Xiamen, in southeast China's Fujian Province, has grown from a small island city to a modern, scenic port city in the past 25 years after being designated as one of the country's first four special economic zones in 1980.

Starting from 1997, every September the city is abuzz with activity as it prepares to hold its high-profile investment event, the China International Fair for Investment and Trade (CIFIT). This year's CIFIT will run from September 8-11.

The city, separated only by a narrow strip of water from Taiwan, is also an important base for cross-strait cooperation and exchanges and is becoming an economic hub along the western coast of the Taiwan Strait.

Export orientation

Xiamen's GDP stood at 47.65 billion yuan ($5.88 billion) in the first half of this year, growing 15.5 percent year on year, Huang Ling, Vice Mayor of the city, told Beijing Review. The secondary industry accounts for 60 percent of its GDP and plays a leading role in the city's economic growth, with electronics, machinery and petrochemicals being the three pillar sectors.

The city's economy is export-oriented, with heavy dependence on foreign trade. The ratio of imports and exports to GDP is about 40-50 percent, said Huang.

Statistics from the Xiamen Municipal Trade Development Bureau show that the average annual growth of imports and exports was 15.6 percent from 1995 to 2004. Last year, imports and exports shot up 28.67 percent year on year to reach $24.1 billion and represented 50.68 percent of the volume of foreign trade for Fujian Province. During the first half of this year, imports and exports grew at 18.7 percent year on year.

As a port city, the handling capacity of containers is the barometer of the city's economy, said Wang Yongjun, Director of the Xiamen Municipal Port Authority. In 2004, the port of Xiamen saw a container throughput of 2.87 million TEUs (20-foot equivalent units), ranking seventh among China's seaports and 26th in the world, according to Wang. In the first half of this year, the handling capacity of containers reached 1.6 million TEUs, a year-on-year increase of 15.1 percent.

"Xiamen's rapid development is inseparable from its foreign investment," said Sun Xiyou, Director General of the Xiamen Foreign Investment Bureau. "Foreign investment's contribution to Xiamen's overall economic development cannot be neglected."

According to Sun, in the past 26 years of reform and opening up, the annual average growth of Xiamen's GDP has been 18.3 percent, placing it alongside other Chinese cities with high GDP growth rates. Foreign-funded enterprises in Xiamen account for about 85 percent of the city's industrial output, 66 percent of its GDP, 65 percent of its exports, and 40 percent of its tax revenues. Of particular note is that in the past two years, paid-in foreign capital has grown at more than 38 percent annually, providing strong momentum to the city's economic growth.

Statistics from the Xiamen Foreign Investment Bureau show that, as of the end of July, 62 countries and regions had manufacturing bases in Xiamen. The city had approved altogether 6,722 overseas-funded projects, including those funded by Hong Kong, Macao and Taiwan, with 5,073 of them in operation. Contractual foreign investment totaled $22.52 billion and paid-in capital, $14.48 billion. The secondary industry, the city's leading industry, attracts the most overseas-funded projects, with 4,695 projects or 69.8 percent of the total, and a contractual foreign investment of $13.96 billion.

Foreign-funded companies in Xiamen include numerous energetic small and medium-sized companies, besides world-renowned multinationals. To date, 35 of the Fortune 500 companies, such as Kodak, Dell, GE, Boeing and Wal-Mart from the United States, Panasonic, NEC and Toshiba from Japan, and ABB and Philips from Europe, have invested in 60 projects in Xiamen, with a total investment of $1.69 billion, and contractual investment of $1.2 billion.

Of Xiamen's investment from outside the Chinese mainland, Taiwan is the second largest source, ranking after Hong Kong. The Xiamen Foreign Investment Bureau's data show that, as of the end of July, the city had approved 2,344 Taiwan-funded projects, accounting for 34.9 percent of the total, with contractual investment of $4.47 billion and paid-in capital of $2.8 billion. But in actual fact, said Sun Xiyou, Taiwanese investors lead the pack as some have their companies registered outside Taiwan and their investment does not get included in the statistics.

The majority of investment from Taiwan, or 86.86 percent, is in the secondary industry - in petrochemicals and the chemical industry, machinery, textiles and electronics. In contrast, primary industry investment stands at a mere 1.86 percent. However, more Taiwan-funded agricultural enterprises are now being established.