In the latest of China's economic reforms, a top Chinese official has announced new plans to open four large industrialized regions to foreign investment and trade.
State Councilor Gu Mu yesterday called the move "the third step" in China's current open-door policy, following the success of China's limited experiments in four special economic zones and 14 cities along the Chinese coast.
The move underlines the speed with which China intends to end its financial and technological isolation, lasting since the departure of Soviet aid and technicians in the early 1960s, and to open the country up to substantial injections of western capital and technology.
Speaking to a congress of leading Chinese writers in Peking, Gu said the expansion of the open-door policy demonstrates that the idea is "making steady progress."
His announcement followed major reforms in the country's wage and price systems that have been in the works for many months. These reforms build on the success of monetary incentives and private enterprise schemes in the rural economy introduced four years ago.
Latent criticism of the open-door policy in China's bureaucratic and Communist Party ranks was addressed recently by the leading political organ, the People's Daily, which said, "No country would be so foolish as to reject external knowledge and technology, and shut out everything and start doing everything from the beginning."
The four geographic areas earmarked for liberalization are the Pearl River delta, the Yangtse River delta, the Shandong Peninsula, and the Liaodong Peninsula. All are relatively advanced industrial and trade centers and in a sense are really expansions of areas lying around some of the 14 coastal cities that Premier Zhao Ziyang named last April as free to offer special tax and trade benefits to foreign ventures.
Gu did not elaborate on what kind of tax privileges or customs regulations investors would enjoy in the four regions. To date, the incentives available to foreign business in the four special economic zones begun in 1980 -- Shenzhen, Xiamen, Shantou and Zhuhai -- have differed from those in the coastal cities. A few of the coastal cities are also offering "special technological zones" for very high technology investment with the best tax concessions and customs allowances in return.
Gu gave no clue as to how soon the areas would open up.
In an interview last month with a Hong Kong daily, Wen Wei Bao, Gu gave a more detailed picture of some of the problems connected with the open-door plan. He was asked whether the disparity between the open and closed cities would cause resentments.
"If our coastal cities develop quickly, the advanced technology can be transferred to the hinterland to support it. There will perhaps be some disparity between the pace of development in these two areas, but from a long-term point of view, this is advantageous for the state," he said.
Gu also promised that the confusion now resulting from the use of various currencies inside zones such as Shenzhen on the border with Hong Kong would soon be eradicated by the introduction this year of a special currency for use in the zones only.