372 { China’s Quest
Establishment of the Shenzhen SEZ—by far the most successful of the
first four SEZs set up in 1979—was the result of an initiative by leaders of
Guangdong province. Early in 1979, Xi Zhongxun, then first secretary of
Guangdong (and father of Xi Jinping, who would become paramount leader
in 2012), proposed to Deng Xiaoping that the province be allowed to “exert its
superiority” via expanded cooperation with Hong Kong.^42 Guangdong should
be allowed to make its own foreign trade decisions and invite foreigners to
invest, Xi suggested. In November 1977, Deng had visited Bao’an district of
Guangdong, which bordered on Hong Kong, where he had been briefed by
local officials on the problem of illegal flight of thousands of young people
from Guangdong across the border to Hong Kong. Local officials had outlined
for Deng their plans for increased use of barbed wire and patrolling to deal
with this problem. This led Deng to suggest that a better method would be to
find a way of creating job opportunities on the Guangdong side of the border.
This in turn led to discussion of the possibility of Bao’an township becoming
an assembly point for agricultural produce being supplied to Hong Kong.
Years earlier, Bao’an had built a reservoir to catch and supply fresh water
to Hong Kong, and that arrangement had gone quite satisfactorily. The zone
discussed in 1977–1978 went far beyond the sale of Guangdong water or food-
stuffs to Hong Kong. Instead, it envisioned combining cheap Guangdong
labor and land with Hong Kong’s industrial manufacturing needs to produce
goods for global markets. Bao’an, now a western district of Shenzhen city,
was to operate along the lines of export processing zones in South Korea and
Taiwan. The Gu Mu–organized State Planning Commission and MOFERT
delegation to Hong Kong in 1978 (discussed earlier) further explored the idea
with Hong Kong leaders. After that delegation returned to Beijing, the State
Council established a Hong Kong and Macao Affairs Office to handle matters
related to expanding economic cooperation with those areas.^43
The proposal by Xi in January 1979 encapsulated these various proposals.
Finally, in July the Central Committee of the party and the State Council de-
cided to establish four special zones for export on a trial basis at Shenzhen,
Macao, and Shantou, all in Guangdong province, and Xiamen in Fujian. In
May 1980, they were renamed Special Economic Zones; addition of the word
“economic” was an attempt to reassure conservatives who feared that the sim-
ple term “special zones” might lead people to confuse the new zones with the
“special zones” under CCP control in the 1930s—and which had constituted
the spearhead for transformation of the country’s political-social system. Hu
Yaobang, then first secretary of the Central Party School, played a key role in
designing the policy framework for the SEZ. He was backed in this by Deng
Xiaoping and Marshal Ye Jianying, a native of Guangdong province.
There was strong opposition to the SEZ.^44 Chen Yun, economic specialist
and virtual coleader with Deng of the reform coalition in the early years after
1978, was a leading voice in opposition to the SEZ. Chen feared the SEZs