Source: David Friedman’s Substack
by David Friedman
“Capitalist countries such as Japan were much more productive than China. To learn why, special economic zones were created, areas within which Hong Kong businessmen and other foreign investors would be permitted to start businesses. The plan was to use such zones to experiment with capitalist principles that might be useful to a socialist economy …. They were intended as a way of quarantining dangerous ideas to prevent them from infecting the greater society while at the same time extracting whatever in them was of value. Over the next thirty years the first, Shenzhen, expanded from a village of 30,000 inhabitants to a city of fourteen million, pulling in ambitious Chinese from all over the country. In 1984, the authorities responded to the success of the first four zones by authorizing fourteen more. Still more followed. The exception ate the rule.” (04/01/26)
https://daviddfriedman.substack.com/p/how-china-went-capitalist