Civic Startups: Lessons from Shenzhen

Finally, after a full day’s journey in the intense heat, they arrived at their destination. It turned out to be just across the border from Hong Kong — not far from the Lo Wu crossing where all foreigners made their entry into mainland China. (In these days you couldn’t fly directly to Beijing from the outside world.) The bewildered Americans followed their hosts to the top of a dike, where the Chinese guides gestured at the vista spread before them. It was not clear what they were meant to look at. All that the Americans could see was the usual South China landscape: There were rice paddies, worked by peasants and their water buffalos in the time-honored manner, and duck ponds. There were a few trees, and here and there a modest peasant dwelling. What the Chinese were describing seemed to bear no relationship to the observable reality. This, they told the Americans, was the location of something called the Baoan Foreign Trade Base. The party had designated it as a special location for foreign investment. According to the plans under consideration, it would soon be the site of chemical factories and textile mills and manufacturing plants. And, oh yes, there would also be plenty of hotels for the foreign businessmen. It was going to be a wonderful chance to make money.…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.

The next day, after an uncomfortable night spent in the only existing local hotel (which had no electricity or running water), the Americans attended a briefing where the Chinese unrolled blueprints that depicted acres of factories, warehouses, and other facilities. The plans betrayed a startling ambition. “It was really hard to believe,” Gorman recalled. “Nothing in China at that point happened quickly — except politics. Business and construction didn’t happen on those kinds of timelines.”…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.

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.…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.

It is inevitable, perhaps, that we tend to focus on leaders when we examine grand political and economic transitions. But they are not the only actors in these dramas. Deng Xiaoping and his colleagues triumphed precisely because they unleashed the creativity and the entrepreneurial urges of millions of Chinese.…In December 1978, back in Guangzhou but still on the run, he [Rong Zhiren] heard a radio broadcast publicizing the results of the historic Third Plenum in Beijing, the meeting that sealed the triumph of Deng’s pragmatic course of economic reform. Like millions of other Chinese, Rong understood that something fundamentally transformative was under way — and that included an opening for entrepreneurship. “I knew this policy would last because Chinese people would want to get rich,” as he later put it. In January 1979, he decided that he would be one of the first to take a chance. He applied for a business license.