Special Economic Zones EQ1

Question 1

Why was China switched off from the global economy prior to 1978?

Answer 1

-China was largely “switched off” from the global economy before 1978 due to its communist policies and isolationist approach and was therefore largerly closed off to trade and fdi
-This kept it separate to the global economy and meant most people lived in poverty rural areas

Question 2

What was China’s “open door policy”?

Answer 2

-China’s 1978 Open Door Policy was a decision to open the country to foreign direct investment (FDI).
-This policy marked a shift from China’s previous isolationist stance, encouraging foreign companies to invest and set up operations in China.
-As part of this, China created the Shenzhen Special Economic Zone (SEZ) in 1980

Question 3

Why were special economic zones created in China?

Answer 3

-To encourage economic growth and foreign direct investment (FDI), China created Special Economic Zones (SEZs) starting in 1980.
-These zones offered attractive conditions for foreign businesses, including low taxes, minimal environmental regulations, free trade zones, and government-provided infrastructure such as roads and ports. -These incentives made China a favorable destination for foreign companies, leading to significant economic growth and the development of a “Made in China” manufacturing base. FDI flowed into China, boosting its economy and integrating it more into the global mark