This articles is from Chinese Business Center
The PRC's 'Four Modernisations' programme has resulted in an effort to attract foreign investment and the promotion of joint ventures with foreign enterprises and governments. Four SEZs have been established in Guangdong and Fujian provinces, which aim to attract direct foreign investment to wholly owned or joint venture concerns to encourage technology transfer and boost exports and employment. As an incentive to attract greater foreign participation in PRC enterprises, the government provides tax holidays and exemptions from import restrictions.
SEZs are not the only method that the PRC government has employed to attract foreign investment however, as cities such as Shanghai, Dalian, Guagzhou, Tianjin and Beijing have been allowed to employ policies similar to the SEZs to attract foreign investors. Hainan Island - previously under the jurisdiction of Guangdong province - was made a separate province in 1988, and in effect functions as a free trade zone. In 1990, the Pudong development zone -similar to an SEZ - was established in Shanghai.
PRC encouragement of foreign investment has not been successful has the government would have hoped, however. Political instability - mainly as a consequence of the Beijing massacre, corruption and general bureaucratic inefficiency have all hindered greater foreign participation in the PRC's economy. In a bid to assuage Western fears of investing in the PRC, the government has been adopting patent laws and signing investment protection and taxation treaties.