The zone is now operating industries in electronics, machinery, pharmaceutics, petrochemicals, building materials, food processing and textiles. They are gradually developing from labour-intensive industries into ones that are based on state-of-the-art technology.

Of the industrial projects completed in 1984, 11 percent belonged to these technology-intensive industries and the figure further increased in 1985. At the same time, the zone also began to orient the sales of its products abroad. The total sales of industrial goods in 1984 amounted to 1.1 billion yuan, 33 percent of which was exported. If import substitution was included, then the amount of goods sold abroad accounted for 48 percent. In the first nine months of 1985, the zone sold 1.3 billion yuan worth of industrial goods, 43 percent of which was sold abroad, and the figure was 57 percent if import substitution was included.

Shenzhen's agriculture is developing in the direction of commercial, specialized and technological farming. In order to keep up with the pace, a large production centre has been established for agriculture. Currently, the city's annual animal and fresh produce includes 10 million chickens; 300,000 hogs; 20,000 tons of milk; 20,000 tons of fresh-water fish; and 180,000 tons of vegetables.

Shenzhen also has recorded fairly large advances in commerce, foreign trade, communications, finance, tourism, catering service, culture, public health and education. In 1984 the city's GNP amounted to 2.3 billion yuan, averaging 3,700 yuan per capita; per-capita national income exceeded $1,000 in the same year. Compared with 1980, its GNP for 1985 was estimated to reach 2.9 billion yuan, a 7.4 times rise; its commodity retail sales reached 2.3 billion yuan, 11 times higher; its revenue hit 800 million yuan, 14 times greater; the city's foreign exchange earnings ran to $660 million.

From January to October last year, the city had signed with foreign businesses 879 contracts valued at $800 million, $240 million of which had been put to use, increasing 9.3 percent, 69.9 percent and 80.7 percent respectively over the same period of 1984. So there is no doubt that a sustained, stable and all-round economic growth has taken hold of the special zone.

- Improved living standards. In 1984, the farmers' annual income in Shenzhen averaged 1,700 yuan, and 80 percent of those farmers had built new houses. The monthly wages of factory and company employees also increased, their monthly wages now averaging 200 yuan - higher than most of those earned by workers in other parts of China, but lower than those in Hongkong. Wage hikes, however, were lower than that of labour productivity.

With better living standards and material well-being, the local people have also begun to enjoy a richer cultural life. A halt has been put to the exodus to Hong Kong, which occurred before the establishment of the special zone, and now more than 1,000 people have returned to settle down in Shenzhen.

Despite the achievements mentioned above, there exist many problems in the special zone.

To begin with, the products turned out by Shenzhen enterprises are not competitive enough on the international market, resulting in a foreign exchange imbalance within the industries themselves (although foreign exchange is balanced and in surplus when the city is considered as a whole).

To date, enterprise management has failed to keep pace with the rapidly developing economic zone. Poor and confusing management and operation of some enterprises has resulted in low financial returns. Because everything has moved at breakneck speed in the zone, economic legislation and regulations have not been fully enacted and there exist many legal loopholes. Therefore, economic crime is on the rise.

Reform is not conducted in a co-ordinate way. The overall economic control system has not been completely established and the management system is not suited to the needs of the development of an outward-oriented economy.

There are still many weak links in the development of socialist culture and ethics. Malpractice is not uncommon among cadres who abuse their power to seek personal gain.

Yet another dilemma facing the economic zone is an unequivocal lack of talent. The professional level of cadres, workers and staff members remains to be improved.

Functions of the SEZ

Coastal belts urged to open up. As one of China's testing grounds for opening to the world, the Shenzhen Special Economic Zone, set up earlier than the other three, has acquired some experience.

During his inspection tour of the zone in January 1984, Deng Xiaoping said, "The development of Shenzhen and its experience prove that our policy for setting up the special economic zones is correct."

Soon afterwards, the Central Committee of the Communist Party of China decided to open 14 more coastal cities and Hainan Island, and later to open the Zhujiang (Pearl) and Changjiang (Yangtze) River Deltas and the Xiamen-Zhangzhou-Quanzhou delta areas in southern Fujian as the open economic coastal areas.

This network of open coastal cities from Dalian in the north to Beihai in the south has begun to take shape. Through these special zones and coastal cities, we have imported advanced technology and scientific management expertise, which eventually will promote economic and technological development in the hinterland.

- Providing experience for reform in the hinterland. Since the beginning of 1981, Shenzhen has reformed its planning and capital construction management systems, its commercial, financial, price and wage systems as well as cadre and personnel system.

It is believed that the experience gained from these reforms will serve as good examples for the hinterland. These experiences include the replacement of investment with bank loans in the zone's infrastructural construction; a public bidding system adopted for capital construction projects; a contract system introduced for the employment of workers, and cadres employed through public ads or election for a term of office.