From Hong Kong’s Capitalist Fundamentals to Singapore’s Authoritarian Governance: The Policy Mobility of Neo-liberalising Shenzhen,China

Theoretical Background

The generation and dissemination of urban policy knowledge have become increasingly globalised, when “the experiences and performances of others” are placed “into quantitatively and qualitatively encoded proximity” (Larner and Le Heron, 2002, p. 417). Ong (2011) notes particularly that policy-makers in Asia’s aspiring cities have frequently engaged in a process of intercity referencing and rivalry, in the race to some summit of ‘world-class’ criteria. Geographers have become particularly interested in tracing the travel of neo-liberal policies and programmes, in order

to map the networks, to explore the power asymmetries that structure the kind of policies that are put into motion, and the types of places that find themselves as either programme ‘importers’ or ‘exporters’ (Ward and England, 2007b, p. 251; see also, McCann, 2011; Peck, 2011).

Theorising the mobility of urban forms and models requires disentangling the complex interweaving of sites and tracks constitutive to a globalised field of urban development knowledge (Robinson, 2011; Ward, 2006). Unpacking the mechanisms through which neo-liberalism or other policy models at a locality are (de)selected or (de)legitimised, however, requires a more sophisticated account than enumerating the channels and mapping the flows of knowledge circulation (Peck, 2004, 2011). The relevant actors with asymmetric power endowments, the heterogeneity of cognitive models and heuristics, and the intended and unintended consequences all need to be unravelled to elucidate fully the acquisition and dissemination of the ideas and practices of urban policy formation (Ward and England, 2007a; Dobbin et al., 2007). In this view, differentiated policy outcomes can proliferate even under conditions of neo-liberalism, depending on the actual urban aspirations, political ambitions, institutional legacies, local conduits and political struggles at work in any given instance under global uncertainty (Ong, 2011; Robinson, 2011; Brenner et al., 2009).

This paper, hence, takes a social-constructivist approach to policy mobility and mutation as proposed by Peck (2011). This approach brings to the foreground the constitutive socio-spatial context or unique historical–geographical conjuncture of policy-making activities and highlights the hybrid mutations of policy techniques and practices across dynamised institutional landscapes. Events of policy borrowing and learning are seen as taking place path-dependently in the context of pre-existing policy regimes, pre-structured institutional/ideological frames and pre-politicised social relations. Such a socially, historically and geographically constructed field of policy mobility frames and filters policy-making imaginaries and legitimacies, legitimising and enabling some patterns of ‘learning’, while deterring or excluding others.

Processes of neo-liberal policy formation, wherever they are found, necessarily hybridise and interdigitate with their ‘others’ (Brenner et al., 2009). Although the posture of the Chinese Communist Party (CCP) would remain a “loose hug rather than an intimate embrace” of the neo-liberal model (Liew, 2005, p. 349), there is no sufficient ground to repudiate that neo-liberalisation is an active process in China. Rather, China is best to be seen as a historically significant conjunctural form, with “neoliberal elements interdigitated with authoritarian centralized control” (Harvey, 2005, p. 120). Given the heterogeneity of historical–geographical conjunctures for policy mobility and mutation, the processes of policy adoption are as likely to be positive and enabling as they might be imposed and prescriptive (McCann, 2011; Ward and England, 2007a). External ideas are more likely to gain purchase when they are seen to be of benefit to local agents, or when they are purposefully and selectively embraced from inside. Seeing neo-liberalisation as contextual and contingent rather than universal and inevitable therefore entails cautious, situated investigations of the selective use of neo-liberal reasoning in combination with authoritarian practices and other non-neo-liberal elements in the construction of the capital-centric project (Ong, 2011; He and Wu, 2009; Liew, 2005).

Particularly, neo-liberalisation should not be seen as a process of state withdrawal or non-governmentalisation, but as “a qualitative reorganization and rescaling of the state, a constant process of state-crafting and re-crafting” (Ward, 2007, p. 118; original emphases). In the case of China, the CCP to date has been the principal architect of the gradualist programme of reform, and markets were actually cautiously incubated and governed by the party state. Hence, China’s political economic regime and central–local relations may best be captured by the notion of ‘regionally decentralised authoritarianism’ (RDA) (Xu, 2011; Landry, 2008). The RDA regime is characterised by a combination of political centralisation and economic regional decentralisation. The central government has control over personnel through the nomenklatura system, whereas sub-national governments run the bulk of the economy through initiating, importing, negotiating and implementing policies and reforms. Such a process of neo-liberalisation and urban policy change, therefore, is characterised by intimate, interscalar interactions along the institutional hierarchy of the state on a period-to-period basis, in response to the demand of the changing economic and societal environment. In such processes of poly-scalar power interplays, as Robinson (2011) points out, inadequate participation, strong élite control and the shortage, or abuse, of local autonomy can all direct or mobilise city strategies towards those policy options consistent with the neo-liberal agenda or other non-progressive ends. Chinese municipal leaders, unlike their Western counterparts, are held responsible not downward to their constituents, or policy-takers, but only upward to the higher-level officials who control their appointment and promotion. Although such a mechanism is effective for the national government to ensure the local implementation of central policies, frequently policy changes would be at the expense of the politically and economically marginalised policy-takers.

In light of these theoretical insights and debates, this paper seeks to provide a grounded historical account of the key features of the formation and transformation of Shenzhen’s market institutions and development strategies in the past 30 years, centred on the shifting target of its policy emulation. The case of Shenzhen offers a unique window to observe how a capitalist urban regime can be initiated and entrenched through poly-scalar state interactions and transnational policy circulation within a (nominally) socialist nation under the continuous authoritarian rule of a communist party. It can also shed light on how seemingly incremental, small adjustments, rather than carefully designed extraordinary efforts, can generate revolutionary outcomes—a paradoxical process that may be conceptualised as an evolutionary revolution.

Hong Kong as the Big Master: Cross-border Imitation and the Initiation of Capitalism in Shenzhen

The transformation of Shenzhen and China in the post-Mao era is closely associated with the emergence of Deng Xiaoping as the paramount leader of China since late 1977. After the decade- long ‘Cultural Revolution’, the national economy was at the brink of collapse and economic policy was still dominated by an ideology of egalitarianism, central planning and self-sufficiency. In this situation, Deng started to proclaim that socialism is not shared poverty, that to ‘emancipate’ the productive forces is cardinal to save and advance socialism, and that socialism and a market economy are not necessarily incompatible (Deng, 1993, pp. 63, 225, 370). Under Deng’s influence, in December 1978, the CCP’s third plenum of the Eleventh Central Committee made a key decision to shift the focus of all party work from class struggle to the four modernisations ¹ which first coined by Premier Zhou Enlai in 1975 (Yang, 1998, p. 63). It is thus the idea of building ‘socialist modernisation’, first conceived at the top of China’s political echelon, that set the tone for the legitimisation of all subsequent transformations, including the development of SEZs. The turmoil of the Cultural Revolution led Deng to abandon Chinese exceptionalism and to re-evaluate Western-style modernisation. During 1978 and 1979, a severe short-run economic crisis, generated by a failed attempt to rehabilitate the planned economy, ultimately compelled Chinese leaders to liberalise rather than recentralise the economy and to seek solutions from the outside world (Naughton, 1995).

The policy-learning process was initiated through waves of foreign visits made by Deng Xiaoping and other top leaders from 1977 to 1978, with the aim of reconnecting to the world and gaining a better perspective for the modernisation project to be carried out. Within 1978 alone, 13 top central leaders visited 50 countries through 20 tours (Tao and Lu, 2008, p. 23). Deng himself visited eight countries including Japan, the US and Singapore, and he was particularly impressed by Singapore’s success in utilising foreign capital (Yang, 1998, p. 244). Relatedly, a delegation sent by Vice Premier Gu Mu in April 1978 for on-the-spot investigation of Hong Kong’s and Macau’s economies proposed upon returning to develop export processing zones (EPZs) in Zhuhai and Bao’an, the predecessor of Shenzhen (Yang, 1998, p. 246). Indeed, Deng Xiaoping had already conceived the conceptual groundwork for future SEZ policy at least by 1975 (Deng, 1994, pp. 28–31), including ideas to develop export capacity, to use foreign capital, to obtain foreign technology and to reform egalitarian wage policy. Observations made through the overseas investigation tours served to elaborate, consolidate and define his ideas.

Deng’s ‘evolutionary revolution’ towards a ‘socialist market economy’ was to start with Shenzhen, which is separated from Hong Kong by just a river. Yet the economic disparity between the two worlds across the river in the late 1970s could not be larger: the average income in Hong Kong was at least 50 times higher than that in Shenzhen (Tao and Lu, 2008, p. 149). This is why hundreds or thousands of desperate people frequently gathered in Shenzhen, looking for ways to cross the heavily guarded border. At times, the illegal border-crossers were too many or too violent and the border guards lost control. During his first visit of Shenzhen in 1977, Deng Xiaoping commented: “this [human smuggling] problem can’t be solved by the guards, because the problem lies in our policy” (Xu, 2008, p. 56).

Such a unique local condition in the larger context of China’s struggling economy served as a trigger to subsequent policy changes. Wu Nansheng was the deputy governor of Guangdong Province between 1975 and 1979, the primary founder of the SEZs in Guangdong, and Shenzhen’s mayor and party secretary between 1980 and 1981 (IHS, 2008). Wu said that, when he was troubled by the economic collapse and illegal border-crossing in his home province, friends from Hong Kong and elsewhere drew his attention to the EPZs of Taiwan and to the free port model of Hong Kong and Singapore (IHS, 2008). In a meeting of the top provincial leaders in January 1979, Wu and others, including the provincial party secretary Xi Zhongxun, agreed that Guangdong should take the lead to experiment with something “similar to the export processing zones overseas” and a new term ‘trade co-operative zones’ was invented to avoid political controversy (Huang and Mo, 1990, p. 20). Exogenous exposures thus resulted in some in-principle concurrence of opinion between the local and central party leaders for a major policy mutation towards some vaguely conceived ‘export processing zones’.

Three months later, Xi Zhongxun brought the idea of opening ‘trade co-operative zones’ in Guangdong to Deng Xiaoping and other central leaders and requested more autonomy to be granted from Beijing (Tao and Lu, 2008, p. 24). Since this was something already in his mind, Deng agreed immediately. Deng also suggested the use of the name ‘special zone’ (tequ) and famously said, “the centre has no money, so you need to work it out yourself and break a bloody new path” (Yang, 1998, p. 252). On 15 July 1979, the central government approved the development of ‘export special zones’ in Shenzhen, Zhuhai and Shantou, and a formal regulatory document started to be drafted by a local team in Guangdong (see Yeung et al., 2009). After reviewing data collected on the operation of export processing zones and free trade zones in Taiwan, Korea and the Philippines, the local leaders believed that the expected ‘special zone’ should be much bigger and more comprehensive; therefore ‘special economic zone’ (jingji tequ) would be a more appropriate name (Huang and Mo, 1990, p. 25). When Hong Kong élites were invited to comment after the first draft, they invariably criticised the authors for not being ‘open-minded’ enough and suggested that their overwhelming caution against capitalist investors needed to be removed (Huang and Mo, 1990, p. 23). On 26 August 1980, the Regulations on Special Economic Zones in Guangdong Province were finally passed by the National People’s Congress. This legendary document represents wholesale power devolution on economic planning, foreign trade, finance, fiscal system, labour, land, price control and other aspects, but many details remained to be elaborated.

As anticipated, Hong Kong investors began to come into Shenzhen to form joint ventures or independent corporations, but problems quickly occurred. In March 1980, leaders of Guangdong’s Labour Department came to Shenzhen and called a meeting with foreign investors (Huang and Mo, 1990, p. 120). Liu Tianjiu, one of the earliest Hong Kong investors, complained

Under your fixed labour system, the desirable workers can’t be hired but those unwanted ones can’t be fired. How could we do business when such ‘iron rice bowls’ are in place? (quoted in Huang and Mo, 1990, p. 120).

For Liu, the solution is

to follow the Hong Kong practice of signing contracts: employers have the right to ‘chao you yu’ (fire) poorly performing workers, and workers can ‘chao you yu’ their employers too (quoted in Huang and Mo, 1990, p. 120).

This was a stunning proposal at the time, since it directly challenged a core doctrine of the on-going state socialism. Nevertheless, the local leaders quickly allowed a labour contract regime to be tried out in a few joint ventures (Huang and Mo, 1990, p.120). In July 1982, a market-based labour contract regime in Shenzhen was formally established through legislation and the practice was expanded to all employment units, even government bodies. In August 1986, based on the experience of contract labour practice in Shenzhen and other SEZs, the State Council in Beijing reformed the labour regime at the national level. The commodification of labour was formally legitimised and institutionalised in the first plenum of the Fourteenth Central Committee in 1993 (Yang, 1998, p. 403).

It was under the influence of Hong Kong investors, therefore, that the local and central leaders with ex ante conviction to carry forward the experiments of SEZs and other ‘socialist modernisation’ projects made their first major step, willingly, towards a capitalist system. Hong Kong investors rushed into Shenzhen after the adoption of a contract-based flexible labour regime. However, on the supply side, most jobs were still allocated by the government and industrial growth quickly bottlenecked by a labour shortage. In 1984, the Shenzhen government made another major move to relax hukou (household registration) control and allowed rural residents, who had been barred from urban areas for several decades, to enter Shenzhen to undertake industrial, commercial and service activities under the name of temporary contract workers as a makeshift measure (Xu, 2008). While ‘rural migrant workers’ (nong min gong) have quickly risen to become Shenzhen’s predominant workforce, without local hukou they have been, and still are, treated as second-class citizens, not only just earning some minimum wage but also being denied most urban welfare entitlements—for example, child education, housing subsidies and unemployment protections (see Chan, 2009). In 2009, the officially reported number of Shenzhen’s non-hukou permanent residents was 6.5 million, 2.7 times the 2.4 million hukou residents (Shenzhen Statistical Bureau, 2010). A more realistic source shows that the number of Shenzhen’s non-hukou residents in 2008 was around 12 million, 88.5 per cent of whom were rural-hukou holders; they accounted for over 85 per cent of Shenzhen’s workforce, but only about 2 per cent of them held a bachelor’s degree or technical certificate. ² Certainly, Hong Kong’s liberal regime has no migration control through such a Soviet-style internal passport system, but it is not in the interest of the party élites substantively to relax the hukou regime.

The (re)formation of Chinese capitalism, therefore, was initiated as a cross-border phenomenon, signified by the historical “encounter of [diasporic] foreign capital and Chinese labour, entrepreneurs, and government officials” spearheaded by the Shenzhen SEZ (Arrighi, 2007, p. 351). Financial pressure on the Shenzhen municipal government (SMG), however, was quickly escalated by this encounter and the speeding-up of Shenzhen’s urban construction. Hong Kong business tycoon Henry Fok made his suggestion to both Shenzhen and central leaders to adopt Hong Kong’s land leasing system, which can bring in handsome income to the government to ease its financial pinch and allow rapid urban development (Zhao, 2010, pp. 108–109; Xu, 2008). Although the free use of land by work units had already been terminated in 1982 (Zhu, 1996), it was unclear how a system of land commodification might be established under socialist public landownership. In 1986, the SMG then sent a special task force to Hong Kong in order to understand its land management regime (Xu, 2008, p. 232). In particular, the task group paid an on-site visit to Hong Kong’s land auctions, accompanied by the director of the Hong Kong Institute of Surveyors. Based on the report later submitted to the SMG by the task force, a proposal for land management reform in the SEZ was approved in July 1987. On 1 December 1987, the first land auction in the PRC’s history was conducted in Shenzhen, witnessed by central government leaders, 17 mayors from other Chinese cities and many Hong Kong business people (Xu, 2008). Such an action was indeed unconstitutional as any kind of land commodification was then prohibited by China’s constitution. The practitioners dared not use the name ‘auction’ (paimai), but ‘public bidding’ (gongkai jingtou) instead (Xu, 2008). Nevertheless, this event was deliberately publicised nationally and led to a constitution revision in April 1988, allowing land use rights to be ‘transferred’ with a fee without landownership privatisation. Once again, another major capitalist component imported from Hong Kong to Shenzhen was then exported to China at large. This imported approach of land commodification did solve the immediate financial constraint of the SMG. Just from the two years 1988 to 1989, land leasing fees in Shenzhen reached 300 million yuan. From 1988 to 2000, Shenzhen’s land leasing revenue reached 40 billion yuan, without which Shenzhen’s rapid urban expansion would be unthinkable (Tao and Lu, 2008, p. 44). This ‘Hong Kongisation’, however, also opened a Pandora’s box when ‘land development fever’, ‘zone fever’, and ‘real estate fever’ subsequently swept China; it became a hotbed for speculation and corruption, and a troublesome defining feature of China’s urban growth model (for example, Cartier, 2001; Tao et al., 2010).

Since then, learning from Hong Kong’s institutions and practices through dispatching task-specific delegations from different government departments has become routine, and Hong Kong has literally become Shenzhen’s ‘big master’ for policy learning. For example, in late 1996, the Deputy Director of Shenzhen’s Urban Planning and Land Resource Bureau Li Jialin led a team of all the major technocrats under his umbrella to visit Hong Kong. After 20 days of scrutinising Hong Kong’s urban planning, land use regime and real estate development, a book, which was a key document guiding Shenzhen’s subsequent urban planning practices, was then published based on the investigation reports (Liu, 1998). Therefore, it was largely through knowledge imported from neighbouring Hong Kong that Shenzhen’s capitalist fundamentals were assembled bit by bit. Indeed, Shenzhen has done nearly everything possible to imitate Hong Kong (see Yeung et al., 2009). The Shenzhen Stock Exchange launched in 1990, for example, was also modelled on Hong Kong’s. The imperatives for such institutional emulation, in turn, were preconditioned by the geographical propinquity and resource complementarity of the two cities, arising out of the capital accumulation drive of Hong Kong investors, supplemented by the aspiration of state officials from Beijing to Shenzhen to ‘develop the production force’ and to achieve their modernisation and urbanisation imaginaries.

Policy Mobility, Policy Legitimacy and Poly-scalar Politics

Largely driven by pragmatic imperatives and informed by relevant models and practices in Hong Kong and elsewhere, new institutional elements and policy designs have gradually replaced, or been combined with, the existing ones in Shenzhen. Such a process, however, was anything but smooth or automatic (Lai, 2006; Zhao, 2010). Since the political power and autonomy of the Shenzhen SEZ is bestowed by the CCP’s Central Committee and the central government, the SEZ’s policy importing processes must follow the guidance of and be endorsed by the centre, as well as complying with the provincial leadership. However, in China’s reform era before 1992, the centre was not quite unified, but was characterised by ‘twin peak politics’ (shuang feng zheng zhi): one peak comprised the liberal ‘reformists’ gathered around Deng Xiaoping and another, slightly lower, peak was made up of the socialist ‘conservatives’ led by Chen Yun (Yang, 2004, pp. 4–5; Lai, 2006). Within the CCP, Chen Yun had even higher seniority than Deng and continued to be respected as the Party’s chief economic authority in Deng’s era. Chen was supportive of Deng on a series of major issues, but their disagreements remained pronounced (Zhao, 2010, p. 101; Yang, 2004). Unlike Deng’s enthusiasm about the market, Chen’s fundamental belief of the “planned economy as primary, market adjustments as auxiliary” never changed (Zhao, 2010, p. 94). Chen had strong doubts and objections to the idea of SEZs from the very start and he never set foot in any of them (Crane, 1990, p. 29; Zhao, 2010, p. 95). Against Deng’s will, Chen emphasised to party leaders in December 1981 that the negative aspects of SEZs must be paid attention to and that they should not be expanded any further, particularly to areas like Shanghai (Zhao, 2010, p. 102). Struggles between the two peaks resulted in cyclic and capricious shifts in the political climate: an overrun of liberalisation in even years, and counter-attacks by the left-wing in odd years, as summarised tellingly by Deng Liqun, then Director of the Research Office of the Secretariat of the CCP (Yang, 2004, p. 9).

Opposing views and voices at the centre greatly puzzled and pressured the SEZ leaders during 1982 and 1983 (Crane, 1990, p. 93). It was Deng Xiaoping who played the role of a sturdy rescuer by his personal visit to Shenzhen and two other SEZs in January 1984 and his written statement that

The development and experience of the Shenzhen Special Economic Zone prove that our policy of establishing such zones is correct (Deng, 1993, p. 52).

Having returned to Beijing, Deng made a very sanguine interpretation of the Shenzhen SEZ and further propagated the great ‘window effects’ of SEZs at the national level in transmitting technology, knowledge and management expertise, and facilitating foreign policy (Deng, 1993, p. 51). He thus pressured the central government in April 1984 to expand the SEZ policy by opening 14 coastal cities and the entire Hainan Island to foreign investments (Crane, 1990, p. 94). In February 1985, three coastal areas (Pearl River Delta, Southern Fujian Delta, Yangze River Delta) were designated as Open Economic Zones (OEZs) endowed with similar preferential incentives to promote export production and foreign investment. Therefore, it was through the strong push of Deng Xiaoping and his supporters at the top that Shenzhen’s imported capitalist institutions and policy practices became legitimised and exported nation-wide.

Nevertheless, a new round of criticisms against the Shenzhen SEZ was quickly launched by the conservatives in 1985. In Beijing, on 25 April, Vice Premier Yao Yilin argued that Shenzhen was rather parasitic and it was only sustained through continual ‘blood transfusions’ of domestic investment (Crane, 1990, p. 113). Hong Kong scholar Thomas Chan in an influential article published in May 1985 showed clearly, using figures from 1983/84, that Shenzhen failed to achieve its originally intended targets such as attracting foreign investment, fostering industrial production, earning foreign exchange through exports and stimulating technology transfer. These findings called Deng’s positive interpretation and enthusiastic promotion of SEZs into serious question. Deng’s optimism over the national importance of SEZs, so evident in early 1984, thus quickly became dimmed and, in July 1985, he characterised SEZs tentatively as “experiments” that could fail (Deng, 1993, p. 133).

The Tiananmen crisis and the fall of communism in the Soviet Union and eastern Europe in 1989 reduced Deng’s glory and triggered new debates on the political justifiability of the open-door policy and capitalist development in SEZs. In 1992, Deng purposefully conducted his widely publicised southern tour, which was indeed a ‘desperate venture’ to cement his reform project before his ultimate disappearance from the historical stage (Yang, 2004, p. 467; Fewsmith, 2008). Deng rebuked his opponents, arguing that the more foreign investments then the more capitalist elements “lack basic knowledge” and asserted, once again, that “SEZs are socialist, not capitalist” (Deng, 1993, pp. 371–372). In response to Deng’s backing of the SEZ policy and new call for the further opening-up of the local economies around China, thousands of development zones (kaifaqu) were established by local governments to attract foreign investment and the process of the Shenzhenisation of China culminated (Wei and Liu, 2001). In October 1992, at the 14th National Congress of the CCP, the building of a ‘socialist market economy’ was formally announced as the overarching goal of China’s economic reform. The evolutionary reforms finally transfigured into a revolution: the battle over the legitimacy of the SEZ policy was virtually over; the debate between capitalism and socialism in public discourse was successfully quenched; and the road to further neo-liberalisation is paved.

While Deng achieved the project of economic liberalisation, it was not his intention to make way for political liberalisation, but to keep the core features of the Leninist party-state intact (Fewsmith, 2008, pp. 28–29). When clearing the way for the leap forward of marketisation in 1992, Deng reasserted the constitutional principle of “the people’s democratic dictatorship” premised upon the CCP’s leadership, which consolidated the institutionalisation of the Chinese model of the market economy plus authoritarian single-party rule (Yang, 2004, p. 482). The political baseline of perpetuated single-party authoritarianism has served as the cornerstone of China’s RDA regime, having a strong and lasting imprint on Shenzhen’s processes of policy borrowing. Under the RDA regime, the limit for Shenzhen to emulate Hong Kong, the world’s greatest experiment in laissez-faire capitalism as it was once described by Milton Friedman (1998), gradually surfaced. The tenet of Hong Kong’s urban governance is to trust the ‘hidden hand’ of the market rather than the ‘clumsy bureaucratic fingers’ of the government (The Economist, 2010, p. 74), apparently at odds with the CCP’s interest for an omnipresent, authoritarian government.

It is crystal clear that policy-makers, in both Beijing and Shenzhen, never intended to relax state control to the extent of Hong Kong’s. Critiques of Hong Kong’s minimum state were frequently found in the reports of the investigators sent from Shenzhen to Hong Kong. In an investigator’s report comparing Hong Kong and Shenzhen’s taxation system, the authors commented that

Shenzhen’s market economy is only about to take off, and it is natural for the level of the state’s regulation and control of the economy to be high; it is unrealistic to achieve limited or even no state intervention (Zhang and He, 1998, p. 48).

Another investigator commented that

Hong Kong’s government has never conducted a medium to long term economic development plan; the government only passively followed the signal of the market and corporations. An economic risk control system has never been established; studies and reflections frequently take place ex post, consequently the [negative] influence of global economic cycles has to be passively accepted (Liu, 2002, p. 77).

Still, commenting on the role of industrial policy, investigator Liu remarked

Because of the lack of state support, Hong Kong’s technological foundation in manufacturing has become far left behind by South Korea, Singapore and Taiwan, and therefore Hong Kong’s laissez-faire economic principle has increasingly exposed its deficiency (Liu, 2002, p. 39).

To be sure, Shenzhen’s interaction and integration with Hong Kong has been increasingly strengthened, and learning from Hong Kong continued. The policy knowledge that this ‘big master’ has to offer to Shenzhen, however, has been considered as increasingly questionable and inadequate to match Shenzhen’s political baseline and rising aspirations; hence, some ‘new masters’ are in demand (Xu et al., 2008, p. 71).

Singapore as the Rising New Master: Perpetuating Single-party Authoritarianism?

Relieved from the burden of political legitimacy, the aspiration of Shenzhen’s leadership has been rising together with its economic growth. Shenzhen’s urban growth target was elevated in 1996 from a ‘regional city’ to a ‘world city’ and further upgraded in 2008 to “catching up with Hong Kong, Singapore, and Seoul in 10 years, and to become a top world city in 30 years” (Xu et al., 2008, p. 25). Consequently, Shenzhen’s municipal leaders have substantially enlarged the geographical radius of their policy screening. Since 1996, the CCP’s Shenzhen Organisational Department started to send 50 or so local government officials to a one-year overseas training programme in Hong Kong, the US, Germany, Japan, South Korea, Singapore and elsewhere. From 2001 onwards, the number of officials sent out increased to approximately 200 per year (Organisational Department of CCP Shenzhen Committee, 2003). Every trainee spending over three months overseas was required to submit a lengthy individual report after their return. The products of overseas learning were assembled and distributed through multiple channels, including debriefing conferences, reports, TV programmes and documentaries; and investigation reports have been selectively published in a book series: Shenzhen Stepping out to the World—Study of the Successful Management Experience of International Cities. Meanwhile, English training courses have been offered to the cadres at home.

If the global screening is to build the breadth of policy knowledge, Singapore has gradually replaced Hong Kong and become Shenzhen’s ‘new master’ for in-depth policy borrowing. Shenzhen’s gesture of policy learning from Singapore dates back to 1983, when Mayor Liang Xiang and other municipal leaders visited Singapore to search for clues to advance the SEZ project (Xu et al., 2008). However, Singapore’s status as a role model to Shenzhen has been raised tremendously more recently. For example, in July 2007, 22 top municipal leaders led by Mayor Xu Zongheng visited Singapore, aimed at studying Singapore’s practices in urban planning and governance (Xu et al., 2008). Five days of intimate contact with Singaporeans, however, only convinced them that some more profound and systemic study was necessary. Upon returning, an unprecedented ‘super delegation’ of 129 municipal leaders was quickly assembled and sent back to Singapore a month later. This ‘super delegation’ was headed by the mayor again and sub-divided into 10 specialised task groups, including urban planning, public administration, legal enforcement, housing provision, transport management and green building. A learning gesture of this magnitude was unprecedented and the goal of this ‘super delegation,’ as stated by Mayor Xu, was ‘true knowledge’ and task-specific ‘deep learning’ through ‘systemic comparison’ and ‘case dissection’ (Xu et al., 2008, p. 88).

This emerging ‘Singapore fever’, however, was not an isolated local initiative, but a national phenomenon strongly influenced by the central and provincial policy-makers. For instance, during his Singapore visit in April 2009, Li Yuanchao, the Minister of the CCP’s powerful Central Organisation Department that controls personnel appointments nation-wide and runs all the CCP cadres’ overseas policy-learning programmes, stated

Our leading officials are receiving training in many parts of the world, including America, Europe and Japan. However, among all the training destinations, Singapore is the top choice (NUS, 2010, p. 5).

Yet how could tiny Singapore become the CCP’s top choice for cadre training across the globe? Minister Li explained, vaguely, that this is due to good Singapore–China relations and the ‘commonalities’ between the two countries (NUS, 2010, p. 5).

To be sure, the dominant presence of ethnic Chinese in Singapore, the convenience of communication in Chinese language, and certain shared Chinese cultural traditions can all be commonalities attractive to Chinese policy-makers. The most important ‘commonality’ not explicitly mentioned by Minister Li, however, is the single-party authoritarian rule, although the difference between Singapore’s parliamentary democracy and China’s ‘people’s democratic dictatorship’ is not trivial at all. The celebrated economic and urban success of Singapore, in sharp contrast to Hong Kong, has always been led by a strong developmental state under the authoritarian rule of the People’s Action Party (PAP) ever since its independence (Pereira, 2008). As Douglass North (2005, p. 105) comments, “Authoritarian rule can, and does, vary, from Josef Stalin terrorism to the ‘Singapore’ model”. Singapore’s urban/national development has been a seamlessly controlled mega project, designed to serve the political ends of the ruling party (Shatkin, 2011). PAP’s longevity of single-party rule and strong presence of the state in socioeconomic development, on top of Singapore’s economic success, have been the real appeal to the CCP leaders (Cai, 2010).

The CCP and PAP were once political foes, but a breakthrough was reached in 1978 after Deng’s official Singapore visit. The CCP’s ‘learning from Singapore’ frenzy was especially sparked by Deng’s southern tour in 1992, when he praised Singapore as an orderly and well-governed country, and said that China must not only learn from Singapore but also surpass it (Deng, 1993, pp. 378–379). In the same year, Singapore’s Nanyang Technological University (NTU) began conducting short-term management and public policy courses for CCP officials, earning it the nickname ‘overseas cadre school’ (NTU, 2009). Since 1998, two Master’s programmes, dubbed “the mayors’ class,” have been offered to cater to Chinese government officials, especially mayors. To date, the two programmes have trained over 1000 senior and middle-ranking officials from diverse provinces and cities across China, and over 10 000 short-term trainees (Song, 2010). Another one-year, full-time Master in Public Administration and Management programmeme, targeting Chinese officials, was begun on 17 April 2010 at the National University of Singapore (NUS, 2010, p. 5).

As Zhao (2009) points out, “China has never learnt from another nation so wholeheartedly for such a long period and still remained enthusiastic about it”. Mr Lee, Singapore’s Minister of State for Manpower and Trade and Industry, explains: “The CCP was looking for its mirror image, its real counterpart” (Cai, 2010). Professor Lu Yuanli, who moved from the Central Party School to Shenzhen University in 1994, published a book entitled Why Can Singapore Do It?, the core issue of which is how the single-party rule has been sustained in Singapore and what the CCP should learn from it (Lu, 2007). Lu also believes that a similar political ideology and similar ways of governance are the key reasons that China emulates Singapore rather than any Western democracy.

On 27 December 2007, Wang Yang, the incumbent party secretary of Guangdong Province, explicitly ordered Shenzhen to “challenge (jiaoban) Singapore” (Southern City Daily, 2007). Wang re-emphasised his call after his official Singapore visit in September 2008; and a month later, the Director of the CCP Guangdong Organisation Department flew to Singapore to arrange specific cadre training programmes, and soon 15 senior Guangdong officials were sent to the NTU ‘mayors’ class’ (Song, 2010). Meanwhile, China’s first centre for Singapore studies opened at Shenzhen University on 1 November 2008, headed by Professor Lu Yuanli (Kam, 2008). The distinguished guests invited for the inauguration ceremony included Professor Zheng Yongnian, director of the East Asian Institute (EAI) at the NUS, EAI’s research director Professor John Wong, who has been appointed honorary director for the new centre, and Lau Ping Sum, former member of the Parliament and executive director of the PAP headquarters.

In Singapore, urban planners have almost absolute power to shape urban development; land use can be easily manipulated via dominant state ownership; city authorities exert both regulatory and economic control over major corporations; and the government owns and manages most of the housing (Shatkin, 2011). Although such a high level of state dominance has few parallels in the neo-liberalising capitalist world, China is certainly an evident exception. Shenzhen’s ruling élites are thus keen to borrow from Singapore the governing techniques that may enable a comprehensive regime of social control, even though this may run the risk of emasculating civil society and community agency. For example, Shenzhen’s 2007 ‘super delegation’ to Singapore made a particular effort to examine the nuances of street policing, law enforcement and personnel management under Singapore’s authoritarian regime (Xu et al., 2008). Besides, different from Hong Kong’s lack of technological progress, Singapore was esteemed as a successful traveller along a complete path of industrial upgrading from labour intensive, to technical intensive, to capital intensive, and to science and knowledge intensive. Aspiring to become the first state-designated ‘national innovative city’, Shenzhen technocrats also worked hard to absorb Singapore’s expertise in planning and governing industrial parks, and policy tools targeting industrial upgrading and innovation, the fruits of which have been subsequently integrated into Shenzhen’s Master Plan of National Innovative City (Shenzhen Science and Technology Expert Committee, 2006; Shenzhen Municipal Government, 2011).

Nevertheless, ‘sensitive’ domains such as Singapore’s democratic system and near-universal public housing have been purposefully avoided after deliberation. For example, Shenzhen leaders concluded that their city is not only much poorer than Singapore, but also incapable of policing its border like a city-state; thus it is unable to exclude undesirable (domestic) migrants and therefore it is inappropriate for Shenzhen to imitate Singapore’s inclusive public housing programme (Xu et al., 2008, pp. 73, 242). Indeed, for the ruling élites, learning from Singapore under the banner of boosting indigenous innovation and industrial upgrading, means casting off, rather than helping out, Shenzhen’s vast rural migrant workers. Such a policy has been articulated famously by Mr Wang Yang as ‘vacating the cage to change the birds’ (teng long huan niao), which implies making space for higher-end industries by vacating lower-end labour-intensive industries, and removing ‘low-quality’ migrant workers to increase the average ‘population quality’—the figure of GDP per capita—thus making room for ‘high-quality’ talent (Wang, 2008). Almost entirely excluded from the authoritarian policy-making process, the ‘second-class’ migrant workers—Shenzhen’s dominant workforce—have no choice but to take it as their fate to be deprived of basic citizen rights or even jettisoned as bad assets from this rising world city (see Zuo, 2010).

Shenzhen’s policy learning gesture from Singapore has been elevated to a new level since June 2009 with the appointment of the new mayor Wang Rong, who had been the party secretary of Suzhou since 2004, and the leader of China Singapore Suzhou Industrial Park, the flagship project of PAP–CCP collaboration initiated in 1994 (Wang, 2010). For his achievement in Suzhou, Wang was praised repeatedly by Singapore’s founding father Lee Kuan Yew as ‘the apprentice surpassed the master’ (qing chu yu lan); Wang Rong was proud of this and said that he is especially keen for Shenzhen to emulate Singapore’s urban governance system and business-friendly principles (Wang, 2010). Ironically, Wang Rong’s sudden arrival in Shenzhen was due to the deposition and arrest of Mayor Xu Zongheng, together with several other major municipal leaders, not long after their high-profile policy-learning trips to Singapore. Xu recently received a suspended death penalty for taking more than US$5 million in bribes, helping nine units or individuals to alter land development plans, win construction contracts or seek promotion since 2001 (Shenzhen Daily, 2011). This raises serious questions about the genuineness of Shenzhen’s policy learning gestures from Singapore.

Conclusion

China’s long march towards market capitalism has been considered as one of the most significant landmarks of the ascendancy of neo-liberalism over the past three decades. As Deng Xiaoping’s flagship laboratory, Shenzhen’s urban and institutional transformation is synchronous and constitutive to China’s shift from state socialism to an increasingly enthusiastic embracer of global capitalism. This paper illuminates the unique mode of Shenzhen’s insertion into global neo-liberalism through selective policy emulation and its transformative impacts nation-wide. Starting with Shenzhen, China’s process of market transition was neither unilaterally imposed from outside, Washington-consensus style, nor technocratically prescribed from the centre, according to some fixed developmental blueprint. Instead, it progressed through ‘feeling for stones’ and Shenzhen SEZ was the stone par excellence being felt. The nuances of Shenzhen’s policy-making processes and the associated poly-scalar interactions elaborated in this paper also suggest that the reform process has not so much been a class-driven, hegemonic project, simply subordinating public interest to the interests of capital and state regulation to free markets, as commonly assumed in the neo-liberalism literature (for example, Harvey, 2005). Instead, this study elucidates the pro-active role of idiosyncratic historical-geographical conjunctures, pre-institutionalised state–society relations and pre-structured ideological-institutional frames, which have been inadequately accounted for in the literature of neo-liberalisation, in shaping the mobility of policies and provoking changes in modes of policy, governance and regulation.

It was Mao’s disastrous enactment of his utopian fantasies and the failed attempt to recentralise the economy after the Cultural Revolution that compelled Chinese leaders to move away from the centrally planned economy and to seek solutions from the outside world. This confirms the near-universal truth that major changes often occur in times of crisis, when ‘solutions-starved’ actors are pressured and novel responses are conceived and legitimised (McCann and Ward, 2012, p. 45). The origination of the SEZ policy was a multiscalar phenomenon and the idea was conceived in the minds of both local and central leaders through their intentional and unintentional exposure to international practices, especially the EPZs. It was neither an externally coerced process, nor a neutral, rational learning process. Instead, it was largely a politically constructed process of trial-and-error, contingently defined and executed on the basis of partial information and asymmetric power relations. The subsequent moves to institutionalised capitalism were also not planned ex ante; they were but a chain of reactive measures enabling a tentative and exploratory attempt at reform to take root and persist. Ultimately, seemingly incremental, small adjustments, rather than carefully designed extraordinary efforts, have generated revolutionary outcomes.

The paper argues that Shenzhen’s experimental process of policy-making in the past three decades can be broadly divided into two stages: creating capitalism and governing capitalism. During the first stage, the geographical proximity between Hong Kong and Shenzhen played a key role in creating the capitalist fundamentals for both Shenzhen and China. Although major decisions were made at the top, or remotely in Beijing, the policy details were actually worked out adaptively on the ground, often driven by the imperatives emanating from mundane daily practices. Hong Kong was not only a convenient source for policy imports, but also Hong Kong investors in Shenzhen, as policy-takers, served as an active force driving policy changes on the ground. Therefore, geography matters, influencing the substance of the interactions between the policy-exporting and policy-importing places. The geography-mediated mutation from export processing zones (EPZs) to special economic zones (SEZs) has further indicated the likely hybridisation of rational deliberation and path-dependent political legitimisation when policy is on the move. The sustaining of SEZ policies in Shenzhen and their nation-wide expansion were largely determined by the ex ante conviction and enduring endorsement of the paramount political leader Deng Xiaoping and his supporters, rather than rational calculations based on accumulated data. This further testifies to the importance of the characteristics and actions of key policy mobilisers in shaping policy mobility.

The new leadership since Deng was determined to get China back on the road to wealth and modernisation, but not to give power to the people, or the ‘free market’ (see Fewsmith, 2008). The CCP has stayed at the commanding heights of the Chinese economy and society throughout the reform process and China’s neo-liberalisation has been characterised by neither political liberalisation nor economic non-governmentalisation. The party leaders were never convinced by the desirability of the self-regulating market, as suggested by the Washington Consensus. Instead, they have been eager to search for pragmatic policy tools to ‘govern the market’ (Wade, 1990). This largely explains why Shenzhen’s target of policy emulation shifted from laissez-faire Hong Kong to authoritarian Singapore when the market fundamentals were established. It was predominantly Singapore’s success in harnessing urban/national development to an agenda of political hegemony via state dominance of land, property, built environment and the economy that has drawn governing élites from all over China to Singapore. The distinctive feature of Singapore as a city-state further rendered it an allure for Chinese states at all administrative levels, which in turn strengthened Singapore’s appeal to Shenzhen, as the nomenklatura system gives strong incentive for local officials to follow proactively and please their upper leaders. However, such a recipe for building state hegemony has also been a recipe for deepening social inequality and conflict.

The concentrated nature of power and the lack of a genuine system of accountability of the party-state have led the policy-making process to drift farther and farther away from the interest of the ordinary policy-takers—particularly the 10 million or so peasant migrant workers in the case of Shenzhen—to become an élitist, non-progressive agenda, defined by the fashionable notion of a world city or innovative city. Before 1992, the reforms had largely been bounded by traditional socialist ideology and intraparty struggles. The triumph of Deng Xiaoping over his political rivals, the formal enshrinement of the market economy and the further fusion of economic and political power have virtually eliminated the remaining weak constraints on the power of the party-state. When policy borrowing has become more deliberative and selective, it has also turned more non-progressive and exclusive, since there is not much incentive for the ruling élites to hold themselves accountable to citizens and to respond to the rising demand for political democracy and social equity. Ultimately, the universal challenge to fair and just policy-making is an issue of political representation and participation—or, to put it differently, quis custodiet ipsos custodes.