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Lateral Economic Cooperation

China also undertook measures to develop "lateral economic ties," that is, economic cooperation across regional and institutional boundaries. Until the late 1970s, China's planned economy had encouraged regional and organizational autarky, whereby enterprises controlled by a local authority found it almost impossible to do business with other enterprises not controlled by the same institution, a practice that resulted in economic waste and inefficiency. Lateral economic cooperation broke down some barriers in the sectors of personnel, resources, capital, technical expertise, and procurement and marketing of commodities. In order to promote increased and more efficient production and distribution of goods among regions and across institutional divisions, ties were encouraged among producers of raw and semifinished materials and processing enterprises, production enterprises and research units (including colleges and universities), civilian and military enterprises, various transportation entities, and industrial, agricultural, commercial, and foreign trade enterprises.

A multitiered network of transregional economic cooperation associations also was established. The Seventh Five-Year Plan (1986-90) divided China into three regions--eastern, central, and western, each with its own economic development plans. In addition to the three major regions, three echelons of economic cooperation zones were created. The first echelon--national-level economic development zones--cut across several provincial-level boundaries and linked major economic areas. Among these were the Shanghai Economic Zone, the Northeastern Economic Zone, the energy production bases centering on Shanxi Province, the Beijing-Tianjin-Tangshan Economic Zone, and the Southwestern Economic Zone. The second-echelon network linked provincial-level capitals with designated ports and cities along vital communication lines and included the Huaihai Economic Zone (consisting of fifteen coastal prefectures and cities in Jiangsu, Anhui, Henan, and Shandong provinces) and the Zhu Jiang Delta Economic Zone centered on the southern city of Guangzhou. The third tier of zones centered on provincial-level capitals and included the Nanjing Regional Economic Cooperation Association. Smaller-scale lateral economic ties below the provincial level, among prefectures, counties, and cities, also were formed.

Data as of July 1987