China’s leadership set a new national direction at the Third Plenum of the 11th Communist Party Central Committee. It shifted the Party’s main focus toward economic modernization and endorsed policies often summarized as “reform and opening up,” creating the political mandate for experiments with markets and foreign trade.
China adopted a national law allowing Chinese-foreign equity joint ventures. This gave foreign firms a clearer legal framework for investing and operating in China, which became essential for later Special Economic Zone (SEZ) policies that depended on outside capital, technology, and management know-how.
China’s central authorities approved “special policies and flexible measures” for Guangdong and Fujian to attract foreign economic activity. These decisions set the stage for creating designated places where taxes, trade rules, and approvals could be more flexible than in the rest of the planned economy.
China approved the establishment of SEZs in Shenzhen, Zhuhai, Shantou, and Xiamen. These zones were designed as controlled experiments where foreign investment, export production, and market-style incentives could be tested before expanding reforms nationwide.
Regulations for the Shenzhen SEZ were approved, providing a clearer rulebook for operating the zone and attracting investors. Putting enforceable rules in place mattered because SEZs needed predictable procedures—such as permits, taxes, and business conditions—to persuade firms to take risks on new ventures.
China expanded opening-up beyond the original SEZs by designating 14 coastal cities as “open cities.” This spread preferential policies and foreign-trade experimentation along much more of the coastline, reducing pressure on SEZs to carry the entire opening-up effort alone.
The Communist Party adopted a major decision on reforming the economic system, marking a shift toward using market mechanisms alongside planning. This helped legitimize reforms that SEZs were already testing, and it gave political cover for deeper changes in prices, enterprise management, and trade.
China began opening larger coastal regions—such as major river deltas and key peninsulas—as “open economic zones.” This scaled up the SEZ idea from individual cities to broader regional development, linking manufacturing, ports, and infrastructure to export-led growth.
China’s 1986–1990 national plan emphasized reform and modernization goals, including expanding foreign trade and using foreign investment and technology. It also highlighted faster development on the coast, reinforcing SEZs and coastal-opening policies as national economic strategy rather than temporary experiments.
China amended its Constitution to allow the transfer of land-use rights “according to law.” This was a practical step toward real estate and industrial development in SEZs and other open areas, because it supported leasing and development arrangements without changing state or collective land ownership.
China created Hainan Province and designated it as an SEZ at the same time. This expanded the SEZ model to an entire province, giving policymakers a larger test area for trade, investment, and administrative reforms than the earlier city-based zones.
China’s central government announced the development and opening-up of Shanghai’s Pudong area. This decision signaled that opening-up was moving into major national industrial and financial centers, not only border-adjacent zones like Shenzhen, and it created a new platform for investment-led urban development.
Deng toured southern China and used the success of places like Shenzhen to argue for continuing and deepening reform. The tour helped reverse a slowdown in reform after 1989 by strengthening political support for SEZs, foreign investment, and broader market-oriented policies.
As Deng’s Southern Tour concluded, its political message had reinforced the central role of SEZs and coastal opening in China’s development strategy. By this point, SEZ-style policies had moved from small pilot zones to wider regional opening, setting the stage for faster nationwide integration into global trade and investment flows in the 1990s.
China's Special Economic Zones and Opening Up (1978-1992)