The Yangpu Economic Development Zone is a 30-square-km area of land offered to lease for periods as long as 70 years. It is a free trade zone where, as envisaged in the development programme, export-oriented, advanced industries and a tertiary trade will spring up.
Yangpu, a 150 square-km peninsula located in Danxian County in northwestern Hainan Province, is 140 km away from the capital city of Haikou. The 30 square-km development zone lies at the tip of the peninsula.
The houses in the small town of Ganchong, a place much like a big village, are shabby. The small building which houses the Office of the Yangpu Economic Development Zone (YEDZ)seems to be the best in the town. Li Huandu, deputy director of the zone, said, "We have been here for eight years; now, the day of development has finally arrived." Li was transferred to the area from a Danxian county government department in 1983, first for the establishment of Yangpu Harbour and now for the construction of the development zone. He is excited that the cause for which he has spent so many years will unfold. "Local residents were also jubilant when they heard the news that the development of the YEDZ would go forward," Li said.
Li said that Yangpu is not suitable for agricultural development but that it abounds in advantages for industry and trade. "Yangpu is a natural harbour," he said. "The three-km-long land belt breaks the deep ocean swells and keeps Yangpu Harbour calm. The flow of the tide in the bay is long and slow while the ebb tide is fast. Thus, the bay is free of silt deposits."
General Secretary Jiang Zemin (second right, front row) in Yangpu in May 1990 (JIANG ENYU)
With a coastline of 110 km, the Yangpu Peninsula can accommodate 26 deep-water docks for 10,000-ton-class ships. Yangpu Harbour is located in the central area of the Asian-Pacific economic sphere and is in the centre of the international shipping lane. In early 1919, Dr Sun Yat-sen (1865-1925) proposed construction of a harbour at Yangpu. Also, in the 1970s, the late Premier Zhou Enlai suggested that 200 docks that could accommodate 10,000-ton-class ships be constructed in China, a figure which included a dock at Yangpu.
Yangpu and its surrounding area are richly endowed with such natural resources as natural gas, oil, salt and titanium, a boon for development of petrochemical, salt chemical and titanium industries. In addition, there are large reserves of brown coal, oil shale, fine quality quartz sand and limestone ore, which can be exploited to develop energy and building material industries.
The terrain in the zone is flat and the amount of earth and stone work required for capital construction reasonable. The geological conditions include a horizontally extended thick rock layer beneficial for industrial and urban construction.
In 1988, the Kumagaya-gumi (Hong Kong) Co. Ltd. signed a contract with Hainan to obtain a lease of 30 square km of land in Yangpu for a term of 70 years. Since then, the company has put a lot of effort into preparatory work. An international trade centre, a rear base for the Yangpu Economic Development Zone during the early period, was completed in Haikou last year. Covering an area of 5,000 square metres, the centre was built at a cost of US$50 million. The State Council gave Yangpu approval to attract foreign capital for development on March 13 and Yu Yuanping, general manager and vice-chairman of the board of directors of the Kumagaya-gumi (Hong Kong) Co. Ltd., arrived in Yangpu the following day. There, he discussed matters concerning the development of Yangpu with Mao Zhijun, (deputy governor and director of the Yangpu Development Office) and Bao Keming (deputy governor in charge of Hainan's routine work). Yu is now organizing a development enterprise group which will include some large enterprises and of which his company will own 10 percent to 20 percent of stocks. Some large enterprises from Japan, Hong Kong and South Korea have expressed an interest in participation as have some large enterprises in China's mainland. The group will sign a formal land lease contract with Hainan Province.
Li Huandu (right), and Dai Yannian, deputy editor-in-chief of "Beijing Review." (CHEN ZONGLIE)
The Kumagaya-gumi (Hong Kong) Co. Ltd plans to pump 2.5 billion Hong Kong dollars into the first-phase project. The funds will cover land preparation and water, electricity, road and residential construction projects. Within two years, much of the residential construction will be completed. It is estimated that some 18 billion Hong Kong dollars will be invested in capital construction over a 15-year period. In the preliminary plan, 60 percent of the zone area will be used for light, heavy and tertiary industries while the remaining 40 percent will be used for residential and community areas. The total development and construction fee is expected to reach 130 billion Hong Kong dollars as the zone is transformed from an agricultural area with a population of 26,000 into a new urban centre with a population of 250,000.
Since the State Council approved the Yangpu Economic Development Zone, Li said, potential investors from many countries and regions, including Japan, the United States, Singapore, Belgium, Taiwan and Hong Kong, and from various provinces, municipalities and autonomous regions in the mainland have swarmed in.
Also a Bonded Zone
Ding Shilong, another deputy director of the Yangpu Development Zone Office, formerly did computer work for the Ministry of Electronics Industry in Beijing. He was transferred to Haikou in 1987. One day, he went shopping with his wife to a vegetable market. Both were shocked to find the market littered with chicken and duck droppings and a dead rat in the street. When he passed by the street several days later, the dead rat was still there. It was the kind of problem he was to deal with when he was later appointed deputy mayor of the city.
In recent years, Haikou has changed with each passing day. High-rises have sprung up, its streets are thronged with cars and business is brisk. When Ding received notice that he would be transferred to the bleak and desolate Yangpu, some people thought he would not go.
"Compared with other economic areas and special economic zones in China, the Yangpu Economic Development Zone has its own special features; it is breaking new ground," Ding noted with assurance.
The construction of infrastructure facilities in other economic development areas and special economic zones has required state investment. The zones then drum up trade with both domestic and foreign businessmen. "Our development zone has sold land-use right to foreign businessmen who then build infrastructure facilities and establish enterprises," Ding said. "After the Yangpu development zone builds its own infrastructure facilities, the state then invests. This practice is compatible with international practices."
Some economic development areas and special economic zones have established bonded warehouses or zones in their areas. In contrast, however, all of the 30-square-km Yangpu development zone is a bonded zone, the largest ever established by the Chinese government. Except for the levy of a 50 percent tax for the import of materials to be consumed in the zone, other import goods are exempt from licenses and customs duties.
Ding Shirong (DAI YANNIAN)
Staff members of the Kumagaya-gumi (Hong Kong) Co. Ltd. working on the Yangpu development scheme.CHEN ZONGLIE
The State Council has required the YEDZ to focus on export-oriented, advanced industries and proper development of a tertiary industry. Export processing enterprises, export-oriented warehouses, transport and packaging enterprises, enterprises engaged in transit and entrepot trade, as well as financial, real estate, bonds and debentures and information enterprises may be set up in the development zone.
In early 1989, one non-Party official was critical of the sale of land in the Yangpu development zone, saying that it would infringe upon China's sovereignty. His view was shared by some newspapers. As a result, the issue became more contentious.
When the matter was brought to Wang Zhen, vice-president of the People's Republic of China, in March 1989, he gave his support to the Hainan provincial government. On April 28, Deng Xiaoping also commented on the development of Yangpu, "The decisions of the Hainan provincial Party committee regarding the development of Yangpu are correct. This rare chance to develop Yangpu should not be delayed."
On May 16, 1990, General Secretary Jiang Zemin toured Hainan and clearly expressed his view that marking off a tract of land for development and attracting foreign investment in Yangpu was a positive step. He noted, "The Party Central Committee and the State Council support it. The introduction of foreign capital to develop land is a purely commercial action. We exercise control over administration of justice and public security there; it will not infringe upon China's sovereignty." Also, in April 1990, Premier Li Peng told Chinese and foreign reporters in Beijing, "The State Council supports the development of Yangpu in Hainan." When the premier was in Hainan on a visit in December, he affirmed, "We shall explore development of a major tract of land in Yangpu."
Ding said that before the State Council made the decision in March of this year, he and other leading members of Hainan Province participated in a symposium, which was hosted by Premier Li Peng, in Beijing. A detailed plan for the development of Yangpu was presented at the symposium and many issues were thoroughly explained. Those who attended the symposium later expressed their support for the sale of land-use rights.
The above-mentioned non-Party official who had misgivings about the sale of land-use rights in Yangpu has changed his views. A recent newspaper article quoted him as saying, "The State Council's decision to develop Yangpu with foreign capital is correct. I support the decision and will help recruit talented people for the construction of the Yangpu Economic Development Zone."
The Yangpu Harbour lies at the tip of the peninsula. A dozen or so new buildings have brought life to the coastal region.
The land in the harbour area belongs to the state. In line with the overall plan for harbour construction, the docks can be built with both Chinese and foreign funds; special purpose docks can be built exclusively by foreign businessmen. However, the administration of harbour navigation will be under the administration of the Chinese transportation department.
Foreign cargo ships at Yangpu Harbour (CHEN ZONGLIE)
The Yangpu Harbour has built with state funds one 20,000-ton-class multipurpose container dock, one 20,000-ton-class multipurpose coal dock and one 3,000-ton-class dock. Their annual handling capacity totals I million tons. Since beginning operations in January 1991, the docks have accommodated 40 domestic and foreign vessels. According to one port staff member, construction of the second-phase project of the harbour will begin next year and one multipurpose berth for 20,000-ton-class vessels and two ordinary berths for 20,000-ton-class vessels will be built. After the completion of the project's second phase, the handling capacity of the harbour will be doubled, meeting the construction needs of a 100-square-km industrial zone. In addition, one 35,000-volt transmission line has been erected and a substation basically completed. A ground satellite communication station has been opened and its 50 extra-high frequency circuits can be connected with 106 countries and regions in the world. Construction of a fresh-water project is in full swing and a 60-km-long highway linking the harbour with the ring highway has been constructed. The five main roads in the development zone have been opened. The people of Yangpu predict that great changes will take place in the next few years and that the development of Yangpu will promote the opening up of the entire province.