China's special economic areas : provincial competition and institutional change

Under economic liberalisation China has impressed the world with its sustained economic growth and productivity improvement. As part of its efforts to transform itself from a centrally planned economy to a market one, China has adopted an ’open door policy’ towards the outside world. Among the measures introduced, the creation of four Special Economic Zones (SEZs) in 1980 was a remarkable step; the subsequent opening up of other coastal and inner cities further testified to China’s resolution in implementing reforms. A key characteristic of the Chinese economic reform process has been the decentralisation of economic power. This paper aims to explore the decentralisation issue in the context of economic liberalisation. The introduction of the Special Economic Areas (SEAs) and other special economic arrangements will be first examined. The controversy aroused by these special policies will be explored. It will be followed by a discussion on the trend of regionalisation of coastal-inner provincial conflicts. Finally, the way to alleviate the contradictions arising from decentralisation will be advanced.