as good examples, although it was difficult to assess whether they had influenced the decision of the Central Government (for instance, the separation of commercial functions from the state and government departments, the enactment of laws and increasing emphasis on the role of legal systems, and the democratic election of factory managers).
c o n tr a s t, both Chen Zhaobin's (1984) and Liu R u n h u a 's study (1985) have acknowledged and discussed the shortfalls of the Zone.
In assessing the achievem ents of the Shenzhen Zone, Chen pointed o u t th a t , given a high degree of a u to n o m y , the Zone had a tt e m p t e d to adm inister the economy with economic m ethods and had diversified the means of a tt r a c t in g developm ent capital. F u r th e r , it had broken the convention of ‘eating from the big p o t ’ or from the ‘iron bow l’ (i.e. indiscrim inate and p e rm a n en t e m p lo y m e n t), and had con c en tra te d on in fra stru ctu ra l co n structio n , thereby providing a favourable investm ent environm ent. A lthough the Zone had not yet achieved its u ltim a te goals and was experiencing ‘tee th in g prob lem s’, Chen m aintained t h a t the Zones would be able to m ake an ample co n trib u tio n to the socialist economy of China.
In response to M .H .T . C h a n 's challenge to the acclaimed achievem ents of Shenzhen (see next section), a more p ragm atic study was u ndertaken by Liu. T he la tte r a d m its t h a t by 1983, the Zone had not achieved the ‘three predo m inan ces’ (sange weizhu): production and construction capital provided by foreign sources, forms of foreign investm ent d o m in a te d by joint-ventures; co-operative production a rr a n g e m e n ts and sole proprietorships: and a reliance on exporting th e products m an u fa ctu red . If the conditions were viewed, however, in a dynam ic fram ew ork, it w*as obvious t h a t foreign inv estm en t had expanded more th a n elevenfold a n d investm ent originating from jo in t-v e n tu re s, co-operative production a rra n g e m e n ts and sole pro p rieto rship s had increased more th a n tw entyfold between 1979 and 1983. He further argued t h a t the Zone’s trad e deficit would decrease as local prod uctio n grew and the b ou nd ary fence segregating the zonal and non-zonal area was utilized.
Judging from this progress, Liu contended t h a t th e Zone was striving to w a rd s its u ltim a te goals. A t the tim e, Shenzhen was still in its form ative stage, and since the Zone was not completely sep arated from the dom estic a rea, it could not have been fully open to the external economy.
A more m o d era te a t t i t u d e to w ard s the achievem ents of the Zones, and Shenzhen in p a rticu la r, is exemplified by the studies of Zheng (1981), Sit (1981), Zhang (1983), Falkenheim (1985) and K ung Kai-sing (1985). A lth ou gh all are supportive of the zone s tra te g y , they are h e s ita n t to foster an entirely positive conclusion a b o u t the achievem ent and p oten tial of the Zones. Zheng’s s tu d y , for instance, has left th e Zone’s fu ture open-ended, after pinpointing the differences between the Zone’s economic system s and t h a t prevailing in other p a rts of China.
Based on the experience of o th er Asian ex po rt processing zones, both Sit (1981) an d Z h a n g ’s (1983) studies a tt e m p t e d to project the possible economic effects and the
likely future developm ents of the Special Economic Zones. By comparing the Chinese Zones* investm ent environm ent with t h a t of o ther Zones, Sit pointed out t h a t the Chinese Zones possessed bo th stre n g th s and weaknesses. Recognizing t h a t the perform ance and the assessment m ethods of export processing zones have been controversial, he remarked t h a t the future of the Chinese Zones remained inconclusive. M ore specifically, Zhang (1983) has argued t h a t the main contribution of the Zones will be found in increasing national income throu gh direct channels and serving as a test-g rou nd for economic reforms. Forecasts on the future developm ent of the Zones by Z hang are based on an ex am inatio n of the in vestm ent environm ent of the Zones, an exploration of potential linkages and the possibilities of establishing backw ard linkages with the rest of China. This a ppraisal led Zhang to a num ber of conclusions: t h a t the Zones have failed to use their assets; t h a t am ong other economic sectors, tourism and light industry possess relatively b e tte r m arkets; and t h a t backward linkages will be difficult to establish. Hence, he viewed the future of the Zones with apprehension. While the studies of Sit and Zhang are projections based on the Zones’ investm ent e nv iro n m en t, those of Falkenheim (1985) and Kung (1985) are assessments of the economic performance of the Zones.
By com paring the initial inv estm ent and growth objectives of zone planners to a c tu a l performance, Falkenheim (1985) discerned t h a t although there have been increases in industrial o u tp u t, local Financial revenue, em ploym ent, wages and commercial activities, developm ent problems have arisen. The problems have included the predom inance of construction o u tp u t value in to ta l industrial o u t p u t, the dominance of assembly and processing industries, the preponderance of Hong Kong capital in foreign in vestm en t, the lagging export performance, and the unclear beneficiary of the dom estic linkages being forged. These problems affected technological transfer and ex p o rt expansion - two main goals of the special economic zone stra te g y . Weighing up th e achievem ents and problems of the Zones. Falkenheim (1985) found it difficult to d raw a definite conclusion on the achievements of the Zones. Nevertheless, he m ainta in e d t h a t fin further opening th e coast to foreign investm ent, the Chinese are sidestepping signs of growing problems in such crucial areas as exports, foreign exchange an d technological transfer, problems not likely to be am eliorated by extending the scope of the policy’. F u rth e r, by rapidly opening the coastal area, the Chinese are unleashing new com petitive pressures which m ight th re a te n the overall objectives of the Zones.
In c o n tra s t, Kung (1985) a d o p ts a more relaxed a ttit u d e tow ards the achievements of the Zones. On the basis t h a t ‘insufficient tim e has elapsed to allow any s tru c tu ra l break to occur’, and ‘until the dynam ics of Shenzhen developm ent takes on a more stable p a th , it rem ains futile to criticise i t ’, he dismissed C h a n ’s (1985) criticism th a t Shenzhen
has failed to fulfil its objective as an industrialization zone which e xp orts its m a n u fa ctu res, a tt r a c t s foreign capital sufficiently, and makes conco m itan t technological progress. At this ju n c tu re , Kung argued t h a t the ‘d e m onstra tion effect’ of the ‘e n trepren eurial d y n a m ic ’ of Shenzhen, and its capacity to generate economic developm ent in an in te g rate d way, have certainly been of some merit. W hile such ‘w a it-a n d -se e ’ or defensive a tt it u d e s have been a d opted by the p rotagonists of the Zones, the opposing school has regarded the Zones as a costly and inefficient developm ent policy which failed to induce na tional growth.
TH E SP E C IA L E C O N O M IC ZONES AS A N