Shenzhen grew from 330,000 residents in 1980 to nearly 18 million within four decades.
In April 1979, Xi Zhongxun, the Communist Party secretary of Guangdong Province, proposed giving coastal regions broader authority to attract foreign investment. Deng Xiaoping agreed, reportedly telling him to create a "special zone" and to break through on his own, because the central government had no money to offer.1
On August 26, 1980, the Standing Committee of the National People's Congress approved the establishment of four special economic zones in Shenzhen, Zhuhai, and Shantou in Guangdong Province and Xiamen in Fujian Province.2 The zones offered foreign firms preferential tax rates, exemptions from import duties on raw materials, and simplified investment procedures unavailable anywhere else in China.
The zones were placed far from Beijing deliberately, to minimize both political interference and political risk if the experiment failed.3 Shenzhen, positioned directly across the border from Hong Kong, grew fastest. The broader administrative area had roughly 330,000 residents in 1980. Between 1980 and 1990, its GDP increased roughly sixty-fold, and its population grew more than fivefold.4
Against a national average annual GDP growth of roughly 10 percent from 1980 to 1984, Shenzhen grew at an annual rate of 58 percent.4 In 1984, Deng visited Shenzhen for the first time and wrote that the city's development proved the policy of establishing special economic zones was correct.
The private sector drove the transformation. The majority of investment came from foreign and private domestic sources, with minimal direct funding from the central government.4 The bulk of the workforce came from elsewhere in China, particularly younger women who could earn significantly more in factory work than in their home provinces. Less than a third of Shenzhen's population held local household registration.5
By 2006, the five original special economic zones accounted for 22 percent of China's total merchandise exports. When all national-level economic zones are included, the zones accounted for roughly 22 percent of national GDP and 46 percent of total foreign direct investment by 2007.4 In 2018, Shenzhen's GDP reached 2.42 trillion yuan, overtaking Hong Kong for the first time. The city that was a fishing village in 1979 is now the headquarters of Huawei and Tencent.