As China marks the 30th anniversary of reform and opening up this year, we will look back at the groundbreaking events in Shenzhen that turned this former tiny outpost into a modern metropolis in less than 30 years. In the first of a special series, we present an inside story about the establishment of Shenzhen City in 1979, which heralded a miracle that has evolved over the past three decades.

WHAT is Shenzhen today was Bao'an County in 1979, a poverty-stricken neighbor of a prosperous Hong Kong. Every day, hundreds of locals and mainlanders from other cities, mired in poverty after three decades of planned economy and years of political turmoil, would risk their lives by swimming across the Shenzhen River to Hong Kong to pursue a better life. Some made it to the "gold rush" in the British-ruled territory, others drowned or were arrested.

The desperate illegal immigration rush was one of the thorny issues facing Zhang Xunfu, the first Party chief of Shenzhen City, when it was established in 1979. In late 1978, the Guangdong Provincial Government decided to upgrade Bao'an County, a border town with a population of about 30,000, to a city that would become the export base for Guangdong, which was then on the frontline of the country's opening-up drive after Deng Xiaoping opened China's door to the outside world.

"At least several hundred people were trying to sneak into Hong Kong every day (when I came here). Almost all working-age men (in Bao'an County) had fled to Hong Kong. Some people traveling from other cities even jumped into the Dongjiang River in Dongguan City, mistaking it for the Shenzhen River," Zhang recalled in a recent interview.

The government scrambled to stop the immigration rush, arresting illegal immigrants and sending them back to their hometowns. Zhang and other officials of the new city government realized that unless farmers in Shenzhen were as well-off as those on the opposite side of the Shenzhen River, the desperate efflux of immigrants would not stop. "The income of farmers in the New Territories in Hong Kong in 1979 was 40 times that of their Shenzhen counterparts," Zhang said.

Seeking overseas investment to develop industry, agriculture and tourism became the top priorities of the city government, Zhang says.

'Shenzhen' means fortunes

Even the name Shenzhen underlined the determination to turn around the battered economy. When Bao'an County was to become a city, officials debated what the new city would be named, Bao'an or Shenzhen.

Earliest known ancient records that carried the name of Shenzhen date back to 1410 during the Ming Dynasty (1368-1644). Local people called the drains in paddy fields "zhen." Shenzhen, which means "deep drains," was used because the area used to have bountiful rivers and streams and paddy fields with deep drains. Shenzhen was a township at the beginning of the Qing Dynasty (1644-1911).

According to Zhang, city leaders decided to name the city Shenzhen instead of Bao'an because the former was better known overseas and local people preferred a name implying "getting rich." In Guangdong and Hong Kong, water is synonymous with money and wealth, so "zhen," either referring to a river, stream or drain, was regarded as implying fortunes. The name was then approved by the Guangdong and Central governments.

Farm reform

Soon after the establishment of Shenzhen City, the local government issued its first policy partly aimed at ultimately solving the immigration problem. According to the new policy, 13 communes and townships, which covered an area of 327 square kilometers, were designated as a "get-rich-first zone" -- the predecessor of the special economic zone -- where farmers were for the first time allowed to sell their products at the local market and export to overseas markets. At that time, trade was banned in China under the Soviet-style planned economy and reform was yet to unfold across the country.

City leaders also instituted bold moves to allocate farmland to each household, a politically risky departure from the country's commune system. "Without such a move, farmers would not become rich and the illegal immigration could not be curbed. I thought a lot about the policy risk. I told my colleagues: 'I am the (Party) secretary, I will take the blame if it goes wrong,'" Zhang said.

Dawn of industrialization

In 1979, Shenzhen was a rural society with no factories except a farm machinery workshop. "We knew Hong Kong faced declining competitiveness in international markets, with high property prices, a shortage of labor and high labor costs. Shenzhen would be attractive to Hong Kong entrepreneurs with low-cost land and labor. So we visited Hong Kong frequently, promoting Shenzhen whenever we met a capitalist," Zhang says.

An advertorial on the Ta Kung Pao dated early March 1979 showed Zhang and other officials held an investment promotion seminar in Hong Kong, unveiling incentives for Chinese-foreign joint ventures even before the Central Government officially legalized foreign investment in China.

The bold attempt proved successful. Hong Kong and Japan businessmen began to pour money into the barren land in Shenzhen. But without any precedent to follow, city officials had to find ways to circumvent rigid rules and laws. Hong Kong businessman Liu Tianjiu was the first overseas investor to develop property in Shenzhen. However, Shenzhen could not sell land lots because the land was owned by the State and no laws or rules allowed land to be traded or leased.

"A cadre in charge of housing named Luo Jinxing had an idea how a joint venture property development company could operate. His idea was adopted, with Shenzhen providing land while Hong Kong capitalists paid for development. Both sides shared the profits," Zhang recalled.

Although the business model worked, Shenzhen officials later found the city was in a disadvantaged position by just to providing cheap labor and land. So they provided land for industrial and business development on a shorter term of 15 to 20 years, allowing the city to share more revenue in the future.

Even then, the deals had to be signed in the name of "compensatory trade," as it was illegal to lease land at that time. "After this, we began to charge a 'land use fee,' which later led to Shenzhen becoming the first city on the Chinese mainland to auction land lots," Zhang says.

Ambitious goal

After discussions about how the new city should be built, where Hong Kong, Singapore and Switzerland were viewed as models, city leaders decided to turn Shenzhen into a garden-like, pollution-free, modern city.

"When we set the goal, some people ridiculed us. At that time Shenzhen was a tiny border town with less than 30,000 residents. The roads easily caved in under the weight of heavy trucks. It was a smelly place with flies almost everywhere. They said we were making a pipe dream," Zhang recalls.

Despite skepticism, the new city went ahead with ambitious plans. It took just two to three years to see major changes. "When I visited the Fishermen's Village in late 1981, the ramshackle houses were gone. Twelve families there had built 12 two-story villas. When Hu Yaobang, then secretary general of the Party, visited the village in 1982, he joked that the home of the village chief was better than his," Zhang said.

Of course, few people could then foresee that Shenzhen would become an economic powerhouse that has driven China's manufacturing boom, and a modern city with 12 million people in less than 30 years.

(Lin Min)

Shenzhen Chronology

1979

●Jan. 31. The Central Government approves the establishment of the Shekou Industrial Zone by Hong Kong-based China Merchants Group.

 ●March 5. The State Council approves Bao'an County to be upgraded as Shenzhen City.

 ●April 5. The Central Committee of the Communist Party of China proposes for the first time the trial establishment of "special export zones" in Shenzhen and Zhuhai.

 ●July 15. The State Council designates Shenzhen, Zhuhai and Shantou to establish "special export zones" on a trial basis.