China's new external financial policies and strategies, as well as its establishment of special economic zones, opened cities, and Hainan Island as windows for investment, are an important part of the open-door policy. When the SEZs were first established, many in and outside of China wondered why the Chinese should take such a step--unprecedent in a nonmarket economy and far ahead of the Soviet Union and other Communist countries.
The modern methods of mass production and the formation of international markets have led to production and consumption on a world scale. To offset the weaknesses of each nation, extensive economic cooperation and technical changes must occur between developed and developing countries. The Chinese understand this very well. While relying mainly on its own forces to bring about modernization, China, as a developing country, has to win foreign assistance, actively develop economic cooperation, and reasonably use and absorb foreign technology useful to its overall economic development. For these reasons, China forged ahead with its decisive policy to set up SEZs and designated fourteen opened cities to attract world resources.
It is obvious that the SEZs and opened cities have performed the functions set out for them to the extent possible at this stage of their development. Foreign capital, technology, and equipment have been introduced, competition has been promoted, and the training of personnel has occurred. Indeed, the SEZs and opened cities represent the focus of a substantial share of all foreign investment flows to China, and significant economic development has been achieved. More important than their enormous vitality in absorbing and utilizing foreign capital and importing advanced technology, the SEZs and opened cities represent a significant pioneering undertaking by China in carrying out the policy of opening the country to the outside world and in serving as experimental centers in economic structural reform to create a completely new set of conditions for economic development. As such, a new avenue has been opened, creating opportunities for foreign investors wishing to become involved in a rapidly expanding Chinese marketplace.