Bulletin Number Five 1985

areas where infrastructure and supporting facilities are readily available, together with a good supply of labour and an easy access to adjacent ports and/or airports; the other view stresses on the advantages of locating these zones in more remote or peripheral areas in the hope of promoting or stimulating regional development, but with the understanding that such decision would require heavy expenditure on the construction of roads, ports and various other facilities. In the case of China, an additional consideration which would possibly favour the latter viewpoint arises from the belief that the SEZs represent a 'foreign' system in the country and it is thought to be undesirable to have them located near existing centres of population concentration. A more remote or peripheral location would allow the government to better control movement in and out of the zones and minimize the adverse spillover effect of zone development, if any, on the social and economic life of neighbouring regions. In the history of development of China's special economic zones, there has also been some controversy over the choice of a suitable site for the establishment of these zones. In early 1979 ， Wu Nansheng, then Deputy Governor of Guangdong Province and later the Chairman of the Guangdong Provincial Administration of Special Economic Zones, favoured the setting up of an export-processing-type establishment in Shantou on the grounds that it has historically been an important trading port with a sound economic base and good labour supply. It was thought that Shantou would be a better location than Shenzhen which though possessing abundant land for development is extremely short in labour supply and infrastructural provisions. The final decision, however, was to designate several locations with different backgrounds as SEZs simultaneously so that a variety of models could be tested. Ultimately four sites were selected which could be grouped into two broad categories: (1) Shenzhen and Zhuhai which were basically frontier settlements with fairly weak economic base and poor infrastructural provisions but have the locational advantage of geographic proximity to Hong Kong and Macau; and (2) Shantou and Xiamen which were historically coastal ports with a sound industrial/agricultural structure and an abundant supply of labour but whose development has been suffocated by the Chinese policy of closure in the pre-1976 era. With each of these four SEZs having different geographical endowment and history of development, it is envisaged that they will play quite different roles in the process of modernization in China and each can thus be viewed as a submodel under the general umbrella of the SEZ model. An attempt will, therefore, be made to outline what the author perceives to be the specialities of each of these zones. The Shenzhen SEZ, which includes the Shekou Industrial District of the China Merchants Steam Navigation Co. Ltd. (H.K.) and the Shahe Industrial District run by the Overseas Chinese Enterprise Company, is characterized by its large spatial extent and comprehensiveness of development. With an area of 327.5 sq. km. relatively distant from China's major urban agglomerations but adjacent to one of the world's most thriving ports —Hong Kong, Shenzhen is destined to serve as an experimental station both to observe and to test how capitalism works. Its locational proximity to Hong Kong means that Western systems of production and management could be imported across the border easily through investments of all kinds. This is reflected by the fact that the bulk of the investment in Shenzhen is still coming through Hong Kong. As an experimental station, Shenzhen has initiated and tested a number of innovative measures which have been transmitted later to other parts of China and has thus become the model for the rest of the country. One obvious example is the introduction of contract labour in the SEZ enterprises whereby workers are hired on contractual terms which give the entrepreneurs the right to take disciplinary measures against workers and to dismiss those who have violated regulations. This has resulted in the breaking of the 'iron rice-bowl, and has helped to improve labour productivity and labour disciplines as well as facilitated more efficient management of enterprises. Such practice initiated in Shenzhen has now diffused to many parts of the country. Other pioneering features of the Shenzhen SEZ include the tender system in construction works and the home-purchase scheme for workers. Previously, contracts for construction works were awarded to local construction teams irrespective of their cost- effectiveness. Shenzhen was the first to experiment with the practice of inviting tenders from construction companies/teams all over the country and to award the job to the most cost-effective team ， resulting in increasing efficiency and reduction in cost. The home-purchase scheme for workers is a move towards the commercialization of the housing policy by treating houses as commodities and thus representing a reversion of the original practice of heavy subsidy by the government on housing. This has triggered off the idea that workers should receive higher wages and less subsidies. Various other measures that have been successful implemented in the Shenzhen SEZ, though not 34 RECENT DEVELOPMENTS