Since 1980 China has established special economic zones (SEZ) in Shenzhen, Zhuhai and Shantou in Guangdong and Xiamen in Fujan, and designated the entire province of Hainan a special economic zone so as to get better results of the reforms and opening to the outside world and stimulate economic development. In 1984 fourteen coastal cities were opened to overseas investment. Then in 1985 an open coastal belt zone was established, and in 1990 -- the Pudong New Zone. In addition, 15 free trade zones, 32 state-level economic and technological development zones and 53 new- and high-tech industrial development zones were established in large and medium-sized cities in China. The idea which stands behind the creation of these zones is to modernize the country, to foster the economic growth, to implant new technologies and management methods; above all to attract foreign investments crucial for introducing essential reforms. Territories of „testing" the market economy are the bridges diminishing the differences between mainland China and Hong Kong, Taiwan and Macau. Special areas, established on the coast, where there are excellent conditions for development of international trade and co-operation, gained the status of separated customs and administrative territories. The author describes the origin of these areas, conditions offered to foreign investors, legal background as well as the economic factors. Favourable tax rates, relaxed entry and exit procedures, facilities in establishing Chinese-foreign joint ventures attract foreign investment. In 1997 the GDP of five SEZ reached 252,2 billion yuan and their total import and export volume amounted to 65,8 billion USD. The paper contains brief characteristics of the foreign investment in China during last decade and comments on the economic and social effects of the implementation of the zones.