chapter  1
17 Pages

Explaining China’s Special Economic Zones

WithGeorge T. Crane

In 1979 the People’s Republic of China initiated a new international economic policy under which it established four Special Economic Zones (SEZs)—three in Guangdong province (Shenzhen, Zhuhai, and Shantou) and one in Fujian province (Xiamen). The SEZs have spawned a cottage industry of sorts within China itself. Examinations of actual economic accomplishments of the SEZs reveal, on balance, a suboptimal performance. Early reports convey a certain optimism. It seemed as if the Shenzhen zone in particular was attracting foreign investment into a capital-starved economy at an impressive rate. Export Processing Zones (EPZ) are industrial estates offering customs privileges and financial incentives to attract foreign investment in export-oriented manufacturing enterprises. The first EPZ was established in Shannon, Ireland, in 1959. In 1965 Taiwan seized upon the EPZ model as an incremental step in the gradual liberalization of its international economic policy and became the first less developed territory to establish a zone.