<P> In China's modern day economic history the Open Door Policy refers to the new policy announced by Deng Xiaoping in December 1978 to open the door to foreign businesses that wanted to set up in China . Special Economic Zones (SEZ) were set up in 1980 in his belief that in order to modernize China's industry and boost its economy, it needed to welcome foreign direct investment . Chinese economic policy then shifted to encouraging and supporting foreign trade & investment . It is the turning point in China economic fortune that truly started China on the path to becoming' The World's Factory' . </P> <P> Four SEZs were initially set up in 1980, namely Shenzhen, Zhuhai and Shantou in Guangdong, and Xiamen in Fujian . These SEZs were strategically located near Hong Kong, Macau and Taiwan, but with a favorable tax regime and low wages in order to attract capital and business from these overseas Chinese communities . Shenzhen was the first to be established and it showed the most rapid growth, averaging at a very high growth rate of 40% per annum between 1981 and 1993, compared to the average GDP growth of 9.8% for the country as a whole . Further SEZs were later set up in other parts of China . </P> <P> In 1978, China was ranked 32nd in the world in export volume, but by 1989, it had doubled its world trade and became the 13th largest exporter . Between 1978 and 1990, the average annual rate of trade expansion was above 15 percent, and a high rate of growth continued for the next decade . In 1978 its exports in the world market share was negligible, in 1998 it still had less than 2%, but by 2010, it had a world market share of 10.4% according to the World Trade Organization (WTO), with merchandise export sales of more than $1.5 trillion, the highest in the world . In 2013, China overtook the USA and became the world's biggest trading nation in goods with a total for imports and exports valued at US $4.16 trillion for the year . </P>

How did the open door policy with china impact us banks and businesses