China opened its doors to the outside world in the late 1970s. Then, a key problem facing China was how to grasp opportunities to join the world's economic development trend and boost the country's economy. On August 26, 1980, the Standing Committee of the Fifth National People's Congress ratified the establishment of four special economic zones in Shenzhen, Zhuhai and Shantou (Guangdong Province) and Xiamen (Fujian Province), starting an epoch-making undertaking. This great initiative embodies the realization of a historic leap in China's socialist construction. In the following years, the special economic zones have served as an experimental field of China's reform program, a window on the country's opening to the outside world and an engine to drive and lead the development of inland areas.

This year marks the 20th anniversary of the establishment of the Shenzhen SEZ. Over the past two decades, this former border town with less than 30,000 residents has initially grown into a modern city that covers 2,020 square km and has a population of 4 million.

Superior Comprehensive Strength 

According to Shenzhen Mayor Yu Youjun, the city currently ranks among the leaders of the country's large and medium-sized cities in terms of comprehensive economic strength. From 1980 to 1999, the annual growth rate of Shenzhen's GDP and local budgeted revenue reached 31.2 percent and 41.8 percent respectively. In 1999, the city's annual GDP totaled 143.6 billion yuan, ranking sixth among major cities in the country, and local per capita GDP amounted to 35,908 yuan, coming first in China. The value of local industrial output reached 202.5 billion yuan (calculated at the current price), ranking fourth in the country; and local budgeted revenue was 18.5 billion yuan, placing it third in the country.

In the first half of this year, Shenzhen's economy maintained the momentum of rapid growth. Its GDP in the first six months totaled 69.8 billion yuan, up 14.2 percent over the same period last year; export volume reached US$15.513 billion, up 26 percent; and investments in fixed assets totaled 23.69 billion yuan, up 13.8 percent.

Keeping pace with the fast expansion of aggregate economic volume, Shenzhen's economic structure has also been constantly optimized. The proportion of primary, secondary and tertiary industries to the general industrial composition is 1.2 percent, 50.5 percent and 48.3 percent, which approaches that of modern metropolises in developed countries. Three pillar industries - high-tech, finance and materials distribution - have initially taken shape. At the end of 1999, savings deposits and loans of the city's various financial institutions totaled 255.9 billion yuan and 184.8 billion yuan respectively. The city has entered the front ranks among Chinese cities in terms of financial business volume, quality of financial assets and the economic returns of financial institutions. In the effort to turn Shenzhen into a materials distribution center, the annual volume of freight and container handling capacity of the local port has respectively reached 46.63 million tons and 2.986 million TEUs, ranking it second in China and 11th in the world. Shenzhen's airport ranks fourth in the country, with an annual passenger transportation volume of 5.25 million people. Shenzhen's economic development has initially achieved a virtuous circle featuring the mutual promotion of the aggregate economic volume, speed, structure and efficiency.

Shenzhen rises to the sky.CHEN XUESI 

The Shenzhen Bus Station 20 years ago.WU MING 

An 'Experimental Field' and a 'Window' 

Shenzhen has given full play to the special economic zones' expected role of an "experimental field" of reform and a "window" on opening-up, taking the lead in China in pioneering the initial establishment of a socialist market economic structure.

Focusing on the reform of State-owned enterprises (SOEs), Shenzhen has pushed forward the establishment of a modern enterprise system and created the three-level State-owned assets management and operation system, guaranteeing the security and appreciation of State-owned assets. In the meantime, on the basis of bold exploitation of various forms for materializing public ownership, an economy of diversified forms of ownership is flourishing in Shenzhen.

Strategic restructuring of SOEs is actively being undertaken in Shenzhen following the principle of "improving the management of large enterprises while relaxing control over small ones". Benefiting from efforts made to perfect the corporate system and reform the administration of SOE cadres, a complete set of systems involving stimulation, competition, responsibility, supervision and restriction, which adapt to a market economic structure, have gradually been established in the SOEs in Shenzhen. Their major economic performance indices, such as the return on gross assets, profit on net assets, profitable range, sales profit ratio and rate of return, have therefore maintained the national advanced level for several years running since 1995.

Meanwhile, Shenzhen has taken practical measures to quicken the transformation of government functions and build a market environment featuring fair competition. It led the country in reforming the administrative examination and approval system, greatly simplifying related procedures and standardizing necessary conducts. The reform of port administration, social security, fiscal and taxation, labor and other supporting systems has been intensified. Various reforms have jointly promoted the establishment of a modern market system that conforms with international practices and the framework of a socialist market economic structure.

A workshop at Shenzhen Science and Technology Co., Ltd.CHEN XUESI

Migrant workers in the early 1980s.CHEN XUESI  

At the forefront of China's reform and opening-up drive, Shenzhen has energetically introduced foreign capital, as well as advanced technologies and management expertise. Relying on consistent innovation and active participation in international competition and cooperation, it has initially set up an export-oriented economic pattern on the basis of an all-round opening to the outside world. The opening of Shenzhen's economy is higher than the average level of large and medium-sized Chinese cities, achieving a complete transition from an isolated economy to an advanced export-oriented economy. The actual foreign capital used by Shenzhen over the past 20 years has exceeded US$20 billion, of which US$12.3 billion or two-thirds of the total was used in the past five years. Foreign investors from 67 countries and regions around the world, including 76 on Fortune magazine's Top 500 List, have set up more than 14,000 foreign-funded enterprises in Shenzhen. Shenzhen's total imports and exports were valued at US$50.4 billion in 1999. Its export volume, amounting to US$28.2 billion and accounting for one-seventh of the country's total last year, has topped China's major cities for seven successive years. Shenzhen has become a major import and export base for China.

The Luohu Port Building.CHEN XUESI

Shenzhen was the first city in the country to set up a stock exchange.WU MING

Foreigners in the Folk Culture Park.WU MING

Yantian Port.WU MING

Development of High-Tech Industry

Since the beginning of the 1990s, Shenzhen has taken the initiative in adapting itself to the approaching of a knowledge economy. It has seized the opportunities resulting from swift technological development and profound economic restructuring around the world and has made great efforts to develop a high-tech industry with the information technology as a key part. The output value of the city's high-tech industry reached 81.979 billion yuan in 1999, making up 40.5 percent of the total industrial output value. The high-tech industry has recorded the highest growth and become a principal driving force of Shenzhen's economy.

The development of Shenzhen's high-tech industry has the following major characteristics:

Children - Hope of Shenzhen's future.WU MING

- Swift development of pillar industries and core products. Electronics and information, biological engineering, new materials and mechatronic industries have all developed rapidly. The major products of the electronics and information industry, in particular, have reached advanced national levels in terms of both output and technical level. Shenzhen is currently a major production base of computer and telecommunications equipment in China. The output value of the electronics and information industry totaled 74 billion yuan in 1999, making up 90.4 percent of the entire high-tech industry.

- Growing proportion of products with independent intellectual property rights. A number of mainline enterprises with independent intellectual property rights have emerged in Shenzhen's high-tech sector. They have produced a batch of new and high-tech products such as program-controlled exchanges with a switching capacity of 10,000 lines, SDH transmission system, GSM system, cellular phones, high-property batteries, organic silicon materials and gamma scalpel. Last year, the output value of high-tech products with independent intellectual property rights amounted to 38.336 billion yuan, accounting for 46.76 percent of the total of the high-tech industry.

- Rapid expansion of non-public enterprises. About 10 percent of Shenzhen's technology-based enterprises are set up by Chinese experts, scholars or students returned from abroad. In 1999, the non-public sector contributed 22 percent of the total output value of the city's high-tech industry.

- Initial formation of an enterprise-based research and development (R&D) system. Currently, Shenzhen has a total of 727 technological development institutions, with 679, or 93.4 percent, affiliated with various enterprises. These enterprises employ 90 percent of the city's R&D personnel and provide 90 percent of the total R&D funds.

Geographical location of Shenzhen. 

- Constant innovations in enterprise operating mechanism. Shenzhen has boldly carried out reforms to diversify enterprise equity, promote the transformation of intellectual property rights into equity, and make production factors profitable. It has established a series of systems encouraging innovation, including the technical equity system, technical employee shareholder system, technical innovation award system and the annual wage system for SOE managers. As a result, an enterprise operating mechanism favorable to the development of the high-tech industry has initially taken shape.

In the development of the high-tech industry, Shenzhen has effectively taken its cue from the government. In 1998, the city promulgated the Rules on Promoting the Development of the High-Tech Industry, which was revised in September 1999. The formulation and completion of related regulations has helped form a legal environment, facilitating the protection of intellectual property rights.

Shenzhen has attached much importance to the establishment of a venture investment system, expecting to employ more market-oriented financial means to support the development of high-tech enterprises. The High-Tech Industry Investment Service Co. was set up in Shenzhen as early as 1994. Last year, Shenzhen established two venture investment companies at home and abroad, in order to encourage local enterprises to enthusiastically introduce international venture capital.

The hammer used in Shenzhen's first auction of land-use rights.

In light of integrating introduction with self-development, Shenzhen has constantly increased its reserve of technology and talent, which is needed for the development of the high-tech industry. By cooperating with Tsinghua University, Peking University, Hong Kong Scientific and Technological University and Harbin Polytechnical University, the Shenzhen Tsinghua Research Institute, Shenzhen-Hong Kong Manufacturing, Teaching and Research Base and Shenzhen International Technological Innovation Institute have been established. Moreover, Shenzhen also has established a virtual university park in conjunction with 33 well-known Chinese and foreign universities.

Benefiting from a mass of high-tech enterprises, research and development centers and fruitful cooperation with famous universities and colleges, Shenzhen currently boasts a better comprehensive environment to attract high-tech investment projects and develop high-tech industries.

A Modern Metropolis 

In the beginning, Shenzhen was designed as "a border city integrating the development of industry and agriculture, with emphasis on the former". In the mid-1980s, the General Program of the Shenzhen Special Economic Zone was created, drawing up the development blueprint and objectives and planning for the city between 1986 and 2000. In 1995, the general program was ratified by the State Council after overall revision. The revised program clearly specified the functions and development objectives of the city, putting forward the plan to turn Shenzhen into a high-tech industrial base, a regional financial, information, trade, transportation center and a tourist resort. According to the ambitious development blueprint, Shenzhen will eventually become a modern international metropolis.

Over the past 20 years Shenzhen's total investment in fixed assets approached 292.2 billion yuan, with more than 30 percent going to urban infrastructure construction. The last five years, in particular, have witnessed the most massive investment in fixed assets, which amounted to 204.5 billion yuan, or 66.8 percent of the total over the past 20 years. With total infrastructure construction input of 41.2 billion yuan over the past five years, Shenzhen comes first among major Chinese cities in investment density. To date, Shenzhen has built up a complete urban infrastructure that can satisfy the basic needs of local socioeconomic development for the next 10 years. In the meantime, it has initially acquired the functions of a regional economic center. Last year, Shenzhen was awarded the Prize for City Planning by the 20th World Architects' Congress. It was the first Asian city to win the honor.

Shenzhen recently set the objective of leading the country in realizing socialist modernization and becoming a showcase of socialist cities with Chinese characteristics. Specifically, the city is expected to basically achieve modernization by 2005, reach the level of moderately developed nations by 2010 and catch up with the level of developed countries around 2030.

From an "experimental field" of reform and a "window" on opening-up to a forerunner of initially realizing modernization and a showcase of socialist cities with Chinese characteristics, Shenzhen is fulfilling its historic leap.

 Shennan Boulevard - a major artery in Shenzhen.WU MING