting of 770 factories and an industrial work force of 100,000. The

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region's solid educational and technical foundation level and its location in aproductive agricultural region offered so lid support foranexport developmenteffort as well as a market for the products of zone-based enterprise.12 Fromthe outset, there was a twofold thrust to development plans for the zone first to develop a small 2.5 square kilometre industrial zone at Huli (in northwestXiamen) adjacent to the new port at Dongdu. The second aim was to overseethe technological renovation of Amoy's older export oriented industries on thebasis of foreign investment.The 1982 master plan for the development of the industrial dis trict calledfor construction in two phases.13 The first phase, to be completed by the endof 1984, called for ground levelling on a 1.1 square kilometre site and thecompletion of power, water, roads, communication infrastructure and all-purpose factory space sufficient for between 100 to 120 factories, creatingemployment for 15,000 workers. In the second stage, projected for 1988completion, an additional 100 factories were to be built employing another20,000 workers. On flanking sites in the eastern and southern sections of thezone tota lling 4.55 square kilometres, facilities for schools, hosp itals, post andtelecommunications centres, restaurants and cultural facilities and workers'dorm itories, foreign residences etc. were to be built. Ultimately a new to wnof 70,000 was envisioned, growing to a population of 140,000 by the turn ofthe century. The plan also anticipated rapid grow th in industrial output (GVIO)from the 1982 level of 1.2 billion yuan to over 6 billion yuan by the year 2000.The Huli industrial district planners sought periodically, thoughunsuccessfully, to extend the industrial zone to encompass neighbouringYuangdang and similar proposals were mooted to develop a non-contiguousdistrict on the mainland, Xingli, across the Jimei viaduct. But if zonedevelopment plans were confined toHuli,the Zone Management Com mittee'sauthority for the technological renovation programme was city-wide and in 1983because of resulting jurisdictional problems the Zone Management Comm itteewas given co-equal status with Xiamen municipality, reporting directly to theprovince. Ultimately, local pressure and the logic of city-wide development ledto the decision in March 1984 to formalize and rationalize the situation bymaking the entire 123.5 square kilometre c ity proper (Xiamen Island) a SpecialEconomic Zone.14 This decision led to a significant shift in zone objectives.A new set of plans drafted in mid-1984 called forin addition to the com pletionof Huli industrial district a new15square kilometre urban banking and tradecentre to be bu ilt in Yuandang district , and an additional 20 square kilometreindustrial zone, the Jiangtou-Lianban Industrial District, specifically for thedevelopment of technology-intensive industries. In addition, a major portexpansion was slated for future development. The 1982 master plan hadprovided for an additional four berths at Dongdu Port which would increasethe capacity of Xiamen Harbour from its 1981 level of 2.03 million tons per

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annum capacity to over4million tons. The goals enunciated in 1984 called formaking Xiamen a major international trade centre and projected a total oftwenty-three deepwater berths with the capacity to handle up to20million tonsa year. On July 30, 1985, the State Council announced formal approval ofXiamen's new status, including a plan to develop free port facilities on theisland.15Zhuhai SEZIn comparison to the older port cities, Zhuhai on the western bank of the mouthof the Pearl River was far less well developed, with a modest industrial baseof approximately 190 enterprises concentrated in Xiangzhou (the capital ofZhuhai since 1961) employing a workforce of approximately 40,000 workers andstaff. In March 1979 Zhuhai was placed under direct administration of theprovince and authorized to establish a pilot economic zone by the StateCouncil.16 The city itself was expanded in size to enclose an area of 364square kilometres, with a population of 138,000 (including 20.000 transients)and in August1979,the formal creation of the Zhuhai SEZ was announced witha 6.7 square kilometre plot approved for industrial development.17 The initialplans called for the division of the zone into four separate areas with 45 percent of the land to be devoted to industrial enterprises. The 1982 plan projectedthree districts: the Gongbei district bordering on Macao which would housethe industrial park development and central administration area; the Jida d istrictto the east, slated for tourism ; and the Wanzi district allocated principally forresidential and office uses. In June 1983, in response to local pressure, theState Council approved doubling the size of the zone to 15.6 square kilometresof which 10.8 were designated for industrial development. At the same timethe adjacent Doumen county (population 240,000) was placed within the SEZjurisdiction.

The master plan for the 15.6 square kilometre site drawn up in early 1984and subm itted to the province for approval called for 350 factories to be builton a15square kilometre site, with an aim of creating an industriai city of 100,000by the year 2000, ten times the 1984 zone population of 10,000.18In the course of development it was expected that local industrial outpu t wouldgrow from its 1983 level of US$70 million toUS 1billion by the year2000.Thefocus of industrial development was to be on electronics and building materials,particularly glass and ceramic, but long-term zone development plans hingedon the development of the Macao economy, and the success of the Pearl Riveroil development and the South China Sea oil development more generally.Reportedly, Zhuhai leaders were pressing Beijing for expansion of the SEZ toencompass the entire 364 square kilometre municipality of Zhuhai, an issuethat was taken up w ith Deng Xiaoping in January1984during his visit to Zhuhaiand which is apparently still under review.19

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ShenzhenThe most ambitious programme of all was the proposed development fromscratch of a new type city on the site of the small rural and fishing townofShenzhen.In1979,Shenzhen was a sleepy townsh ip of 23,000 in largely ruralBaoan county.20 The scope of Shenzhen goals were ambitious not onlyrelative to the lack of prior infrastructural development, but in terms of absolutemagnitude. The new zone would be the largest such zone in the world, 327.5square kilometres in area, stretching forty-nine miles along the border of HongKong's New Territories, incorporating fully one-third of the area of the newlydesignated Shenzhen municipality. The population of the zone in 1981 was98,000,out of a total m unicipal population of 300,000. In the draft twenty yeardevelopment plan released in 1982,21 the main objective of zone leaders wasto establish a comprehensive, integrated zone, whose prime focus would beon industrial development, preferably technology-intensive in character, butsimultaneously promoting agriculture, tourism, and trade. Of the 98 squarekilometres available for urban development, 15 square kilometres weredesignated for industrial development. The zone was divided into eighteendistricts to be developed serially on a self-financingbasis.The average targetedannual grow th rate for the Sixth Five Year Plan period (1981-1985) was 88 percent, with per annum growth slowing to 25 per cent during the Seventh FiveYear Plan (1986-1990). The average per year pro jected annual growth rate of theSEZ to the year 2000 was31per cent per year. Shenzhen's industrial output(GVIO) of51million yuan in 1980 was to reach 1.2 b illion yuan by1985,by whichtime 200 new enterprises were to be in production and with approximately50,000 workers on the job. Industrial output would top 12 billion yuan by theyear2000,by which time the zone's popu lation was expected to reach 800,000.A total of 1,500 new zone enterprises creating over 200,000 indus trial jobs wasto underpin that growth. An amended five-year development plan set forth inmid-1984 covering the Seventh Five Year Plan period envisaged a 100 per centincrease in the size of Shenzhen city proper (then 30 square kilometres). It wasexpected that this would be achieved through the gradual absorption of thenewly rising industrial and commercial districts ofLuohu,Shangbu, Futian andShekou, with the zone's population estimated to rise from the 1984 level of250,000 to 450,000 by 1990 at which point industrial output would top 4.78 billionyuan.22Infrastructural DevelopmentDespite central efforts to limit the scope and risks of the zone initiative, therelative backwardness of the four SEZs meant that an enormous initialinfrastructural investment was required, a daun ting obstacle to the realizationof zone plans.23Even the more developed cities, Xiamen and Shantou were

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impoverished in comparison to the economically more advanced east Chinacoastal cities because of their long time fron t line status. The result, as onecommentary on the Shantou zone noted, was that greater priority and muchlarger amounts of investment was necessary to bring their special traits fullyinto play .24 In the case of Shantou, for example the estimated initial five-yearcapital cons truction costs (including roads, land preparation, electricity, watersupply and administrative and support facilities), ranged from 151.3 million to200 million yuan, covering such items as 15.5 kilometres of roads, five bridgesand culverts, 4 kilometres of coastal revetments, 42 kilometres of undergroundwater mains, a water purification plant with a daily capacity of 26,000 tons, amodern telephone exchange, a new post and telegraph fac ility, 200,000 squaremetres of all-purpose industrial floor space, foreign residences, and threeadditional berths to augment existing harbour facilities, this last item requiringan estimated 22 million yuan.25 Expenditures simply for developing the first.2 square kilometre parcel alone were put at 35.7 million yuan, with 15 millionyuan of that amount allocated for basic infrastruc ture , 10 million yuan forsupport facilities, 5 million for the construction of 20,000 square metres offactory space and the remainder for administration.26

Xiamen's capital requirements were even greater, running at well over .7billion yuan for the first three years. Of course much of this investment wasintended to serve wider regional development goals and is not all properlyassignable to zone development costs, narrowly defined. A Far EasternEconomic Reviewestimate of the total costs of building the Huh industrial parkput the figure at 120 million yuan,27 but this appears to be a small fractionof total zone-related capital construction. Some indication of the magnitudeof the latter may be inferred from a partial list of construc tion projects. Theseinclude four new deep water berths at Dongdu port (including a containerterminal), the expansion of Gaoqi airport to accommodate Tridents and Boeing737s, the development of feeder rail links to the Yingtan-Xiamen main line, awater supply system with 110,000 tons daily capacity, a 110 KVA transformerstation,telephone and telecom munications modernization, not to speak of landpreparation costs for1 million square metres of industrial land and the buildingof conventional factory space.

In1982,actual capital construction expenditures were 100.25 million yuan,a figure which covered initial costs of the first two berths at Dongdu portincluding revetments for additional berths, the extension of runwayandparkingapron areas of Gaoqi's airport, 19.3 kilometres of water mains, two pumpingstations, cold storage facilities and Dongdu fishing port and 460,000 squaremetres of ground preparations.28 In 1983, expenditures for the com pletion ofdockwork, underground conduits and an additional 500,000 square metres ofland preparation were put at 210 million yuan.29 Capital constructionexpenditures in 1984 involved total costs of 420 million yuan, of which 190

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million were alloted for the completion of the dock and warehouse zone andauxilliary housing.30Total zone-related capital construction costs over the firstthree years appear to exceed 700 million yuan, four times the anticipateddevelopment costs of the Shantou SEZ, with direct in-zone costs incurred in1982 and 1983 running about 10 to 15 per cent of full zone-related capitalcons truction costs. Projected capital construction investment for1985was 850million yuan.31Zhuhai's construction requirements were equally massive. The zone alonerequired an additional 110 KVA transformer substation for its power needs andanother 200,000 KVA station was necessary to meet anticipated city-wide powerdemands. Harbour development plans called for the add ition of six deep waterberths. In terms of transportation , an internal and peripheral highway net wasslated for construction, the existing heliport was to be expanded toaccommodate thirty helicopters and a medium-sized airport was put on thedrawing board. Further, plans called for more than doubling the water supplycapacity from the existing level of 30,000 tons per day to between 60-80,000tons per day along with two sewage treatment centres. While the total costsof these projects are not known and indeed many of them are only barely under-way, available dataonactual construc tion expenses indicate a level of spendingaround 700 million yuan over the initial five year period. Moreover, Mayor YaoGuang, on a visit to Hong Kong in mid-1984, indicated that the pace of capitalconstruc tion was to be stepped up in 1985 and 1986 with investment over thetwo years to top 1 billion yuan.32

The construction of the new Shenzhen zone involved the most massivecosts ofall,the 1982 master plan calling for infrastructural investment of US$2.4billion between 1980 and 1990.33 In fact, actual capital construction expen-ditures v irtually doubled each year, from 1979 through year-end 1984 to talling3.46 billion yuan over the six year period, and the 1984 revised plan covering1985 to 1990, projected capital construction expenditures of 7.5 billion yuan.34As the volume of actual investment indicates (Table 1), a major achieve-ment of the SEZs has been their successful generation of very substantialcapital construc tion funds which has contributed to an equally creditable paceof construction. In Xiamen the completion of the airport, the port expansionprogramme and the completion of water supply, power generation and telecom-munications facilities has laid the foundation for both zone and municipaleconomicandtrade development. The pace of growth in Zhuhai has been slowerbut changes have nonetheless been significant. Most of the infrastructural workon the10square metre industrial portion of the zone has been completed. Thetarget date for final completion is August 1985. A 400 kilometre sea channelin Jiuzhou harbour is nearing com pletion as well and major strides have beenmade in the development of a tourism industry. The most marked successesof course have been registered in Shenzhen where a major urban and industrial

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Table 1Zone-Related Capital Construction Investment(million yuan)

Zhuhai SEZXiamen SEZHull Industrial Park(excluding transport)Shenzhen SEZ

1979

49.88

1980 +(1979-1980)

124.87

1981(65)

270.39

1982105100.2515.5632.65

1983(136)210*36.55885.93

198434042 0

1,500

Total67 6730.2

3,643Sources : Zhongguo Jlng/i T equ Nianjian (1983) (Alamanac of China's SEZs) (Hong Kong: ChinaSEZ Yearbook Pub lishing Co., 1983), p. 273;Far Eastern Economic Review, October 1,1982,p. 63; Fujian Ribao, Apri l 1,1983; China Daily,June 5,1984 and January 21,1985,

p. 3;Nanfang Ribao, February 1,1983; Hsin Wan Pao (Hong Kong), September 2,1984,p. 1;Asian Wall Street Journa l, July 8,198 2, pp. 1 and 5; Renmin Ribao, March 29,1984and Decmeber 29, 1984.Note:* Al l f igures are for actual expend i tures except those asterisked which are for planned expen-ditures. Figures in parenthesis are derived as percentages of the succeeding year.

development programme have virtually created a new city. The constructiondata at Table 2 suggests the scope of this achievement.To besure,the pace of development has not been even across the zonesand many of the major projects have been plagued by delays, particularlyaffecting efforts to improve transport links between Hong Kong and the zones.Questions have also been raised about the utility of some of the infrastructureput intoplace,writers pointing to the low occupancy rate of under-roof industrialfacilities created by Shenzhen. But these problems notw ithstand ing, the zoneexperiment has clearly led to major strides in local capital construction.Moreover, one of the distinc tive achievements of zone development policyhas been the striking degree of foreign participation in basic infrastructuredevelopment. Despite the initial zone legislation which provided that allpreparatory work including levelling, land preparation, construction work for

water supply drainage, electric power, roads, docks, communications,warehouses and other public fac ilities was to be the respons ibility of theChinese administration, an even more significant proviso mandated that ifnecessary foreign capital may be used in the aforementioned constructionwork. 35 The importance of this provision was acknowledged by Gu Mu inearly 1985 in his praise for efforts in Guangdong and Fujian to increasedramatically capital construction despite local budgetary limitations on the

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Table 2Shenzhen Construction: 1979-1984

1979 1980 1981 1982 1983 1984 Total_,, Area Cons truct ed 130,113 346,303 545,944 926,662 1,464,000 2,600,000 6,013,022g j (square metres)Residential Dwelling Area 52,617 178,546 234,687 624,0 00 1,544,917 1,500,000 3,044,917(square metres)

Sources: Renmin Ribao, March 29 ,1984;Zhongguo Xinwen She, January 1, 1985(CEA 85:008,98).

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basis of foreign investment.36 One analyst, for example, noted with pride thatChina has not, as other countries in similar situations, made large investmentsof state money... in developing the infrastructure of her SEZs. 37Ascertaining the precise proportions of foreign and domestic contributionsto infrastructural development, however, is not easy, in part because of thedifficulty of separating infrastructural projects from overall investment totals.The 1982 Shenzhen master plan anticipated that US$7.2 billion, 58 percent ofthe total zone investment costs through the year2000would come from foreignsources.38 The 1984 Zhuhai master plan calling for US$2.1 billion ininvestment by the year 2000 estimated that one-third wou ld come from foreignsources.39 In the Xiamen zone where development costs for the ten majorprojects including the airport and harbour development are estimated to exceedhalf a billion yuan, foreign funds played a major role. In the four-year periodfrom1980to 1983 the province raised US$145 million in foreign funds, including

a Kuwaiti loan for airport development, a loan from the First Chicago Bank forthe purchase of a provincial fleet, etc.40Much of this money has been funnelled through infrastructural jointventures of which the most distinctive form has been large-scale tractdevelopment contracts. Of these, omnibus joint venture projects include keyinfrastructural components in addition to industrial and commercial develop-ment plans.41 Hopewell's master plan for Shenzhen, for example, includesexpansion of the Luohu railwaystation,and the construction of7to 8 kilometrelight railway line running from Luohu to Futian. Similarly in Zhuhai the crucialUS$37.2 million port modernization at Jiuzhou harbour where four new berthsare to be added will be funded out of a US$63 million loan syndication forGladhover's Zhuhai development programme.42On the domesticside,construction investment has been funded from threesources: intra-zone enterprise net profits, including processing fees, propertydevelopment and tourism profit taxes, etc; domestic (extra-zone) direct invest-ment in the form of capital, material and manpower by central governmentministries; and provincial government agencies and enterprises acrossChina.43 The proportions from each source have varied from zone tozone.The1982 Shenzhen plan projected 75 per cent of domestic investment from SEZgenerated net profits, 15 per cent from domestic direct investment and justunder 15 per cent from bank loans and credit.44 Direct domestic investment

has in fact run at about20percent of the total over the past fiveyears.InZhuhai,in 1982 about 45 per cent of the domestic capital investment came from SEZprofits, mainly from tourism, and about 55 per cent from domesticinvestment.45

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Foreign Investment in the SEZsIt is undoubtedly premature to offer any long-term assessment of the attrac-tiveness of the zones as magnets for foreign investment, given the lack, untilquite recently, of completed physical, administrative and legal infrastructure.According to Gu M u's Report to the Ninth meeting of the SixthN.P.C.StandingCommittee in early 1985, a tota l of US$2 billion of investment had been pledgedto the zones through some 4,700 economic cooperation agreements, an amountconstituting over 40 per cent of the total pledged foreign direct investment inChina.46While the SEZs incentive policies clearly enabled them to garner thelion's share of total investment, the figures are less than impressive whencompared to total infrastructural costs of c lose to 6 billion yuan and even lessso when actual investment is considered. The latter figure across the foureconomic zones according to the same report, totals an estimated US$840million over the past five years.The most successful of the SEZs has been Shenzhen which accountedfor US$580 million or67.5per cent of to tal actual investment through 1984 andover 75 per cent of the total number of economic cooperation agreements. 47As Table3below shows, there has beenasteady annual increase in the numberof project agreements signed with foreign businessmen, with a slight levelling-off in 1981-1982 as consequence of political uncertainties in Hong Kong andthe resulting collapse of the Hong Kong property market. The dollar volumeof pledged foreign investment also rose steeply from 1979 to its peak in 1981,declining sharply in 1982 and resuming an upwards trend in 1983 reaching peaklevels again in1984.Because of the lag between initialled agreementsandactualutilization of investment funds, the pattern of actual investment has experiencedsteady g rowth. A partial breakdown of the agreements by type reveals a strongpredominance of small processing and assembly agreements, with the moreelaborate and more desired contractual or equity joint ventures running onaverage at about 18 per cent of the total number of agreements. 48While this must be reckoned somewhat disappointing, the sharp increasein the number of equity and contractual joint ventures in 1983 marks asignificant change and probably reflects the growing confidence of the foreigninvesting community in the legal and administrative reforms put into place.Shenzhen has dominated the equity joint venture scene nationally, with its totalof127joint ventures between 1979 and 1983 amounting to 67.6 per cent of thetotal number of equity joint ventures signed nation-wide.49Breaking down the Shenzhen's investment total by sector reveals bothin terms of number of agreements and in terms of actual investment that thelargest single category was manufacturing, with 43.6 per cent of the total,followed by real estate development with just over a quarter of total actualinvestment.

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Table 3Foreign Investment in Shenzhen SEZ: 1979-19841979 1980 1981 1982 1983 1984 Total

Number of agreements s ignedPledged investment(HK$ mil l ion)Actual investment(HK$ mil l ion)

170235120

303213625 0

5786800590

5831419880

87826341130

98 3(6000)1650

3,49519,224 (1979-October 30, 1984)4,620

Sources: Renmm Ribao, March 29, 1984, p. 5; China Daily, December 27, 1984, p. 2; Hong Kong Standard, July 21 ,1985, p. 2.O3}>o1 1

IndustryReal EstateCommerce Food ServiceTourism and Recreat ionAgr icul ture, Husbandryand othersCommunicat ion & Transport

Table 4Shenzhen SEZ: Composition of Investment(1979-1983 Totals)Number ofAgreements

1,847591321642328

2,505

Percentage ofTotal Number73.72.45.30.616.9

1.1100

Actual Investment(HK 1,000)1,299,010789.35224,65150,80044,790 Agricuture and435,170 Others37,0402,980,810

Percentage ofTotal43.626.57.55.1Husbandry 1.514.61.2

100

2Io>oszDO

Source: Renmin Ribao, March 29, 1984, p. 5.


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Zhuhai SEZ ranked second among the zones in terms of the number ofprojects50(839), the volume of pledged investment committed to zone projects(US$1.31 billion) of which US$80 million was in actual use by year end 1983.51The Zhuhai investment guide issued in mid-year 1984 listed fifty joint ventures,(including both contractual and equity joint ventures) with a total investmentof US$1.2 billion, with the following sectoral breakdown.

Table 5Zhuhai SEZ: Joint Ventures (mid-year 1984)Sector Number of projects Pledged Investment(US$ m illion)Industrial 24 910Tourism 7 230Real Estate 2 39Comm unications 8 19Commercial 8 7Cultural 1 1Total 50 1,206Source: Office of Administration of Zhuhai SEZ, A n Open CoastalCity Zhuhai(October 1984)p. 33

While much of this pledged investment came in the form of large tractdevelopment projectswhose full realization will be dependent on the futureeconomic c limate, Zhuhai investment commitments on paperwererunning wellahead of the assumptions of the zone master plan which anticipated a totalof US$700 million in investment through the year 2000. As in the case ofShenzhen, there was a significant reported upsurge in the investment in 1984with 111 projects signed in the first quarter alone and pledged investment ofUS$198m illion.Among the new projects were a US$22 million brewery, Zhuhai'slargest single joint venture enterprise to date.52Data on Xiamen SEZ investment is much more difficu lt to assemble. Theavailable figures suggest that serious investment began in the zone only in 1983and that during the firs t two years there may have been no more than a dozenor so projects with a value of US$40 million. This rose to a total of thirty-sixjoint ventures projects by year end 1983, involving approximately US$200 millionin pledged foreign investment. A major spurt of investment occurred in 1984with the s igning of thirty-seven new agreements at a reported value of US$254million,a breakthrough w hich followed years of negotiation and the successfulcompletion in 1984 of many key infrastructural projects.

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Table6Xiamen SEZ: Joint Venture Projectscumulated totals) >at>z

o>

1982 July 983 September 1983 December 31,1 983 December 29,1 984 QNumberofagreem ents /projec ts 18 23 29 36 73 ^Pledged foreign investment 40 150 150 200 454 c(US$ mil l ion) O>o

z3)

Sources: Zhongguo Jingji Tequ Nianjian (1983) (Hong Ko ng: China SEZ Yearbook Publish ing Co ., 1983),p.335;China s Foreign Trade, &Apri l 1984,p. 20;Fujian Luntan No. 23(June15.1984),p. 7;Renmin Ribao, December 29, 1984.


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Table 7Industrial and Agricultural Output (by value) in Shenzhen and Zhuhai(million yuan)

Shenzhen SEZ (GVIO)Shenzhen SEZ (GVAO)Zhuhai SEZ (GVAIO)

Sources: Renmm Ribao.

197960.6185.70

198084.44104.80

1981242.82128.75

March 29.1984.D.5 and December 29.1984: Yanachen

1982362.12135.00

a Wanbao. June 2

198372 0150(197)

. 1982 and Februai

19841,817115.00408

v 16.1983: Beiiina

JOURNj>oFPUBLCj>oINIS2Review No. 13 (April 1, 1985), p. 24;Hong Kong Standard, July 21 ,1985, P. 2.


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In Shantou where infras tructural work began only in 1982, foreign invest-ment is only now beginning to develop. The7953SEZ Yearbookreported a totalof360agreements forShantou,of which 352 were for processing and assemblywhile only eight were classified as some form of joint venture agreements. Ofthe eight, six of the larger projects were reported in operation in early 1984.53There are no overall figures on the magnitude of foreign Investment, thoughan interview in Hong Kong in December 1984 withazone businessman elicitedthe unconfirmed report that thirteen enterprises (three equity joint ventures,ten contractual joint ventures) were either in operation or under construc tionand involved a total pledged investment of about US$250 million.Economic ImpactHowever modest these investment totals from a national perspective, theirregional impact has been substantial in three areas. First, the rising pace ofcapital construction and overall domestic and foreign investment has stimulateda rapid rise in the value of industrial output (GVIO). The trend was most markedin Shenzhen which experienced an average annual increase in industrial out-put of 56.4 per cent between 1979 and 1983, and 100 per cent between 1983and 1984 with foreign en terprises and Sino-foreign join t ventures accountingfor53per cent of tota l outpu t value in 1983.54Though no complete breakdownis available forZhuhai's industrial output the total of agricultural and industrialoutput (GVAIO) manifested substantial growth (See Table7).A secondary resultwas the steady rise in local financial revenues which in turn were fed back intolocal development programmes.

Table 8Local Financial Revenue(million yuan)1979 1980 1981 1982 1983 1984

She nzhen SEZ 35 55 118 163 296 512Zh uh aiSE Z 38.38 - 63 148

Sources: Beijing Review No. 13(Apri l1,1985),p. 24;Yangcheng Wanbao, June 2,1982; CaizhengWent Yan/iu,1984, No. 2, p.17;Zhonggu o Jingji Tequ Nlanjian (1983) (Hong Kong: ChinaSEZ Yearbook Publishing Co., 1983), pp. 670-671; Hong Kong Standard, July 21,1985,p. 2.

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developed technologies .59 Zhao Ziyang similarly observed, with someasperity, following his visit in early 1984 to Xiamen SEZ, that Special EconomicZones are not being developed for the purpose of providing jobs, nor shouldthey go solely after increases in their output value .60 Rather, as Ji Chongweidescribed the proper gu iding ideo logy of the zones, they should developexport oriented industrial structures... based on advanced technology, whichis the key both to export competitiveness and technology transfer.61Substantial concern has been voiced over the lagging export performanceof the zones, particularly Shenzhen. Not only have total imports substan tiallyoutrun exports (in 1983 on an order of five to one), but even local exports (thoseproducts handled by zone trade agencies) ran well beh ind imports from 1979to 1981,turning the corner only in 1982. Equally worrisome, the overall volumeof exports has grown far more slowly than the economy (Shenzhen's1983exporttotal ofUS 21 millionadisappointing1 per cent of the total Guangdong exportsin the same year). Moreover, exports have continued to be dominated by fruitand foodstuffs w ith very few industrial products. 62

Table 10Shenzhen SEZ Exports (local)1979 1980 1981 1982 1983 1984

Value of exp orts 9.42 11.24 n.a. 16.00 21.10 not app licableSources : Shenzhen Tequ Nlanj ian (1983), p. 428 ;Guoji Maoyi Wen ti No. 5 (September-October,1984) (CEA 85 005, 93).

To be sure, foreign exchange revenue from zone development andprocessing fees have redressed this d isappo inting picture som ewhat, and thedevelopment of zone industries is still in the embryonic phase, but the long-term problem of export competitiveness remains a crucial issue for zoneplanners, particularly with the imminent completion of the interior border controlline, and the planned shift to convertible zone currency when the flow ofShenzhen comm odities into the interior will experience restric tions at wh ichtime, as one commentator observed, the export problem will indeed becomean acute one. 63Another troublesomeareacentres on the extent and character of linkagesbetween the domestic and zone economies. The frequently cite d slogan, wa iyin nei lian , emphasizing import of foreign funds and technology and theirlinkage with domestic resources, posits significant ties between zoneandnon-

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zone econom ies, a pattern described both as a new pattern of productionexchange and a major accelerator of economic growth.64But it remains unclear precisely what forms these new ties will take andwhom they will benefit. Most accounts have stressed the reciprocal nature ofthe exchange, one such report noting that in the economic interchangebetween the SEZ and interior the SEZ will gain considerable economic benefit,while the interior will share from the preferential policy , and utilize advancedtechnologies imported into the SEZ. 65 One discussion of the likely patternof cooperation in the Pearl River delta region described a division of labourin which the hinterland would supply raw materials and intermediate processedgoods to the zone which would assemble finished products for export. Foreignexchange generated in this way would enable the SEZ to purchase moreadvanced technology some of which would be sold to the h interland to graduallyupgrade its production.66 This form of sub-contracting from the zones to thehinterland has in fact been a very important stimulus to local economic grow th,and is quite visible in sections of former Baoan county that now constitutesthe periphery of the Shenzhen SEZ. Similar putting-out arrangements have beenbuilt into a number of joint venture contracts signed by the Xiamen SEZ.Unfortunately for the development of zone-interiorties,the primacy of zonegrowth goals has meant that the procurement of needed raw materials andmanufactured goods from the domestic economy has been limited.Bureaucratic delays and supply and transport bottlenecks have meant that evenfor goods manufactured in China, sourcing has tended to beexternal.This hasbeen particularly true for key construc tion goods such as rolled s teel, cementandtimber, but applies to many finished products aswell.

Table 11Shenzhen SEZ: Construction Material Procurement (1983)

Product

Rolled Steel(tons)Cement(tons)Timber(cubic meters)Coal

TotalConsumed

150,000700,000

47,00091,700

PercentageProcuredDomesticallyunder plan(at stateprices)

2.3814.298.50

45.80

market(negotiatedprices)31.6234.37

4.5054.20

PercentageProducedin-Zone

4.20

PercentageImported

66.0047.1487.00

Source: Beijing Review No. 1 (January 7, 1985), p. 36

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For the most part the SEZs and particularly Shenzhen have been majorbeneficiaries of these new forms of economic cooperation. In Shenzhen forexample, in 1983, some 456 domestic joint ventures were in operation, witha total investment of 649 million yuan, one-third of the total investment up tothat point, with a 1982 output of over 100 million yuan (27.7 per cent of 1982GVIO).67 These ties involved linkages with firms attached to seventeenministries and bureaus at the central level, twenty provinces and cities andeighty prefectures and counties. The contribution of domestic enterprises tothe SEZs in some areas such as electronics has been particularly marked.Starting virtually from scratch, Shenzhen has built a substantial electronicsindustry, with sixty enterprises, 13,000 staff and workers, a total investmentof 180 million yuan, and output value in 1983 of 320 million yuan. Of the sixtyfactories, fifteen were set up with foreign participation , fifteen were set up bythe SEZ using its own resources, but thirty were set up as domestic jointventures in cooperation with other provinces and central agencies.68 Whateverthe exact distribution of benefits to domestic and zone partners in thesecooperative ventures, it is clear tha t domestic investment is being encouragedby the central government as a means for building up the zone industrial baseunder principles that are not entirely even-handed. As one recent articleacknowledged, the prim ary purpose of the SEZs is to attract foreign capitaland dom estic integration consequently was supp lemental in importance.69On the otherhand,domestic firms have real incentives to establish cooperativelinks through investment in the SEZs, inc luding access to advanced technologyand world market information, an opportunity to generate additional foreignexchange revenue, and a chance to achieve higher levels of profitab ility thanwould be possible through investment in theirownlocales. Whatever the relativepayoffs to the SEZs or their domestic partners, from the national perspectivethe shift of investment to the zones represents fulfilment of part of a broaderrestructuring reform, centering on enhancing the economic role of cities asfocal points fo r comm ercial and industrial development. To the extent that theresulting redeployment of manpower and funds results in more efficientproduction, and more rational new, economic linkages independent of ministry-based or territorially-based adm inistrative units, then the outcome is seen asdesirable.

The decision in 1984 to open fourteen coastal cities to foreign investment,and the creation of Economic and Technical Development Zones in thosecities represents a logical extension of these principles wh ich are at the heartof the enclave development strategy.70 Undoubtedly, political pressures fromthe coastal cities played a part in the broadening of the zone experiment, andno doubt cost considerations were influential in shifting its emphasis to anumber of more developed coastal c ities. But equally, the size of the Chineseeconomy, and the recogn ition that each of the newly designated op en cities

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will play a catalytic role in the regional development of its own zone-hinterlandwas the key to the decision to move beyond the limited four-zone enclaveexperiment. It equally explains the decision to enlarge the existing zones sothat they could more adequately fulfill th is strategic function . Gu Mu's acclama-tion of Dalian's role as the centre of-Northeast China, and Lianyungang'sstimulative impact on the cities along the Longhai Railroad seems to confirmthis view. In this sense, the SEZ experiment has been a success if only inhelping to rethink regional strategies of growth.In 1982, analyzing the strategic role of the SEZs, one commentatoridentified three perspectives on their functions. The first opposed them as treasonable , as breeding grounds for social evils . The second settingadvocated them as small, sealed-off export processing zones emphasizinglabour-intensive industrialization. The third and preferred option, called for the boldest use of the zones to turn them into hu bs of economic contact withthe outside world. If modernization is the premise on which the zones arefounded, the writer continued, the zones must not be ma inly used forprocessing and assem bly, which can be done wherever there is surpluslabour, nor must they be merely the backdoor of Hong Kong. Rather, theymust be backed by all of China, and become pivotal points for the transfor-mation of China's ties w ith theworld.71 The third option has clearly becomethe basis of China's policy towards the zones since Deng Xiaoping's1984visit.Implications and ProspectsThe development of the SEZs from 1979 through mid-1985 reveals a dynamicprocess characteristic of other areas of reform in which an initial period ofcautious experimentation gives way to accelerated and increasingly ambitiouschange. In the case of zone po licy, this mid-reform acceleration has grown ou tof the growing confidence and assertiveness of the reform coalition, strongpressure from development-oriented local governments, the profound influenceof the international business community on whose cooperation the entirestrategy is premised, and the logic of the reform itself.Yet, while the direction of change warrants confidence, the pace of changemust occasion concern. In further opening the coast to foreign investment,the Chinese are sidestepping signs of grow ing problems in such crucial areasas exports, foreign exchange and technology transfer, problems not likely tobe ameliorated by extending the scope of the policy. Further, by sanctioninga substantial expansion in the number of zones, the Chinese are unleasing newcom petitive pressures wh ich may further threaten the overall objectives of theprogramme.The Chinese deny that the wider open door on the coast will create

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problem s for the older as we ll as weaker, new zones, but the recent diffic ultie sof Malaysia's zone experiment sugge sts that the Chinese may be over-optimisticin their prognosis. Should protectionism increase, or should the South ChinaSea oil development slow do wn , mu ch of the basis on which the southern zonesare being p lanned wil l disappear. The recent reservations expresse d by Ch ina'sleadership about the future of the zones may well presage a period of slower,but perhaps ult imately, healthier zone development.

NOTES

1. Kawai Hiroko, Ch ina's Open Door Policy in High Gear, ChinaNewsletter, No. 53 (November-December 1984) pp. 11-17,Ta Kung Pao (Hong Kong) April 7, 1984, p. 12. Xinhua, January 17, 1985 [FBIS, January 23, 1985, K6]3. SEZs 'Not FaringWell ' , South China Morning Post,September 23, 1984.4 Fa r EasternEconomic Review, December20,1984,pp. 99-104; Rea ssessing the SEZ Policy.Changes in the Open Door, The NinetiesMonthly, No. 186 (July 1985), pp. 50 62.5. Xu Dixin, Ch ina's SEZs, Beijing ReviewVol. 24, No. 12 (March 23, 1984), pp. 14-21.6 Liaowang, No. 24 (June 11 , 1984), p. 15.7 Zhongguo Jmg/i Tequ Nianpan (1983) (Almanac of China's SEZs) (Hong Kon g, 1983), p 272.8. Beiiing Review,No 50 (December 14, 1981), p. 8; China s Foreign Trade (Ap ril 1982), p. 99. Chen Chuankeng, Problem s In the Development and Con struction of the Shantou SEZ, RidaiDili (Tro pical Geograph y), Vol 4, No. 1 (March 1984), p. 49-56, in China Report Economic Affairs(CREA.84.092, pp. 97-106);Jmgu Tequ Nianpan (1983), pp 272-273.10. Wen Wei Po (Hong Kong) February 1, 1983, p 1, March 20, 1984, Shantou Ribao, June 16,1983,CflE4:83:388, 5911. Edith Terry, Fujian 's Special Economic Zone s, China Business Review,Vol. 7, No. 5(September-October 1980).

12. Beijing Review,No 50 (December 14,1981);ZhongquoJingp Nlan/ian(1983) (Almanac of China'sEconomy) Section V, pp. 91-93.13. Asian W all Street Journal, April 13, 1982;Liaowang, No. 24 (June 11, 1984), pp. 14-15.14. Changes in Xiamen's Zon e, Business China,November 14, 1984, p 16315. X iamen Jingii Tequ Touzi Zhi Nan (Guide to Investment in Xiamen SEZ) (Xiamen, November15, 1984),Xiamen R ibao, July 30, 1985, p. 1.16 Zhuhai Jmgu Tequ TouziZhi Nan (Guide to Investment in Zhuhal SEZ) (Zhuhai: Zhuhai SEZDevelopment Co., 1983).17. Asian WallStreet Journal, July 8,1982, pp,1and 5,Nanfang Ribao, July 27,1983, p.1;Officeof Administration of Zhuhai SEZ (comp), An Open Coastal City-Zhuhai (October 1984).18. Asian Wall Street Journal,March 27, 1984.19. Interview, Hong Kon g, December 6,198 4; see also Tim Williams , FOCUBon Zhuhai, ChinaBusinessReview, Vol 11, No. 6 (November-Decem ber 1984), pp. 57-5920. Shenzhen SEZ Econom ic Development Corp (ed.),Investmen t Guide for Shenzhen SEZ(HongKong:Wen Wei Po, 1982).21. Guo/I Maovi,No. 9 (September 27,1983), p. 5;Wen Wei Po(Hong Kong) September 11,1983,p. 2, Business China, September 29, 1982, pp. 39-40.22 China Market,August 1984, pp 20-22;Zhongguo X inwenShe, August 15,1984[FBIS,August16,1984, p. 2]23 David K.Y. Ch u, The Costs of the Four SEZs to Ch ina, Part II, Econom ic Reporter (English)June 1982, p. 9.24. Chen, Prob lems in the Development and Co nstruc tion of the Shantou StZZ, RidaiDili,p. 98.25. Zhongguo Jingii Tequ Nianiian(1983), p. 273.

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26 ibid27 Far Eastern Economic Review October 1, 1982, p 6328 Fullan Ribao, April 1, 198329 Ibid30 China Daily,June 5, 1984, January 21 , 198531 China Dally,January 21 , 1985, p 332 Nanfang Rlbao,February 1, 1983, Hsin Wan Pao (Hong Kong), September 2, 1984, p 133 Asian Wall StreetJournal July 8, 1982, pp 1 and 534 Renmin Rlbao,March 29, 1984, December 29, 198435 X inhua, August 26, 1984 [FBIS, August 28, 1980, L10]36 X inhua, January 17, 1985 [FBIS, January 23, 1985, K6]37 China Reconstructs July 1983, p 1038 AsianWall StreetJournal September 20, 1982, p 139 Asian Wall StreetJournal March 27, 198440 China Economic News, October 24, 1983, p 441 AsianWall StreetJournal January 18,1982 ,Hong KongStandard July 3,19 82, Tim W illiamsand Robert Brill iant, Shenzhen Status Report, China Business Review,March Apr il 1984, pp 101442 X inhua September 19,1984[FBIS,September 25,1984, K6], Madelyn C Ross, Zhuh al's Hong

Kong Connection, China Business Review,Volume 11, No 6 (Novem ber-Decem ber 1984), pp 39 4043 These expenditures appear to require central author isation with some partial excep tions In1985, central infrastructural expenditures totalling US$750 million were authorised in the first half ofthe year See South China Morning Post, July 29, 1985, p 644 Asian Wall Street Journal, September 20,1982, Business China, September 29,198 2, p 14045 Liao Wang, No 16 (Ap ril 16, 1984), p 2546 X inhua January 17, 1985 [FBIS, January 23, 1985, K8]47 Ibid K948 Renmin Ribao, March 29, 1984, p 549 Renmin Ribao,March 29, 1984, p 5, Economic Reporter, February 20, 1984, p 2050 Zhongguo Jmgji TequNian/ian (1984) (Hong K ong China SE2 Yearbook P ublishing C o , 1985),pp 267-26851 Beijing Review,No 13 (Ap ril 1, 1965), p 2452 China Daily,Ap ril 17, 1984, p 153 Radio Guangzhou, January 17,1984 CREA84010,83),X inhua,April 25,1984[FBIS,May 4,1984]54 China Economic News, February 20, 1984, p 755 China Reconstructs, Vo l 33, No 9 (Septemb er 1984), p 1556 Beijing Review, No 50 (December 17, 1984)57 Guo/I Maoyi Wentl, No 5 (September October 1984) in China Economic Affairs (CEA 85 005,P 94)58 Ibid, p 91,Zhongguo X mwen She, April 1, 1984 [FBIS, April 3, 1984, p 2 ]59 Renmin Ribao,December 29, 1984 CEA85007,81)60 X inhua, January 20, 1984 [FBIS, February 1, 1984, K13]61 Ji Chongw ei, Theory and Practice of China's Policy of Opening to the Outside World , Jing/iYanjlu,No 11 (November 20, 1984) (CEA 85009,47)62 Shenzhen Tequbao, September 13,1984, p 2,Nanfang Ribao, July 14,1984, p 1 CEA84101,109), Quoll Maoyi Wentl, No 5 (Septem ber-Octob er 1984) CEA85 005, 94)63 Ibid, p 9464 Nanfang Ribao, February 6, 1984, p 465 Quon Maoyi Wentl,No 5 (September Octo ber 1984), CEA850 05, 88)66 Wen Wei Po (Hong Kong), January 8, 1985,[FBIS, January 14, 1985, W6]67 Shenzhen TequBao May 2,1983 CREA83 363,4546),Zhongguo XmwenShe June 29,1983(Cf lA83 367, 114 115)68 Radio Guangzhou, Augu st 24, 1984 CREA84077,56)69 Nanfang Rlbao, February 6, 1984, p 470 Ji, Theory and Practice, Jlng/i Yan/iu,p 5371 Ruan Ming , Estab lishme nt of the SEZs and Econom ic Strategy, Fujian Luntan,No 2 (Apri l20, 1982) CREA82259,47)

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