China's special economic zone ushers in new reform

China unveiled a reform plan on Sunday to build the southern city of Shenzhen into a pilot demonstration area of socialism with Chinese characteristics in the next five years.

The building of the demonstration area will help deepen reform and expand opening-up comprehensively, according to the document jointly issued by the general offices of the Communist Party of China Central Committee and the State Council.

The plan for 2020-25 gives local authorities in Shenzhen a more direct and greater say in businesses, such as carrying out market-based economic reform, improving market and legal environments for global businesses, building a high-level open economy, providing service for people’s livelihood, and bettering the ecological environment and urban space.

Among the measures to improve market-based allocation of factors of production, the document supported Shenzhen in further exploring the land management system and taking new measures in the capital market construction.

Shenzhen’s ChiNext board has just streamlined the listing process in June and allowed IPO pricing to be fully determined by the market.

As a flagship of China’s high-tech industrial development, Shenzhen will take the lead in improving the data property rights system and exploring new mechanisms for protecting and utilizing data property rights, the document said.

Per the plan, the government will further loosen restrictions on foreign investment in cutting-edge technologies in the tech hub.

Known as a paragon of opening-up and development, Shenzhen in Guangdong Province is one of China’s earliest special economic zones.

Starting from a small town, it has developed into a key economic hub that surpasses Singapore in terms of gross domestic product.

In 2019, Shenzhen’s GDP topped 2.69 trillion yuan (US$401.6 billion).

According to Zhong Jian, an economics professor at Shenzhen University, the new reform program heralds a new round of reform and opening-up. After 40 years of development, China’s reform has entered the “deepwater area,” as “hard nuts” — meaning difficult issues — need to be cracked.

Sources involved in the drafting of the plan said the key term of the reform is “comprehensive authorization,” which indicates Shenzhen will be directly authorized to take the lead in increasing institutional openness.