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Print Edition> Business
UPDATED: April 29, 2011 NO. 18 MAY 5, 2011
A Piece of Paradise
Uninhabited islands are up for development in China

A PEARL ON THE SEA: An uninhabited island stands in the sea near Sanya, Hainan Province (CFP)

Starting on March 1, 2010, China's Law on Island Protection went into effect. The law gives the country ownership of all uninhabited islands off its coast and calls for the building of a supervision and protection system. Under the law, new development projects on uninhabited islands will be subject to strict environmental impact assessments.

By the end of 2010, China's surveillance fleet had stopped about 30 instances of illegal development on islands. One case led to the demolition of 15 unauthorized villas in Hongcheng Garden on Ersha Island, south China's Guangdong Province, last June.

At present, 90 percent of the selected islands are smaller than 0.1 square km, and therefore unsuitable for real estate development, said Lu. "The development of these islands is expected to follow the Maldives Island pattern, focusing on tourism and other tertiary industries. People can share the public resources of these islands," she said.

Qingdao's Sanping Island in east China's Shandong Province is the largest island on the SOA list, covering an area of 153,500 square meters. Wang Shulian, Vice Director of the Qingdao Ocean and Fishery Bureau, said development of Sanping will focus on environmental projects such as tidal and solar power generation, and seawater desalination.

Instead of property rights, Lu said, developers can apply for land use rights for a maximum of 50 years in accordance with Chinese oceanic regulations and laws. To prevent speculation, officials have decided not to allow islands to be transferred.

Before obtaining development and use rights, developers must first hand in plans showing how much of the land that they want rights to will be covered with green vegetation, how they plan to dispose of garbage and treat sewage and how far any buildings they put up will be from the coastline, Lu said. Environmental experts will be asked to gauge whether the plans do enough to protect the environment.

The State Council and the provincial governments authorize land development rights. Foreign companies and individuals are also eligible to apply for land use rights of islands on the list. Their applications should be submitted to the State Council for approval, Lu said.

Investing for what?

Although the action of developing uninhabited islands is guaranteed by the government, conservationists and applicants have expressed concerns about costly and risky investment and the difficulty of protecting the islands.

Duan Deyu, Vice Director of the Ocean and Fisheries Bureau of Sanya, a tourist city in Hainan Province, said divers destroyed and stole coral and tourists spoiled the vegetation of the city's scenic islands. "We have had inspections, but it is hard to control since there are so many tourists," Duan said. "The uninhabited islands are scattered and protecting them could be even harder."

Officials also worry about a lack of imagination among developers. Most of the plans so far are for the development of tourist facilities. Insiders fear the creation of a large number of identikit resorts will result in many non-viable projects.

Zhejiang Ocean University's Geng said any development should be executed prudently and in line with carefully drafted plans. "Greater attention should be paid to the preservation of wild animals and plants," he said.

Duan said the development should be led by local governments.

Investors have also been warned of the economic risks of putting their money into islands.

One problem is the hefty investment required. Regulations say buyers must pay the entire 50-year use fee up front. The amount will be calculated by taking into account the area of an island, a potential investor's proposed method of developing the land and the distance between the island and the nearest part of the mainland, said Gu Zijiang, an official with the Zhejiang Provincial Ocean and Fisheries Bureau.

The rents, say local media reports, will vary from 100,000 yuan ($14,640) to more than 100 million yuan ($14.64 million). On top of this is the huge cost of developing the islands, most of which lack even the most basic infrastructure such as roads, fresh water and power supply.

The first group of islands to be released in Zhejiang includes 31 uninhabited islands in coastal areas near Ningbo, Wenzhou, Zhoushan and Taizhou.

Tang Hongsen, another professor with the Zhejiang Ocean University, said the current moves find an echo in 2003 when SOA said for the first time private citizens and organizations would be allowed to exploit these opportunities. "But the moves did not gather momentum as developers realized the enormous transportation costs for the construction materials needed to develop the island. It's also costly to equip the islands with electricity and clean water," Tang said.

Conservation policies may also restrict the nature and scale of the developments permitted.

Thirty-five-year-old Chen Xiaoxian couldn't agree more. The Wenzhou native was the first in the area to rent out the 80,000-square-meter Zhuyu Island located near the city seven years ago. "It was much more difficult than I expected," said Chen. "My investment of more than 1 million yuan ($146,400) was, like water absorbed by sand in the desert, gone in seconds."

"To take a simple example, it took me more than 100 yuan ($14.64) to transport a cubic meter of sand to the island," she said. "Most of the money went on developing wharf facilities, electricity and clean water supplies, road construction and environmental protection."

There was no island protection law in China when Chen signed the rental contract with the local government for five years in 2004.

"I only needed to pay a small amount of rent each year, something like 30,000-40,000 yuan ($4,390-5,860), when the local government and I reached an agreement. The bottom line was to take particular care of the environment," she said.

Chen said she put seashells costing more than 200,000 yuan ($29,283) on the island in 2007 alone. "The idea was to build a sustainable resort and attract high-end tourists, but it turned out we didn't earn a cent at all," she said. The island was returned to the government when the contract expired in 2009.

Chen is undecided whether she would invest in an island again now the new list has been released. "It all depends on the policy details," she said.

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