ABSTRACT
This chapter analyzes how the general factors influencing Chinese economic theory found expression in specific analyses of international trade and international finance. The reformers' declared objectives in the international sector were initially similar to their objectives in the countryside. They wished to make decisions about international trade based primarily on economic principles, like that of comparative advantage, rather than based on political principles, like self-reliance. The key international sector reform during 1978–1989 was the establishment of Special Economic Zones (SEZs). China's journey toward free market capitalism seems to have been less interrupted in the international sector than in the domestic sector in the years following the Tiananmen Square tragedy. Chinese leaders strongly supported the expansion of trade and foreign direct investment (FDI). Deng Xiaoping's lavish praise of Shenzhen and several other export-oriented cities in January 1992, helped trigger a leap in new FDI announcements from $12 billion in 1991 to $58 billion in 1992.
