Popular economic reforms ideas that ensued in China, Deng Xiaoping referred to Karl Marx and his theories, which predicted that nations need to undergo urbanization and a stage of capitalism for a natural socialist transition.
[2]: 55 Various Chinese leaders visited Shannon Free Zone, including Jiang Zemin (in 1980) and later Zhu Rongji, Wen Jiabao, and Xi Jinping.
[2]: 55 In the late 1970s, and especially at the 3rd plenary session of the 11th Central Committee of the Chinese Communist Party in December 1978, the Chinese government initiated its policy of reform and opening up, as a response to the failure of Maoist economic policy to produce economic growth which would allow China to be competitive against not only industrialized nations of the west but also rising regional powers: Japan, Korea, Singapore, Taiwan, and Hong Kong.
For these, Chinese Paramount leader Deng Xiaoping coined the name "special zones"[5][6] and characterized them as experiments in the mold of the pre-1949 Communist base areas.
[10]: 50 These initial SEZs successfully attracted foreign capital, primarily from ethnic Chinese in Taiwan, Hong Kong, and Southeast Asia.
[10]: 51 Researcher Zongyuan Zoe Liu writes that "[t]he success of these cities as 'red' treaty ports represented another step in China's overall reform and opening-up plan while legitimizing the leadership of the CPC over the Chinese state and people.
"[10]: 51 Primarily geared to exporting processed goods, the five SEZs are foreign trade-oriented areas that integrate science, industry and innovation with trade.
[citation needed] Since its founding in 1992, the Shanghai Pudong New Area has made progress in both absorbing foreign capital and accelerating the economic development of the Yangtze River valley.
In addition, the state has given Shanghai permission to set up a stock exchange, expand its examination and approval authority over investments and allow foreign-funded banks to engage in RMB business.
[15] In 1984, China opened 14 other coastal cities to overseas investment (listed from north to south): Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai.
[16][17] Then, beginning in 1985, the central government expanded the coastal area by establishing the following open economic zones (listed from north to south): the Liaodong Peninsula, Hebei Province (which surrounds Beijing and Tianjin; see Jing-Jin-Ji), the Shandong Peninsula, Yangtze River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in southern Fujian Province, the Pearl River Delta, and Guangxi Zhuang Autonomous Region.
In 1990, the Chinese government decided to open the Pudong New Area in Shanghai to overseas investment, as well as more cities in the Yang Zi River Valley.
[19] As seen by the table below, the ten years of economic reform from 1980 to 1990 increased population in Shenzhen by six-fold, GDP by around sixty-fold, and gross industrial output by two-hundredfold.
[21]: 114 From 1990 to 2018, Chinese enterprises established eleven SEZs in sub-Saharan Africa and the Middle East including: Nigeria (two), Zambia, Djibouti, Kenya, Mauritius, Mauritania, Egypt, Oman, and Algeria.
[23]: 55–56 The Sihanoukville Special Economic Zone began with a focus on manufacturing consumer goods with the goal of transitioning to producing machinery, photovoltaic materials, and chemicals.
[22]: 177 As Professor Dawn C. Murphy summarizes, these zones now "aim to transfer China's development successes to other countries, increase business opportunities for China manufacturing companies, avoid trade barriers by setting up zones in countries with preferential trade access to important markets, and create a positive business environment for Chinese small and medium-sized enterprises investing in these regions.
SEZs are estimated to have created over 30 million jobs, increased the income of participating farmers by 30%, and accelerated industrialization, agricultural modernization, and urbanization.
[26]: 66 A 2022 study in the American Economic Journal found that SEZs in China led to increased human capital investment with improved educational outcomes.
[18]: 37 In turn, private firms have benefitted from cheaper labour, a business-friendly environment, robust infrastructure, and China's large domestic market.
Others, like Gopalakrishnan, point out that "Left out of the picture are inequities in development, arable land loss, real estate speculation and labour violence", as well as significant transparency problems in bureaucracy.