Opening to the World
Opening to the World
A Driver of Domestic Reform
China began its reform and opening after a long period of being closed to the outside world. On the eve of the reforms, China lagged behind the West in production technologies and management know-how. However, the market opening and promotion of foreign direct investment (FDI) created favorable conditions for attracting modern technologies from abroad. Eventually, the burden fell on local enterprises, in an enabling business environment, to become world-class companies. The government implemented a dual-track approach and a step-by-step transition to create a business environment that allowed for import substitution and it took advantage of the opening to the world to boost domestic progress. Several localities were selected as special economic zones to implement export-oriented strategies. The positive results during this initial phase of reform and opening can be attributed to two factors: the partial opening of the domestic market to foreign businesses and the use of preferential treatment to attract FDI.
Keywords: Chapter foreign direct investment, special economic zone, preferential treatment, import substitution, export-oriented strategy
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