October 2020 marked the 40th anniversary of the Shenzhen Special Economic Zone. For forty years, Shenzhen, China’s first special economic zone, experienced rapid growth and development. This is the first in a series of articles about Shenzhen and the Pearl River Delta.
When I first visited Shenzhen in 2006, I was not aware that it had a relatively short history as a city compared with Beijing, Shanghai and Guangzhou. However, over the next several years I learned how this fishing village in the Pearl River Delta had rapidly transformed and developed into one of China’s leading cities and metropolis. Each visit that I have made to Shenzhen over the past decade has made me realize that Shenzhen is China’s miracle city.
Shenzhen is a miracle city because it has experienced consistent economic growth and development for four decades. According to the Xinhua News Service, Shenzhen has experienced GDP growth for over 20.7% on average annually over the past 40 years with its GDP per capita starting at less than $1,000.00 and reaching $30,000 in 2020. There is no other city in the world today –East or West– that can rival Shenzhen’s success.
Shenzhen’s population has not stopped growing. For example, in 1959 when W.E.B. Du Bois, the distinguished African American scholar, toured China, Shenzhen’s population was a modest 8,000. However, by 1972, when US President Nixon visited China, Shenzhen’s population had more than tripled to around 27,000. By the beginning of the opening up and reform period in 1978, Shenzhen’s population had risen to around 48,000. When Shenzhen was declared China’s first Special Economic Zone, its population increased to approximately 59,000. In 2020, Shenzhen’s population leapt to approximately 13 million. However, some people believe that it is significantly more, approaching 15 million or more.
What is the genesis of Shenzhen’s miracle? Did it fall from the sky in the form of an ancient tablet? Answers to Shenzhen’s success can be found in the mind of Deng Xiaoping, China’s paramount leader. Deng was a great man of vision because it was under his leadership that an important series of economic reforms that modernized China’s economy and opened it up to foreign investment and trade. These reforms assisted in the revitalization of China’s domestic economy, which increased the demand for labor. Consequently, millions of migrants poured into various cities and towns, many of them along China’s southern coast where the new manufacturing and processing centers were based. Together these events marked the beginning of China’s great transformation.
Deng’s approach to opening up and reform were not overtly Marxist or Maoist inspired, but nor was it a repudiation of socialism. Instead, Deng drew inspiration from Chinese literature and folklore with some of the following idioms: “Truth is to be found by practice;” “seek truth from facts”; and “cross the river by feeling for stones.” Deng’s philosophy was based on concrete results that would improve the livelihood of people rather than abstract idealism that tickles one’s imagination. At its core, Deng’s approach was experiential and practical.
Shenzhen occupies a special place in China’s great transformation because it was selected as the first special economic zone. The Shenzhen Special Economic Zone (SEZ) was launched by the central government as an experiment with market economic reforms. These reforms opened up designated areas of China to foreign investment, international trade and technology transfers. These reforms also stimulated the growth of private enterprise and entrepreneurship, marking a drastic departure from the Mao era.
Seeking to attract foreign capital, special economic zones have different trade and business laws than other parts of China. For example, special economic zones offer various tax incentives, lower tariffs and other foreign business friendly policies. Understanding this dynamic is important to see why so many American corporations, like Apple and many other corporations, moved their manufacturing to China.
Spurred by Shenzhen’s success, four other special economic zones were launched for Hainan Island, Shantou, Xiamen and Zhuhai. The rapid success of these first experiments encouraged Beijing to expand these reforms to other parts of China. Thus, by 1984 an additional 14 coastal cities were opened to attract overseas investment. This group was designated “Open Coastal Cities” and included the following: 1) Dalian; 2) Qinhuangdao; 3) Tianjin; 4) Yantai; 5) Qingdao; 6) Lianyungang; 7) Nantong; 8) Shanghai; 9) Ningbo; 10) Wenzhou; 11) Fuzhou; 12) Guangzhou; 13) Zhanjiang; and 14) Beihai.
December 29, 1985 marked an important date in Chinese history because the Shenzhen International Trade Center was completed. At that time, the 50 story skyscraper was China’s tallest building. Keen observers noted that it was not the height of the skyscraper that was most impressive, but the speed by which it was constructed. One floor was completed an average of 4.8 days, a stunning achievement. The Shenzhen International Trade Center is just one remarkable example of what some people describe as Shenzhen speed, the rapid pace of development in this former inconspicuous fishing village.