On Wednesday 14 October, Xi Jinping visited Shenzhen to mark 40 years since its establishment as China’s first special economic zone (SEZ), which the president dubbed “a miracle in world development history”. The creation of the SEZ in 1980, when today’s futuristic metropolis of 13 million inhabitants was a fishing village, was an early landmark in the opening up of the Chinese economy under Deng Xiaoping, and with it came probably the biggest economic story of our time: the integration of the Chinese and US economies.
US capital streamed into Shenzhen and other manufacturing centres and the output of their factories streamed back across the Pacific and into the hands of US consumers, a process particularly accelerated when China joined the World Trade Organisation in 2001. Supply chains for computers and other electronic products criss-crossed the Pacific – a large part of Apple’s production takes place at the Longhua complex on the edge of Shenzhen – and as China became wealthier, more investment started to flow in the other direction, into the US economy, where Chinese investors hoovered up stakes in car makers, technology firms and energy generation. China also used its surplus of US dollars to buy American debt and keep down the value of its own currency, the renminbi, becoming the biggest foreign holder of Treasury bonds.
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