Farms were given back to the farmers and they were now free to plan production, distribution, which lead to huge increases in productivity, surplus income and output. This new system led to surplus income being invested in the privately run town or village enterprises for light manufacturing. Young workers were now offered a contract system of employment instead of the previous lifetime assignment to a production unit. Permission to start small businesses such as restaurants and shops were now given to families and individuals. The government introduced a phased program of removing price subsidies on consumer good, which allowed the market to determine the price of goods to spur economic growth and encourage consumption. As these reforms began to stabilise in the Chinese economy, more goods appeared in shops and wages increased for several years. Amazingly the enduring problem of unemployment and underemployment reduced because of more and more people becoming self-employed. .
Also China was very encouraging to foreign investment due to globalisation, it announced a dramatic new openness to foreign trade, investment and borrowing. To achieve China's goals of reintegration with Taiwan and Hong Kong and an acceleration of outward economic development, four Special Economic Zones were established. Three of these SEZs were situated in Guangdong Province, Shenzhen, north of Hong Kong; Zhuhai, north of Portuguese enclave of Macau; and Shantou, opposite southern Taiwan. The fourth was Xiamen, which is in the southern part of Fujian Province along the Taiwan Strait. These Special Economic Zones offered a range of enticing incentives to attract foreign investors, such as exemption from taxes for a maximum of five years and permanently lower taxes, cheap land and labour and less stringent regulations. With these in place, trade grew from 10% of GNP in 1978 to 36% of GNP by 1996.
In major department stores today, shoes, shirts, sweaters and toys that once carried labels saying "Made in Korea" or "Made in Taiwan" now predominantly say "Made in China".
