A revolution that transforms the world’s second biggest economy
“The world has seen China’s accelerating reform and opening up, and its determination to carry it forward. China’s reforms will never stop, and its doors will only open ever wider.” — China’s President Xi Jinping (in his New Year Speech)
China’s opening up and reforms do not have an extensive history. The journey towards economic prosperity and development started only forty years ago, i.e. in the late 1970s, with a vow to push for economic development in both urban and rural areas of the world’s most populous country.
This process started, primarily, through Deng Xiaoping’s opening-up-to-the-world policies and the Sino-Foreign Equity Joint Ventures, adopted on 1 July 1979 at the second session of the 5th National People’s Congress, under which they permitted, inter alia, foreign capital and allowed Western companies to enter China; thus, diverting the landscape from traditional to dynamic and modern.
Last forty years of China remain unprecedented in world history as no other country could achieve what China did in the form of maximum growth through establishment of Special Economic Zones (SEZs).
China’s reforms and opening up through its SEZs are indeed a revolution. According to the definition of SEZs, they are characterized by a defined geographical area, local management, unique benefits and separate customs and administrative procedures. In 1980, first four SEZs were created in southeastern coastal China and consisted of what were then the small cities of Shenzhen, Zhuhai and Shantou in Guangdong province, and Xiamen (Amoy) in Fujian province.
These SEZs worked on the basis of comprehensive design and planning. A particular region and the type of SEZs complemented each other. SEZs were adequately provided with preferential policy and supporting facilities so as to attract investment. In this regard, prolonged tariff exemptions, better roads, supply of electricity and water, and flexibility of policies were ensured.
Besides, local governments were allowed to offer tax incentives to foreign investors and to develop their own infrastructure for which they need not seek the approval of the central government. Business enterprises have made most of their own investment, production and marketing decisions, and foreign ownership of such ventures has been legalized.
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