The Baoan Foreign Trade Base was located in a village that was named, like the nearby river, Shumchun. It later became known under a different version of the name: Shenzhen. It was a place that had attracted Deng's attention at least as early as the 1978 Work Conference (just before the Third Plenum), when he had floated the idea that the party should "enable some regions to perform better and become more prosperous." Deng had calculated that if only 5 percent of the counties and 5 percent of the citizenry became "relatively prosperous," this would translate into 100 counties and 40 million residents -- the equivalent of a medium-sized country and presumably a powerful catalyst for change. Shenzhen was the first on his list of 19 places targeted for early prosperity. "Obviously, he had taken notice of this place at a very early date," writes former aide Yu Guangyuan. "In his view, a major factor in Shenzhen's quest to become prosperous sooner than others was its capacity to conduct foreign trade." During the Work Conference, in fact, Yu himself had told party officials from Guangdong of his own idea -- inspired by an ad a friend had brought from Hong Kong -- to construct office buildings in Shenzhen under the auspices of the Chinese Academy of Sciences (Yu's home institution) and rent them to people from Kowloon, just over the border, where soaring land prices were already driving rents into the stratosphere. Yu even envisioned simplifying border-control procedures for visitors from Hong Kong.
Gorman and his compatriots, all of whom had experienced firsthand the xenophobic legacy of the Cultural Revolution years during their visits to China, could hardly be blamed for feeling skeptical. What they were not yet able to appreciate was the fact the Chinese were deadly serious about their plans to invite overseas investors into new "special districts" that were already well into the planning stages.
Lower-level officials -- especially in Guangdong -- were undoubtedly keen on the idea. But this was one case where Deng could claim full credit for driving the initiative forward. He had spent his years in exile brooding over how to stimulate the Chinese economy, and he had concluded, after his return to power in the early 1970s, that his country had to tap into the global marketplace for technology, know-how, and management expertise. His 1974 trip to United Nations headquarters in New York City had been the first to jolt him into an understanding of just how far behind China had fallen.
After his third return from political oblivion in 1977, Deng took a series of trips around the region that reinforced this view. His itinerary included a visit to Japan, where he saw the evidence of that country's extraordinary postwar rise to the pinnacle of the global economy, as well as one to Singapore, which though far smaller in absolute terms was also demonstrating just how powerful the East Asian formula of single-party rule and market economics could be. Deng's private comments to his speechwriting team in 1978, when he gushed about the Japanese and Singaporean workers who could use their bonuses to buy houses and cars, make it clear just how influential these experiences were.
Nor was that all. Deng and his colleagues -- at least those who wanted to pay attention to the outside world -- were also acutely aware of the extraordinary rise in living standards already engineered by Hong Kong and Taiwan, which -- like Japan, Singapore, and South Korea -- had also made strategic decisions to reject "self-sufficiency" and to actively participate in global trade. Taiwan, in particular, had reaped a variety of benefits from its "export-processing zones," areas with special commercial, legal, and tax regimes designed to entice foreign investors to take advantage of a well-trained but low-wage labor force. The Taiwanese were gambling that the shortfalls in tax and customs revenues would be balanced out by the know-how they would acquire in management and production techniques (not to mention the extra employment). By the late 1970s, their gamble that was paying off to spectacular effect, and the example was not lost on their compatriots on the mainland.
But the impetus for a creative approach to foreign investment did not come only from the top. There was also some intense lobbying going on at the regional level -- particularly in one of the areas that stood to gain the most from trade with the outside world. That was Guangdong province, directly adjacent to Hong Kong. Its capital, Guangzhou, was the home of the traditional trade fair because it had a long history, dating back to imperial times, as one of the few places where foreigners were allowed to do business with Chinese. The direct proximity of Hong Kong, whose population included many Cantonese-speaking migrants from Guangdong, meant that the province still had access to an extensive web of contacts with the outside world, including the huge network of overseas Chinese. All this meant that a certain amount of illegal trade had continued even during the darkest days of Maoism. (Indeed, considering the huge and intricate possibilities for smuggling offered by the Pearl River Delta, the gateway to Guangdong, it could have hardly been otherwise.) Many Guangdong residents received remittances from their relatives in Hong Kong or places more distant, and these funds were major source of revenue for a region that had otherwise been severed from its natural trading hinterland after 1949.
Guangdong party officials knew all of this very well, and they were eager to seize upon the new talk in Beijing of opening up the country to investment. They had prevailed upon the party bureaucracy to let them open a few modest channels for trade with Hong Kong, but they were already thinking big. Their plans received a major boost in 1978, when a set of high-ranking party officials, including several from Guangdong, set off on a fact-finding trip to Western Europe that affected them in much the same way that Deng's journeys had unsettled him. They were impressed not only by the modern air-traffic control systems at Charles de Gaulle Airport in Paris and the automated milking sheds on a Dutch farm, but also by the willingness of their hosts to expose them to new insights and by the eagerness of European businesspeople to marshal funds for investment in production facilities in China.