Shenzhen, the busy city pictured above, is located in one of China’s special economic zones (SEZs). How are SEZs part of China’s change from a command economy to a mixed economy?

A Chinese Special Economic Zone is a place in China where the Beijing government allows foreign trade and investment. The government also does not interfere in the activities, production and trade of the companies.  Therefore, these zones are capitalist zones within a communist country.

The first four zones were established in 1979: Xiamen, Shenzhen, Zhuhai and Shantou. The zones soon experienced enormous population growth. Due to its success, the government decided in 1984 to establish another 14 new zones, open capitalist cities.

The island of Hainan was added to the four existing SEZs in 1988 and the Pudong district of the port city of Shanghai in 1990. In addition, 23 large, mostly provincial capitals received similar economic freedoms.

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