Pearl River Delta Economic Zone - History

History

In 1979, the Central Government of the People's Republic of China announced that Guangdong Province would be allowed to follow less restrictive economic policies and would be permitted to set up three Special Economic Zones (SEZs), including two in the Pearl River Delta, Shenzhen and Zhuhai. Preferential policies in the SEZs included a number of features designed to attract foreign investment, such as a 15 percent tax rate, tax holidays of up to five years, and the ability to repatriate corporate profits and to repatriate capital investments after a contracted period. They also included duty free treatment of imports of raw materials and intermediate goods destined for exported products, as well as exemption from export taxes.

Guangdong's early experience with reform allowed a market-oriented culture to develop earlier than in other places in the Chinese Mainland. Starting in 1979, Guangdong Province and the SEZs were given greater political and economic autonomy than other jurisdictions in the Chinese Mainland. Areas of greater autonomy included finance and fiscal matters, foreign trade and investment, commerce and distribution, allocation of materials and resources, labour, and prices. In 1988, Guangdong was granted expanded powers to set its own economic direction, and was designated a 'comprehensive economic reform area'. This gave rise to the creation of the Shenzhen Stock Exchange, as well as development of a land lease system and some privatisation of housing. Shenzhen became a leader in terms of foreign exchange markets, operation of foreign banks, land reforms, and stock market development.

The economic development of the Pearl River Delta Economic Zone took off after the reform programme was instituted. The region's GDP grew from just over US$8 billion in 1980 to more than US$89 billion in 2000 and nearly US$221.2 billion in 2005. During that period, the average real rate of GDP growth in the Pearl River Delta Economic Zone exceeded 16 percent, well above the People's Republic of China national figure of 9.8 percent. Since the onset of China's reform programme, the Pearl River Delta Economic Zone has been the fastest growing portion of the fastest growing province in the fastest growing large economy in the world. In the process, a region that was once largely agricultural has emerged as a manufacturing platform of global importance. It is a world leader in the production of electronic goods, electrical products, electrical and electronic components, watches and clocks, toys, garments and textiles, plastic products, and a range of other goods.

For the first ten years of China's economic reform process, the internationalisation of the Chinese economy was largely a Pearl River Delta phenomenon, with the export-oriented production of foreign-invested entities based in Shenzhen, Dongguan, and Guangzhou leading the way. In recent years, the development environment for indigenous private-owned enterprises has improved dramatically in the Pearl River Delta Economic Zone and local firms are now playing an ever-growing role in the region's economy. In this regard, Shenzhen, Dongguan, Foshan, and other parts of the Pearl River Delta Economic Zone have been at the forefront of private sector development in China. .