Shenzhen, one of China's first special economic zones, has basically become a modern city through 19 years of development. Shenzhen's success, under the guidance of the Deng Xiaoping Theory, has provided enlightenment for China's modernization drive.

Socialist market economy

Shenzhen's reform was based on marketization, State-owned enterprise (SOE) reform, cultivation of the market and improving the social security system, and was focused on cultivating market entities and SOE reform. The SOE reform in the city shows the following characteristics:

1. Different ownership develops together. Shenzhen has not only emphasized and supported SOE reform and development, but also encouraged the development of non-State sectors, forming a situation where enterprises of different forms of ownership compete with and promote each other.

2. A three-tiered State asset management system-State asset management committee, asset operation company and enterprise-has been established.

3. Except for direct or indirect control of public welfare, monopolized and national-security-related industries and sectors, Shenzhen has implemented an open policy on enterprises in all other industries. Meanwhile, the quality of State asset operation has been improved, and measures have been perfected, providing an environment suitable for enterprise development.

4. A corporation management structure has been introduced in enterprises.

5. Shenzhen has been paying close attention to the cultivation of the means of production, labor and capital markets. Now, a multifunctional market system has been created.

6. Special stress has been put on the establishment and perfection of the social security system. A social security system based on medical care, endowment, unemployment and industrial accident insurance has been established.

Through 19 years of reform and exploration, Shenzhen has initially formed a framework of a socialist market economy.

Technological innovation

The industrialization in Shenzhen has been accomplished on the basis of systematic and technological innovation.

While conducting system reform focusing on economy and administration, the city has pushed forward technological innovation focusing on new and hi-tech industries to accelerate its industrialization and modernization.

Technological innovation has oriented Shenzhen's mode of economic growth to high quality and efficiency. By the end of 1998, the total industrial output value of the city had reached 194.8 billion yuan, of which 65.5 billion yuan, or 35.4 percent, came from new and hi-tech products.

Technological innovation has also accelerated the development of an export-oriented economy. To date, 17 of the top 500 transnational corporations in the world have invested in the city. The establishment of foreign-funded hi-tech enterprises has trained personnel and brought knowledge to Shenzhen, helping quicken the city's pace of entering the world market and becoming an international city.

The late Deng Xiaoping pointed out that the key to realizing the four modernizations (modernization of agriculture, industry, national defence and science and technology) lies in the development of science and technology. The practice of Shenzhen has proven that innovation and the development of science and technology are springboards for realizing industrialization and accelerators for modernization.

Fairness and efficiency

Eliminating polarization and achieving common prosperity are the basic aims of socialist modernization. Although in the past 19 years, the gap in economic development between Shenzhen and inland areas has enlarged, polarization did not occur in Shenzhen because of the following measures.

First, different systems including shareholding, cooperative and employee holdings systems have been explored and utilized. In the reform of property rights, efficiency and fairness were unified.

Second, backward areas were supported by means of transfer payments to achieve common development.

Third, a social security system was established to take care of the needy.

The practice in Shenzhen has proven that in the process of the modernization drive, polarization can be avoided, while imbalance in development is inevitable. So, in the initial stage of socialism, the principle of "giving priority to efficiency and paying attention to fairness" is unshakable.

(Guangming Daily November 5, 1999)