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would undermine China’s state sector, which Chen, following Mao and Stalin,
took to be the core of China’s socialism. With market-based SEZ prices above
planned prices in “interior provinces,” enterprises would prefer to send mate-
rials to the SEZs rather than to “interior provinces” designated by the plan. In
this fashion, the SEZs would undermine sound planning. SEZs would also be
costly; where would the money come from? Would it not make more sense,
Chen Yun said, for central planners to operate on the whole chessboard of
China, allocating resources where it made the most sense, not privileging
some areas over others? Smuggling and capital flight into the privileged SEZs
would further bid up the cost of resources outside the Zones. The result would
undermine sound economic planning, which was essential to stable growth
in China.
The SEZs also violated the teachings of Marx and Lenin; China’s workers
would be exploited, just as Marx and Lenin said. Foreign imperialist intel-
ligence agencies would use the zones to spy on China and undermine its
socialist system. Bad things would come into China via the SEZs: corruption,
organized crime, drugs, pornography, and prostitution. China had once be-
fore thrown out such imperialist decadence, while “cleaning house” in the
early 1950s. Such “bourgeois filth” should not be allowed back in. The SEZs
were reminiscent of the treaty ports imposed on China during its Century
of National Humiliation. After wiping out those treaty ports, did China now
want to reestablish them where arrogant and rich Westerners could again run
wild and boss around Chinese on China’s territory? Was this why the Chinese
Communist Party had made the revolution? Such were the questions Chen
Yun and other opponents of the SEZ asked.
These were potent arguments in the context of the late 1970s and early
1980s. Eventually, they lost out to the reformist’s argument that China was
poor and backward, and simply needed to earn more foreign exchange to
import advanced machinery and equipment. On this basis the reformers
argued: Why not try markets and cooperation with Hong Kong and foreign
capitalists on an experimental basis, in an enclave literally fenced off from
the rest of China and under the supervision of the PRC and the Chinese
Communist Party?
Rules for the operation of the Guangdong SEZs were promulgated in
August 1980.^45 Hong Kong and foreign businesses that set up factories in
Shenzhen were to operate their businesses “according to their own business
requirements.” They could operate on a profit-seeking, market basis outside
China’s economic plan. They were required to hire workers via a labor service
office set up by the Guangdong government, but could pay and otherwise
reward those workers, and fire them, according to procedures spelled out in
a contact. Basically, this meant the businesses would operate on a capitalist
basis, just as they would in Hong Kong. Chinese enterprises were permitted
to enter into joint ventures with foreign firms in the SEZs, and foreign firms