ramdev bharadwaj - China Foreign Policy

7/28/2019 ramdev bharadwaj - China Foreign Policy

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Strategic Shift in Chinese Foreign Policy

and Development of Coastal Areas

Dr. Ram Dev Bharadwaj

Professor & HeadDepartment of political Science,Rani Durgavati University,Jabalpur (M.P.) INDIA

Forei gn po li cy of a country is nothing but re fl ec tion of des ire of a

nat ion and an effective weapons by which nat ional interes t be

protec ted and object ives of nat ional deve lopmen t may ach ieved.Therefore ,foreign policy and the process of national development are

integrated with each others. Todays China is following need based

forei gn pol icy . As .China a i s the most populous developing

country in the world. After over two decades of reform and opening

up the Chinese economy and Chinas over all national strength have

grown substantially with an ever-expanding market. In recent years

substantial ly with an ever-expanding market . In recent years ,China

has redoubled i t s ef for ts to expand domest ic demand and impor ts

,and it has managed to maintain the momentum of a sustained ,rapid

and sound economic development. Todays China has entered a new

stage of development in which i t i s bui lding a wel l - to-do society

across the country and speeding up the socialist modernization drive

.The t ime had gone of Maos policy of isolat ion and extreme self-

rel iance, when China found herself 20 years behind the developed

countries in science-technology and industry, 40 or 50 years behind

them in agr icul ture. But the int roduct ion of Chinas opening up

and reform policy over the past two decades has brought high-speed

development of i ts economy and a s ignif icant improvement in

different sectors of society. Todays l iberal ized China is a major

internat ional producer of cer tain key indus t rial commodit ies : she

ranks f irs t in coal , cloth, cotton, meat , rapeseed, cement, s teel and

TV sets second in electr ici ty, chemical fert i l izer , foreign exchange

reserves and absorbed foreign capi tal ; f i f th in crude oi l ;e ight in

international tourism ,tenth in foreign trade & exports and twelfth

in impor ts . How for al l these dras tic changes and dynamism of

Chinese personali ty been taking place become a deep concern and

meter of discussion ,analysis and research among the poli t ical and

academic leadership of the world. The present art icle is indented to

discussed about s ignificance of s trategic s ituat ion of China and the

strategic shif ts in development & modernization policy of Chinese

leadership which led to opening and l iberal izing to Coastal areas of

China .An at tempt has also been made to review the impact Chinas

open door policy and l iberal izat ion on Coastal ci t ies of China. At


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economy. To put mor e emphasi s on bet te r qua li ty and g reat er var ie ty ,wh il e

increasing production in metallurgical ,machine-building and chemical industries and

in heavy indust ri es n genera l. (iv) To effec tively nar row the scope of capit al

construction, improve i ts quali ty, reduce coast and shorten construction period. (v)

To br ing about fur ther increases in the average income of al l peasants f rom the

collect ive economy, and to raise the average wage of al l non-agricultural workers

and staff, all of which will come about through increasing production .(12)

China has made a point of s tressing self-rel iance to be the basis of social is tmodernization, i t is hoped , by a peaceful international environment. I t regards i ts

o pe nin g t o th e o ut sid e w or ld a nd b ro ad en in g t he sc op e o f e co no mi c a nd

technologica l exchanges with fore ign countr ies as condit ions essent ia l to the

modernizat ion under taken. Chinese policy makers are very clear in development

s tr at egy of China and correlat ion with foreign poli cy in implica tion . The have

real ized that fact that in the wor ld today, product ion, commodi ty, c i rculat ion and

science and t echnology are so h ighly developed tha t no s ingle count ry has a ll

resources and know-how needed for expanding i ts economy. All countries , including

social is t ones, seek to take advantage of the growth and progress in other countriesand promote their own economic growth by exchanging what they have for what they

lack and soaking up the best they can f ind others As we know that China pursued a

policy of opening to the outside world only after correcting the Leftist error,

particularly during the cultural revolution. Since 1978, Chinas volume of foreign

trade increase, foreign governments and international f inancial organizations have

promised for signed agreements to extend loans to China and established joint

ventures . Economic cooperat ion and, and technological exchanges increased and

China has obtained addit ional sophist icated equipment and technology from abroad.

I t i s to put al l branches of the economy on an advanced technological bas is that

China embarks upon the Programme to modernize i ts science and technology. China

has s hi ft ed f rom a s tr es s on s er vi ng newly bui lt ent er pr is es t o t he t echn ical

t rans fo rmat ion o f exi st ing ent er pr is es . These i mpor ted t echn iques i nc luded

des igning, technological processes , manufactur ing and management , some sample

machi ne ry , t es ti ng met er s and i ns tr umen ts , key equ ipment and p roduct ion

l ine .Since1979, China s economic mechanism and soc ia l s truc ture a lso have

undergone a profound transformation. As ownership structure has been established

that takes the publ ic sector , as i t main body ,supplemented by the pr ivate sector ,

which includes individually owned and foreign owned enterprises a s tructure with

divers sectors of the economy developing s ide by s ide has been es tabl ished. The

states mechanism for macro-regulation of the national economy has been constantly

improving while planning concepts and methods are being renovated and improved,

in order to step by step from a socialist market economy.

As an examination of Chinas open door policy would clearly contr ibute to an

unders tanding of the l iberalizat ion process , The Central Committees landmark

Deci s ion on Reform which was passed a t the Thi rd Plenary Sess ion of the CPC


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Twelfth Central Committee in October 1984 ,was widely described by blueprint for

China reform process and open door policy. The CPC made this clear that we would

promote (the ) individual economy particularly in those economic fields mainly

based on labour services and where decentralizat ion operation is suitableand

cooperate management and economic associat ion among the s tate , col lect ive and

individual sectors of the economy. (13) Speaking at the Third Plenary Session of

the Central Advisory Commiss ion of the CPC on October 22,1984 Comrade Deng

Xiaoping said, that the world community is quite concerned about the Decision onReform and l iberal izat ion of Chinas economic s t ructure , and we say our current

policy is working, because our country is thriving, the peoples living standers are

genuine ly r is ing and China s interna t ional prest ige i s growing. These are the

essential facts. Our policy succeeded first in the countryside it will not change there.

.As Central Commit tee has mapped out a plan to help the poor areas to prosper .

Now that most parts of the country have become better off, the state can spare more

resources to help develop the res t . (14) Comrade Deng Xiaoping fur ther made i t

clear Isolat ion prevents any countrys development. We(China) has suffered from

this and so did our forefathersWe must open ourselves to outside world. Decisionon Reform of the economic s t ructure and opening foreign af fai rs i s a very good

document , for i t explains what social i sm is in terms never used by the founder of

Marxism-Leninism. (15) As i t i s c lear that s ince 1979 Chinas foreign pol icy and

economic relat ions are based on the pr inciple of Open Door to promote foreign

trade and investment. Chinas foreign policy of economic reform and liberalization is

both an interesting and an important in which one can explore the interaction of

id eo lo gy , po licy an d prac tice in th e p roce ss of p olicy fo rmu la tion an d

implementat ion. The present research paper wil l focus on the very important aspect

of China s poli cy of economic reform, and re la ted poli ci es implementat ion on

Coastal areas of China, as a part of Chinas open door policy

in its drive to modernization.

Impac t of Reform & Open Door Pol icy on Coastal areas

China is situated in the eastern part of Asia, on the west coast of the Pacific Ocean. It

has a total land area of 9.6 million square kilometers. Out of which China's land border

is 22,800 and its coast of the mainland covers 18,000 km. long area. China has vast

territorial seas and numerous islands. Curving in a crescent around the eastern shore ofthe mainland, the ocean nearest to China is divided into four seas, from north to south

the Bohai, Huanghai (Yellow Sea), and the East China to South China seas. Sheltered by

the Liaodong and Shandong peninsulas, the Bohai is almost an island sea. The Huanghai

runs from the Liaodong Peninsula to the mouth of the Changjiang (Yangtze) River. The

East China sea, east of the mainland, runs from the mouth of the Changjiang River. The

South China Sea begins at the southern t ip of the Taiwan Strai t . The coast of the

mainland runs (18,000 km.) from the mouth of the Yalu River on the Chinese-Korean

border in the north to the mou th of Bei lum River on the Ch inese-Vie tnamese border in


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the south (16). From north to south, the most famous coastal harbors and ports and cities

include (1) Dal ian, (2) Qinhuangdao, (3) Tianj in, (4) Yantai, (5) Qingdao, (6)

Lianyungang, (7) Nantong, (8) Shanghai, (9) Ningbo, (10) Wenzhou, (11) Fuzhou, (12)

Guangzhou, (13) Zhanjiang, (14) and Beihai. The coastal water are r ich in natural

resources. More than 1,500 species of fish, prawns, shellfish, allege, and kelp live in the

Bohai, Huanghai, and the East China and South China seas; the continental shelf also

contains vast reserves of petroleum and natural gas as well as geothermal energy

resources.

In 1979, the Chinese Government decided to establish the Special Economic

Zones. The opening of fourteen coastal cities followed this to the outside world in 1984.

Each of the 14 cities is a unique gateway to China's vast interior and has its own special

advantages. Although they al l share the qualit ies of good ports and enthusiastic,

progressive leadership , they also dif fe r grea tly each with it s own se t of asset s and

liabilities, personalities and flavour. Some of the cities, such as Shanghai and Tianjin,

are well-known metropolises. Other, like Beihai and Lianyungang, are now taking their

first steps on the march to modernity. Still others are cultural and historical centers;some are more industrial and commercial; and a few are known as resorts that attract

tourist from around the world. As China strives to export its beautiful products and

import and assimilate the world's technology, 14 of these coastal cities have opened their

doors to the four corners of the earth.

Talking with Prime Minister Robert Mugabe of Zimbabwe, Comrade Deng

Xiaoping said that "if China is develop, it must continue opening to the outside world

and proceed with its liberalization and reform. These should also include reform of the

pol it ical st ruct ure, which is in the realm of the superst ructur e. The policy of open ing to

the outside world is correct, and China has benefited greatly from it. If anything, we

(China) should open our doors even wider. And that 's we are going to do (17). The

pol icy of opening Chi na 's do ors to the out side world has produ ced the re su lts we hoped

for. We (China) have implemented that policy in various ways, including setting up SEZs

and opening 14 coastal cities. Wherever the open policy has been implemented there

have been notable results (18).Our (Chinese) achievements in the last few years have

proved the co rrec tness of ou r po li ci es of re form and opening to the out side world.

Although there are still problems in various fields. Comrade Deng Xiaoping added that, I

do not think they'll be too hard to solve, if we go at it systematically. Therefore, we mustnot abandon these policies or even slow them down. One of the topics we have been

discussing recently is whether we should speed up reform or s low i t down. That 's

because re form and the open pol icy involve ri sks . Of co urse we have to be caut ions , but

that does not mean we should do nothing. Indeed, on the basis of our experience to date,

the Central Committee has been considering to accelerate the reform and our opening to

the outside world (19).

In order to maximize the advantages of i ts coastal zones and actively

develop its export-oriented economy, the Chinese Government determined, in March


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l icated in the Economic and Technological Development Zone in fuzhou. (12) The

Xiangyu Free Trade Area, located in the Xiamen Special Economic Zone, will initially

occupy 0.6 sq.km. (13) The 2.3 sq.km. Shantou Free Trade Area is located in the Shantou

SEZ. The first steps in establishing free trade areas in China are proceeding smoothly. A

number of such areas, including Tianjin Port Free Trade Area, Shanghai's Waigaoqiao

Bonded Area, and the Dalian and Zhangjiangang free trade areas, have already been

sealed off and are soliciting business. To date, nearly 1,000 enterprises have entered

these free trade areas, with a total investment in excess of US $ 2 billion, half of which

is foreign capital (21).

DALIAN COASTAL CITY : LOOKING FORWARDS

Dalian is one of China's key ports for international trade. Dalian covers

12,000 square kilometers and population is about 471,000. Dalian is located on the

southern most tip of the Liaodong Peninsula. In 1976, Dalian built China's largest deep-

water wharf at Nianya Bay. Dalian Harbour can now handle more than 35 million tons ofcargo a year. Dalian Harbour is also the ocean gateway to the north-eastern provinces of

Heilongjiang, Jilin and Liaoning, and the eastern part of inner Mangolia. Since Central

Government decided to open outside the world, Dalian has opened for foreign business,

the funds and advanced technology imported will spark the economic development of the

whole area.(22)

Dalian specializes in machine building, petrochemical, textiles and other

light industrial products. About 80 percent of its products are shipped to other parts of

the country. I t leads the country in producing ships, internal combustion engines,

combination machine-tools, high-speed tool steel, soda ash and synthetic cloth. More

than 1,900 industrial enterprises are staffed by 580,000 people. Of these business, 59 are

fairly large or key enterprises, producing more than 70 percent of the city's total value.

The state policy is for this open city to absorb outside investment and import advanced

technology to revamp the old enterprises rather than build new ones. The reason is clear;

these enterprises have ready workshops and skilled workers and technicians. Importing

some key equipment, raw and semi-finished material and advanced management methods

can greatly increase their productivity and enhance the quality of their products and can

even enable some factories to produce new items. Renovating old enterprises requiresless money and yields quicker benefits for both the Chinese and foreign partners. Dalian

municipal government has devised a pacific programmes to turn it into an important hub

of international communications, an advanced industrial base and one of the trade,

finance, tourism and information centers in Northeast Asia within 20 years Dalian is

quickening its development pace to promote opening to the outside world. Following the

establishment of the Dalian Economic and Technological Development Zone, Dalian has

set up a high-teach district, a bonded district and the Jinshitan National Tourism Holiday

District with the approval of the State, plus a small economic development area along the


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Shenyang-Dalian Express way and the coastline of the Yellow Sea (23) Foreign investors

also enjoy preferential treatment in these zones. A development zone, through a part of a

city, is somewhat independent of it. However, its prosperity adds to the prosperity of the

entire municipali ty. Dalian plans to expand i ts harbours by opening up an area in

suburban Jinzian Country, which will provide about 100 berths for ocean-going vessels.

Backward local post and telecommunications facilities are being updated. A 160-channel

microwave communications system l inking Dalian to Shenyang and a 300 channel

coaxial telephone cable project put into operation in 1984 (24)About 500 foreign funded

enterprises have been setup in the Dalian Economic and Technological Development

Zone. The five important items on the agenda all rank number one out of all development

zones nationwide. They include area occupancy, total investment volume of foreign

owned, joint venture and cooperative enterprises, negotiated foreign worth, actual

implementation of foreign exchange earnings for exports. In 1992 alone, Dalian used

foreign funds to set up 200 projects in finance, real estate, merchandising, entertainment

and information services, obtaining US $ 355 million of contracted foreign funds (25)..

In the near future Dalian will open international air routes to Osaka and Sendai in Japanand Seoul in the Republic of Korea. The completion of the Dalian-Shenyang Electrified

Railway will speed up the formation of this international communication hub.(26) The

largest heavy oil catalyst facility being built which will have an annual production

capacity of 3.5 mil l ion tons in Dalian,Liaonting Province.(27)During January-June

2001the trading volume of soybean futures at the Dalian Commodities exchange was 4.3

times of that at the Tokyo grain exchange and 23.5 percent of that at the Chicago futures

Exchange

QINHUANGDAO COASTAL CITY : TOWARDS KEY WORLD PORT

Qinhuangdao is a quickly growing port on the Bohai Bay in north China.

The central government has invested heavily in Qinhuangdao because of i ts superb

natural harbour and its importance to China's modernization programmes. The city also

has sizable deposits of granite and marble, as well as mining potential for coal, iron,

lead, zinc, gold, silver and graphite (28). Qinhuangdao was a small fishing village. In

1898 the Manchu government opened it as a commercial port to foreign traders. Later it

became a coa l port fo r the Ka iluan Coal Mine owned by a Bri ti sh fi rm in Tangshan .

After 1949 the government improved and expanded the dock. Several deep-water berths

were built and the port channel was dredged to make way for ships of more than 10,000tons. With a 124.4 km. long coast, Qinhuangdao is a major agriculture base for north

China. Special products include prawns, sea cucumbers and jellyfish. According to

Mayor of Qinhuangdao City, Wang Daming, Primary, secondary and territory industry

sectors are all developing rapidly in the city. The strongest industries are those engaged

in glass , machinery, const ruct ion mater ials , a luminum goods , texti les and food

product ion and sh ip rear ing (29).

In 1992, Qinhuangdao was l is ted one of the top 40 cit ies with the best investment

environment in China. Qinhuangdao's modern international harbour remains ice-free


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the year round, and is equipped with state-of-the art facil i ties catering to every

shipping need.

As the Qinhuangdao Economic and Technological Development Zone,

established in 1984 with the approval of the State Council, is only 1.5 km. from the

harbor, the railway station and the city proper. This Zone was an immediate hit among

investors. Among the zone's 304 enterprises, 84 are foreign funded ones involving a total

foreign investment of US $ 372 million. Qinhuangdao has set up a 'Foreign Information

Service Center' (30). Continuous efforts are being made to turn Qinhuangdao into a

modern international city with advanced harbor facilities, high-tech industries, efficient

agricultural production and development tourism. Qinhuangdao is rated by the state as a

top-level tourist city. There are more than 300 tourist attractions in the mountains and

forest, and along the sea, rivers, lakes and springs. Sites worth visiting include places,

temples, caves and the Shanhaiguan Pass. The 'Great Wall' begins its long journey to the

west from Shanhaiguan Pass (17 kilometers northeast of Qinhuangdao harbour). It goes

first to north and then to the west along the mountain ridges.

There are about 20 cooperative projects stated for Qinhuangdao in variousspecification in various areas.(31). Some of them are as fol lows: (1) To introduce

magnetic controlled spray-coating equipment and technology to produce 400,000 to

600,000 square meters of coated glass per year. I t has total investment of US $ 3

million, including US $ 750,000 of overseas investment. It is joint venture type project.

(2) To set up a production line making 1,000 tons of clinker cement per day. It has total

investment of US $ 27 million, including US $ 12 million of overseas investment, its

nature is joint venture, compensatory trade and foreign loans. The Qinhauangdao

Wushan Cement Factory i s a Chinese par tner . (3) To int roduce equipment and

technology to produce, 3,000 tons of spun bounds geography non-woven fabrics per year

with US $ 9.6 million, including US $ 4 million of foreign investment. Its type of

par tner sh ip is jo in t ven tu re . (4 ) To in troduce an as sembly line with an annual product ion

capacity of 1.5 million read only and erasable optical disks. It has 300 million yuan,

including US $ 36 million of overseas investment with joint venture nature. Its Chinese

par tner is Qinhaungdao Elec tron ic Gl ass Factor y, Haigang Dis tr ic t of Qinhaungdao .(5)

To set up a production line capable of producting 2 million nickel-hydrogen rechargeable

bat te ri es an nual ly . With a jo in t ven tu re na tu re of pa rtner sh ip it has 14 mi ll ion yuan ,

including US $ 1.6 mil lion of overseas investment.(6) To construct the four laneQinhaungdao-beijing Expressway Five year duration. Total investment of US $ 509.6

million (equivalent to 2.96 billion yuan). A foreign loan, exclusive foreign investment

in nature and Qinhaungdao Communications Administration is Chinese partner. (7) To

produce supe r-con tort ion liquid crystal di sp lays (STN-LCD), wi th US $ 4 mi ll ion,

including US $ 2 million of foreign investment of joint venture project is to established.

(8) To set up facil it ies to produce 1 mw-solar energy bat teries project i s to be

established with a joint venture in nature in Qinhaungdao.(9) To set up faci li ties

producing 15,000 model PK ratchet -ac tion electr ic blocks annua lly, a pro ject with a jo in t


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venture in nature has to established in Shanhaiguan with US $ 1.7 million, including US

$ 700,000 of foreign investment.(10) To set up facilities to produce 5,000 low-speed,

high-torque motors per year, a project is proposed by the Qinhaungdao Hydraulic

pressure Equi pmen t Fac tory , with 15 mi ll ion yuan, incl ud ing US $ 2 mi ll ion of fore ign

investment.(11) To install ampicillin processing facilities which can produce 200 tons of

ampicillin and 150 tons of cephaloridine per year, a project with US $ 4.55 million,

including US $ 2 mil l ion of foreign investment is proposed by the Funing Country

Amylum Glucose Factory, Qinhuangdao.(12) To contract the Qinhuangdao Shopping

Centre, the largest multi-function business and commercial center in Qinhuangdao is

proposed with US $ 25 mil lion, including US $ 6.5 mi ll ion of foreign investment , it has

jo in t venture type of pa rtne rship. (13) To se t up a 200 ,000 ton dock (342m x 58m 12.6m).

Total investment of this project is US $ 80 million including US $ 50 million of foreign

investment. Chinese partner of this project is the Shanhaiguan Shipyard.(14) To produce

10 million instruments and meters annually, project proposed by the Beidaihe Instrument

and Meter Factory, Beidaihe District, Qinhuangdao. Nature of project is joint venture.

TIANJIN : ECONOMIC CENTRE OF NORTH CHINA

Tianjin is an old-line seaboard industrial and commercial city in north China. It is

a leading port, industrial base and economic and trade centre. Mayor of Tianjin said that,

the Tianjin government has decided to place strategic focus on development of its 2,000

square.km. seashore to foreign economic growth. The area encompasses Tianjin Harbor

plus econ omic developmen t and free fo re ign trade zone and the lower Haihe Rive r

Industrial Zone (32). During the "93 Tianjin Investment Environment Symposium" held

in Tianjin, Mayor Zhang Lichang said that "Tianjin aims is to attract US $ 1.2 billion of

foreign capital in the coming f ive years and transform i tself into an international

economic, financial, commercial and trade center". This symposium was attended by 35

managers from Tianjin's foreign funded enterprises (33).

Introduction of foreign capital constituted the most important activity. More than

2,200 foreign traders from over 50 countries and regions including Hong Kong Japan, the

United States, Taiwan, held wide-ranging negotiation with more than 300 enterprises or

company representat ives from 24 of China's provinces, autonomous regions and

municipalities. They signed 98 contracts and agreements for the use of foreign capitalTianjin Pipe Corporation- TPC -is Tianjin's largest industrial project (it is a major state

run iron and steel enterprises), with a total investment of US $ 980 million. It 's the

bigges t seamles s pi pe producing bas e wi th advanced equipmen t to make up for the oi l

pipe shor tage in Ch ina (34).Italy's Zanussi Elettromeccanica (ZEM) signed an agreement

to transfer ozone friendly compressor technology to i ts joint venture operat ion in

Tianjin. The Tianjin Steel Tube Co. is another significant Co., which has completed in

1993. The company is designed to have an annual capacity of 500,000 tons of s teel

tubes. Its oil casing and boiler pipes will meet 30 percent of the domestic need.. The


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f irm, with a total investment of 2.7 bi l l ion yuan, ships in i ts main equipment from

Germany, Italy and the United States (35).

The Tianjin Economic and Technological Development Zone (TETDZ) is another

reform measure. TETDZ is a modern industrial urban complex on the once sal ine

infes ted soi l near Bohai Bay, has become one of the bes t among China 's 30 plus

development zones.In 1993, foreign business people from 46 countries and regions has

come to establish businesses in the zone. A foreign financed firm ratified has totalled

1,709. Contracted investment volume reached US $ 2.53 billion and US $ 1.66 billion of

foreign capital has been employed (36). The United Planning Co. of America spent

US $ 467,000 on conducting detailed assessment of the Tianjin zone. It signed a letter of

intent with the Tianjin zone to put in US $ 140 million in investment. A manager from

the Motorola (China) Elect ronics Ltd.. said dur ing the ' 93 Tianj in Inves tment

Environment Symposium, that the Tianjin Motorola Co has been dramatic progress. It

now appears that the original US $ 120 million investment plan will be greatly expanded.

the company is s et t o add another US $ 150 mil lion . Tai njin De Pu (DPC)

Biotechnological and Medical Producer Inc. is a high-tech Sino-US joint venture set upin 1992. Business turnover that year was more than 8 million yuan and reached 15

million yaun in 1993. High efficiency has led the investment to add US $ 600,000 to its

original US $ 870,000 (37). The Tianjin Harbor Commercial Co.Ltd.(CBW) is China's

first such warehouse jointly run by the Tianjin Post Office and the Royal Nedlloyed

Group N.V. Covering 150,000 square meters with total investment of US $ 30 million,

its first phase construction coast US $ 9 million (38). Apart from all these

development, the free trade zone still confronts some problems. First, any foreign

financial body intending to enter the zone needs state approval and so far none exist

there. Second, the zone lacks experienced professionals. Third, the Zone's development

direction should be handled with dexterity. Currently, the free trade zone is treated as a

special economic zone and therefore, rules and regulations should be drawn up early to

help it evolve toward becoming a free port (39). The Tianjin municipal Government has

planned to crea te a bet te r investmen t envi ronmen t for fo re ign enterprises .F irs t, the

collection of administrative fees is regulated. A collection license and identity papers

issued by the pricing department must be produced and collection standards must be

strictly, adhered to when collecting fees from foreign enterprises. Second, preferential

pol ic ie s on inves tment in infrast ructure pr ojec ts have been fo rmulated. Forei gn investorsare encouraged to invest in infrastructure projects, including roads, bridges, railways,

airports, rail transit ,electric power and heating .Various measures have been adopted to

guarantee reasonable investment returns, Third, a service center to promote foreign trade

has been established to provide policy consultation, import and export information,

marketing and logistic services for foreign investors. An investment and start-up center

for small-and medium-sized enterprises from foreign countries and Hong Kong, Macao

and Taiwan has been established to minimize their investment risk. (40)

YANTAI: A FAIRYLAND CITY


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Yantai is a small city it is connected with the rest of the country through the

Lanzhou-Lianyuangang Rai lway.Yantai i s wel l known for i ts aquat ic products,

par ti cu larly it s prawns. Other area resour ces include gold, copper , iron , lead an d coa l.

Known in legend as 'a fairyland' city, Yantai has a pictures landscape fascinated many

including Qin Shi Huang, the first emperor or the Qin Dynasty (41). Since the founding

of New China in 1949, Yantai had lad Shandong Province in industry, agriculture and

fishing. Its industrial output value ranks second only to Qingdao. After opening to

outside world Yantai beats Qingdao in resources, and a combination of its own strength

and foreign investment and technology will certainly speed development.

Till August 1993, more than 10 Sino-foreign joint ventures have begun working in

the zone and 18 joint venture contracts have been signed. Offshore funds, totaling US $

21 million, mainly emanate from the United States, Japan, the Republic of Korea,

Germany, Hong Kong and Taiwan (42). The zone has been divided into three functional

districts to handle finance and trade, processing and storage respectively (43). Quiet

changes have taken place in the trend of foreign investment pouring into the Yantai.

Instead of schemes with limited funds, small risks and a short reoccupying period, moreforeign capital is now being invested in infrastructure projects with substantial

investment greater hazards and a long pay back period, such as those involving energy,

transport and telecommunications. Reports cite the amount of foreign capital invested in

the city's infrastructure projects as already exceeding US $ 160 million.

. The power industry has attracted the most foreign capital, totaling US $ 97.4

million. Second, forms of investment have become more diversified, including joint

ventures, outright monetary grants, and foreign bank and government loans. Third, the

amount of foreign investment in each project is great. Around 66 percent of foreign

funded endeavors have individual foreign investment exceeding Us $ 10 million. Among

them are the third stage of the Longkou Power Plant with an installed capacity of

400,000 kw. and the construction of six 10,000 ton berths for second stage of the western

por t are of contracted foreign investment in each of the above two project s has soared

above US $ 40 million(44).

The Yantai was among the first 14 opened coastal cities in China.In 1993,it was listed

among Chinas top 50 cities in terms of comprehensive economic strength and among 40

Chinese cities with with the best investment environment. The city also took the lead in

China in set tl ing up an economic and technological development zone, high-techdevelopment zone and bonded zone.( 45)The Yantai is a favorite investment destination

of members of Asia-Pacific Economic Cooperation-APEC- countries Up to now,all 20

APEC members outside Chias mainland have established trade links with Yantai and 18

of them have investments there.So far,Yantai has carried out economic cooperation with

more than 50 countries and regions in the wor ld in a var iety of international ly

concentional practices. The city has approved 5,826 foreign investment projects of which

1,900 have gone into operat ion. The combined contracted foreign capital of 215


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overseas-funded projects, each with an investment of more than US$10 million, amounts

to US$3.47 billion, accounting for 45.25 percent of the citys total.(46)

QINGDAO : CENTRE FOR OCEANOGRAPHY

The city of Qingdao is located in the south-east corner of the Shandong Peninsula,

one of the China's most affluent area It can handle more than 22 million tons of cargo

annually. Qingdao's rubber, chemical, electronics, and building material industries have

been expending rapid ly . Its bee r, wh ite wine and marble produc ts are among it s most

popul ar produc ts . The thick , leafy trees wh ich cover ed moun ta in slopes dropp ing gent ly

to the sea on three sides give this city the name it deserves-Qingdao or "Green Isle".

In an interview Zang Kun, the Mayor of Qingdao said, we are going to undertake

440 technological projects. Ocean to foreign investment in other areas which will

promote Qingdao' s techno logical advance. By the end of the cen tury we plan to bu ild in

Huangdao an industrial area of 15 square Kilometers ,100,000 people and more than 300

enterprises (47). On August 1, 1992 the Qingdao High-Tech Industrial Park has been

established, and it made notable efforts to attract foreign investment and the results havebeen remarkab le . Accord ing to Jiang Huas han, depu ty direc tor of the pa rk 's managemen t

committee, recently announced there are 273 enterprises registered in the zone, 66 of

which are foreign invested. Total investment stands at 3 billion yuan, including US $ 150

million of overseas investment (48). High-Tech Industrial Park is expected that foreign-

funded projects involved in high-tech area as marine science and technology, bio-

engineering, new materials, fine chemical, optical mechatronics, micro-electronics and

computers to move into the park. A number of large projects have already entered the

park, includ ing one which produces wi re less secu ri ty te lecommunications wi th senses

International Ltd., based in the United States Silicon Valley, as a partner , and a

programmes cont ro lled te lephone exchange manufact urer se t up in cooperation wi th AT

& T (49).

The Republic of Korea's firms and investors are finding an excellent environment

in China, par ticular in Qiangdao. In Qingdao Republic of Korea (ROK) funded

Enterprises Society. Qingdao has 131 ROK funded enterprises, and most of them are

exclusively ROK funded. There are estimated to be over 1,000 ROK nationals working in

the city. In the late 1980s, the ROK government formulated the West Coast Development

Programmes and founded a promotion committee. At a total cost of US $ 25 billion, theprogrammes aims to fo rm a Yel low Sea Economic Zone which encompasses the

Shandgong Peninsula and China's east coast open cit ies . Qingdao, because of her

strategic situation acutely sensed an opportunity. In late 1989 encouraged by the sincere

cooperative spirit esixting between Qingdao and ROK firms.Since second half of 1989,

Qingdao and the ROK have established 52 joint ventures. This has resulted in total

foreign investment of US $ 73.62 million, the development of 7,800 workers and the

collection of US $ 3.1 million in rent and US $ 1.1 million in administrative expenses

(50).


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20/40

harbour received 50 ships from 22 countries and regions, including Panama, Greece,

Japan, Britain, the United States, Indonesia, ex-Soviet Union, Cuba, Yugoslavia and

Thailand. It has also established shipping links with 36 overseas parts (53).

. The city has now 48,000 cotton thread shindles, 26,000 weavers, 28,000 woolen

textile spindles and can print and dye 200 million meters of fabric a year. Eight industry

and textile constitute the mainstay of Nantong's comprehensive industrial setup. The

machine building, electronic, chemical, pharmaceutical, building materials and foodstuff

industries are also well developed (54)Nant ong has marked of f a 4.62 sq .km. economic

and technological development area at Fumin port, about 10 km. to the south-east of the

city proper. Skir ted by revers and l inked to the ci ty by a bridge, Fumin is an ideal

location for setting up joint ventures and whooly owned foreign enterprises. The Mayor

of Nantong is confident that so as the city's people work with one mind to implement the

state's policy of opening to the world and enlivening the domestic economy, Nantong

will surely become an important trade and transportation hub on the Changjiang, a

modern textile and light industrial base and major export commodities producer were

foreign capital and expertise will be put to good use (55). Nantong has developed tradelinks with over 90 countries and regions in the world. Since 1980 the total volume of

export has been doubled. Foreign funds to the tune of $ 60,000,000 have been utilized to

import more than 90 items of advanced technology and equipment from Japan, Britain,

Italy, Holland, the Federal Republic of Germany, Switzerland, Hong Kong, Belgium, the

United States, New Zealand and Macao (56).

Nan tongs social secur ity system also began to take shape in 1980s .Old-age insuran ce

system reforms made progress in 1990sIn 1992,Nantong put forward to have the system

cover all labores, guaranteeing pensions to be given in full and on time to retirees of

bankr up t and less incurr ing en terprises . Thei r 10-yea r effor t has made the goa l become

trueIn 2002 there are 6 00,00 enterprise employees, including those of private firm, have

taken part in old-age insurance. The subsistence allowance system is the base of the

Nan tong social secu ri ty system .By the end of 2002,10,703 resident s in 4.558 househo lds

received the subsidy. (57)

SHANGHAI : LARGEST INDUSTRIAL & COMMERCIAL CITY

Metropolitan Shanghai is located half way up China's Pacific coastline with thehighly developed Changjiang (Yangtze) River Delta at its back. Shanghai covers 6,186

sq.km. Today i t has become a comprehensive industr ial base with solid economic,

technical and professional resources. Its industrial output value makes up about one-

ninth of the nations total, and its financial income one-sixty. Both its import and export

volume accounts for one-fifth of the country's total. It occupies first place in the whole

country in terms of the economic results of industry (58). A cradle of China 's modern

industry, Shanghai has become one of the nation's key industrial bases. It processes

comprehensive industrial system encompassing 15 industrial departments.. A number of


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key enterprises, including the Shanghai Baoshan Iron and Steel Complex, the Shanghai

Pet rochemicals Factory, the Shanghai No. 3 I ron and s teel Plant , the Shanghai

Volkswagen Automobile Co., the Shanghai Yaohua Pilkington Glass Co. Ltd., the

Shanghai Bell Telephone Equipment Manufacturing Co. Ltd., the Yongxin Colour

Picture Tube Plant Factory, were set up in succession. They have brought more verve

and vigour to China's old industrial base. The Shanghai Shipbuilding industry is capable

of building all sorts of vessels to meet the shipping classif ication standards of al l

countries. The MD83 large passenger aircraft of Shanghai have own praise and fame for

quality and been sold to United States where their design originated. Nuclear Power

units produced by Shanghai have entered international market. In addition, heavy load

capacity rocket carriers and man-made satellites developed by Shanghai have been sent

into the sky (59). The open door policy has fostered new friendships between Shanghai's

intellectuals and their overseas counterparts and brought many old acquaintances back

together. Deputy Mayor of Shanghai, Yuan Chongwu, focussed on the development

strategy of Shanghai in future. He said "Using foreign capital, importing advanced

technology and strengthening international cooperation constitute Shanghai's long-termpol icy fo r economic and social devel opment (60).

In the immediate future Shanghai wil l , act ing on i ts needs for economic and social

development, emphasize the following endeavors: (1) Speeding up the technological

transformation of old enterprises, especially those in meters, building materials, light

industry, textile and food processing, so that by 1990 the city's industry, transportation,

communications and construction will reach the level of the developed countries in the

1980s . (2) Development of new technology, whi le seeking a break through in

microelectronics, Shanghai will gradually launch new industries such as in new

materials, optical fibers, lasers, biological engineering, marine engineering and robotics.

(3) Developing the Minhang and Hongqiao Development Areas, which will become

Shanghai's investment centres for overseas industrial is ts and entrepreneurs. (4)

Developing tourism, trade centres and other service industries. More tourist hotels,

off ices buildings, apartment buildings and recreational centers will be buil t. (5)

Speeding up urban development. That means developing the infrastructure, including

energy supply, transportation and public utilities. Shanghai will also transform and build

new harbours, rai lway s tations, a irports, tunnels , highways, and subways and

telecommunications facilities so as to improve the investment climate. (6) Developingsideline production in sub-urban areas, with the emphasis on milk, fresh water fish,

pou lt ry , fodder and open ing up Chongming Is le . (7 ) To pr ov ide a good investment

environment for overseas business representatives, in the near future Shanghai will build

an express trolleybus line between Baoshan and Jinshan, a new sub-way and a bridge

across the Huangpur River. The city's construction plans also include two tunnels under

the Harangue River, railway overpasses and highways. Shanghai Harbour 's cargo

handl ing capacit ies wil l be expanded, and prepara tions are underway for the

establishment of a Shanghai based airline.


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In the 1980s, Shanghai set up three economic and technological development

zones in Minhang, Hongqiao and Caohejing. In 1990s development of the Pudong New

Area has been in full swings. The Minhang Development zone devoted to the processing

industry has attracte many foreign firms. The Hongqiao Development Zone, focusing on

finance and foreign trade, has led the nation in implementing compensated transfer of

land-use r ights. Caohejing Development Zone is Shanghai' s base for high- tech

development, testing, production, operation, training and service. Many big names in the

high-tech world such as the 3M Co. of the United States, the Bell Telephone Equipment

Manufacturing Co. Ltd. of Belgium, and the Daikei Data Processing Co. Ltd. of Japan

have all set up there. The Pudong New Area differentiates itself from others with its

large, terri tory sector and high-tech projects . I t has been the establishment of 700

foreign enterprises and over 1,400 domestics enterprises, attracting a total US $ 1.56

million and 9.26 billion yuan (61). For more than a century, Shanghai has been a well-

known commercial hub with various undertaking and a beacon for legions of traders. In

1992, the city experienced consumer commodities retail sales equivalent to 47.94 billion

yuan, putting it in the nation's top rank By the end of May 1992, it had 629 commoditymarkets on various scales such as large specialized wholesale markets, trade centers,

wholesale and transaction markets, a future market, trade warehouses, small commodity

wholesale markets and collectively run trading markets (62).. Shanghai has established

links with over 30,000 traders in more than 170 countries and region. Hong Kong, Japan,

The United States and Western Europe are its four biggest trade partners. In the past few

years, trade ties with Russian, South Korea and Southeast Asian countries also developed

with great momentum. Shanghai is restoring its image as an Oriental foreign trade center

that lures countless businessmen (63).

The construction of the 7,658, meter-long Yangpu Bridge, the world's largest

cable-styled bridge that spans 602 meters, was completed on September 15, 1993. The

magnificent bridge, with its twin towers that rise some 208 meters in height, is shaped

like an inverted 'Y'. Some 256 colorful cables support the massive structure. The bridge

has the capacity to handle 50,000 vehicles per day, and its height, which rises some 48

meters above water level, provides easy and navigation for 50,000 ton ships. The 1.33

bil lion yuan Yangpu Br idge was completed in 29 months (64). Shanghai has now over

1,600 real estate companies the nearest developments to the down town area are in

Hongqiao and Pudong. Villas generally cover 250 sq.m., with the largest covering 400sq.m. They often have gardens each with an area of 200 sq.m. Currently, villas range in

pri ce be tween US $ 1,000- 2,000 per square meter. However, those in the dis tant subur bs

normally sell for less than 1,000 US $ 1 million (65).

Foreign-funded projects and investment have greatly increased during last few

years. An agreements signed in Beijing on March 16,1993 saw foreign funds that are

being used by four pro ject s (66) in Shanghai. (1) The first is the Shanghai (ford) Motor

Vehicle Spare parts and Components Co. Ltd. jointly established by the Ford Motor

Automobile Co. of the United States and Shanghai Yanfeng Accessories Factory under


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the Shanghai Auto Industr ial Corp (2) The second is the co-establishment of the

Shanghai Siemens Mobile Co. Ltd. by the Shanghai Changing Communication Equipment

(Group) Co, The Post and Telecommunications Adminis trat ion and the Xinda

Communication Technique Co. of Shanghai, as well as Siemens of Germany.. (3) The

third is the co-founding of the Tomson Waigaqiao Development Co. Ltd. by the Units

Development Co. of the Shanghai Wagaoqiao Bonded Zone and a f irm at tached to

Tomson of Hong Kong. (4) The fourth is the joint setting up of Shanghai Jinqiao Fujita

United Development Co. Ltd. By the Shanghai J ianqiao Export-processing Zone

Development Co. and the Fuj ita Co. of Japan., The Shanghai Yuejin Elect rical

Machinery Plant has engaged in over a decade of cooperation with the ABB Co., a well

known transnational Britain and four other firms. Since 1992consortium and flourishing

concern in Europe (67). Shanghai has clearly promoted not only expansion of numbers

but al so improvement of qual ity of Sino- foreign joint ventur es in the fi elds of machi ne ry

and electronics industry. Efforts will be made to accelerate the pace of joint investment

and cooperation with famous global f irms and t ransnational three forms in the

establishments of joint ventures with foreign business: (a) Establishment of new jointventures; (b) Increase in investment; and (c) Participation in Sino-foreign joint ventures

with substantial investment. For instance, a US firm and the Shanghai Engineering

Machinery Factory will set up a new joint venture with a total investment of US $ 14

million (68). As Hightech industry in Shanghai began in 1987 since than it has obtained

67.05 million yuan of government funds for high-tech industries and set more than 200

key projects . The seven high-tech industries in Shanghai can be divided into three

categories in terms of period of development, degree of difficulty, technical and material

conditions and market factors: (i) The first category involves the large-scale micro-

elect ronics , computerizied swi tch boards and opt ical f iber telecommunications

industries. In 1993 the output of integrated circuits reached total 20 million pieces in

Shanghai, while total income from computer software was expected to reach 5 million

yuan and total output is about 300 million yuan (ii) The second category covers modern

bio techno logy, laser and new materials that hav e in itially taken shape. (i ii ) The th ird

category refers to industrial robots, a field in the formative stage (69).

The city of Shanghai is foreign ahead toward the goal of establishing a socialist

market economy and becoming a modern international metropolis. There are 121large

terms-national companies in Shanghai alone and over a third of those are from UnitedStates. The US is second in capital investment in Shanghai, a total of 2,012 foreign-

invested projects were approved in 1992, 4.5 times the number in 1991. The amount of

foreign investment in 1992 was US $ 3.357 billion, 6.5 times the amount in 1991. And

that was just in the 1992. All together, there are 3,289 projects in Shanghai, adding up to

a total of US $ 6.689 billion (70)

Financial reform has also been taken place in Shanghai. Shanghai has established

a financial system with the Central Bank (People's Bank of China) as its core and state

specialized banks as the principal components. The setup also includes commercial,


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overseas Chinese and foreign banks. The city has set up a comprehensive market system

of bourses, foreign exchange transaction centers, ordinary and inter-bank loans and

insurance. The Bund area, known as Shanghais Wall Street, holds numerous foreign

financial institutions (71). By the end of 1992, financial institutions operting FOREX

bus inesses in Shanghai had estab li shed bus iness ag en ts and accoun t ties with some 5,300

central institutions and their subsidiaries in more than 150 countries and regions. This

promoted the development of Shanghai and the who le coun try' s fo re ign tr ade and

international financial business, creating a favorable financial environment for domestic

and foreign investment. One signif icant f inancial reform move in Shanghai is the

cultivation and development of securities market (72). The total market value of stocks

reached 55.8 billion yuan, an increase of 19 times over 1991. In 1992, the transaction

volume of the Shanghai Stock Exchanges came to 76 billion yuan, 6 times the figure of

the previous years. The Shanghai securities market is spreading far and fast across the

country and is expected to become a national center (73).

Shanghai has introduced market approaches by hosting a meeting of Asia-Pacif ic

Economic Cooperation in 2001 In 2001,there were 28.000 enterprises from 91 countriesand regions have invested in construction projects in Shanghai. Li Ka-shing invested 390

million yuan in a project to construct 150,000 square meters of apartments and official

bui ld ings . At pr esen t, 144 domest ic and fore ign financ ia l in st itutions have been

established in Lujianzui finance and Trade District ,and 49 of the 88 banks are foreign.

(74). Relation between Shanghai and other APEC members are very strong. In 2000, the

total trade volume between Shanghai and APEC members increased 43.5 percent over the

year 1999,accounting for 77 percent of Shanghais trade volume. Till 2000,17 pf 21

APEC members had invested in 19,000 projects in Shanghai, accounting for 85.2 percent

of the total foreign investment there. Contracted investment reached US$31 billion or

68.4 percent of the total.(75)To established multilateral cooperation in extensive realms

and extended activit ies in the international community as a formal international

organization the Shangahi Cooperation Organization(SCO) is playing very significant

role. The basic document defines the SCO as an international organization of openness

pav ing a way for the par tici pa ting of neighboring countr ie s and coopera tion with other

international organization .On June 7,2002,president of China, Russia, Kazakhstan,

Kyrgyzstan, Tajikistan and Uzbekistan gathered in St. Petersburg and discussed about

the future development of Shanhai The SCO is significant in many ways as after theSeptember 11 ter rorist a ttacks , the US realized that regional economic under-

development and political instability can affect the world.

NINGBO: MECHANIZED HARBOUR

Ningbo is located in the southeast coas ta l province of Zhej iang, is the second

largest city. Ningbo farmers grow large crops of rice, cotton and aquatic products. The

area also has rich mineral resources such as flourite, lead, zinc, pyrophyllite and quartz.


25/40

An ancient ci ty, Ningbo began to trade with Korea, Japan and the Southeast Asian

countries during the Tang Dynesty (618-907). During the Northern Song Dynesty (960-

1127) it became one of the coutnry's major trading ports, comparable to Guangdong's

Guangzhou and Fujian's Quanzhou. After the Opium War (1840-42), Ningbo was

declared one of the f ive trading ports ( 76), open to the west . The founding of the

People's Republic of China in 1949 boosted Ningbo's economic growth and i t has

gradually become a prospering port city with up-to-date facilities, a god industrial base

and a diversified rural economy. In May 1984 the city was designated one of the 14

coastal cities to open international trade. Currently Ningbo is actively making use of

foreign investment and improving advanced technology. Efforts are also being made to

upgrade the city's existing enterprises, improve its telecommunications, air and sea

transportations services, water and electricity supplies and expedite its infrastructural

construction. Its international shipping routes lead to Korea, Japan and countries in

Southeast Asia. It is also situated like a focal point in the centre of fan-shape inshore

area. The distances are all nearly about 2,500 kilometers from Ningbo across the Pacific

to North America and Oceania and across the Strai t of Malacca of the Gulf area.Westward through the Suez Canal to Europe and southward around the Cape of Good

Hope to South America are also about the same distance. This special geographical

pos it ion provides an economical , ra tional cen tre for trans portat ion of goods between

continents.

Since it opened its door wider to international trade in 1984, Ningbo had nested

more than 800 business representatives from 22 countries and regions. City's officials

have signed contracts with some of them, and are s t i l l holding talks on many other

pro ject s. More than 150 jo in t ven tu res, whol ly foreign-funded and coopera tive

enterprises have signed up, with 80 in operation, Close to the east side in the 1.3 square

km. Xiaoshan Industrial District. Being developed with exclusive funds from Hong Kong

enterpreneurs, it is the first vast tract of land in Zhejing Province to be opened up solely

by non-mainland inves tment (77).

The Ningbo Economic and Technological Development zone, covering a total area

of 29.6 sq.km, was one of the first development zones to be established in China. The

government, Zhejiang Provience and Ningbo have successively invested some 6 billion

yuan in many projects. There are a total of 30 major projects valued above US $ 10

million under construction, planning of negotiation, with a total investment of US $ 4bil lion (78). In November 1992, the Ningbo Bonded Zone which covers area of 2.3

square km was established with state approval. Currently, the free trade zone is a free

economic area opened to the widest extent in China. The free trade zone also institutes

the enterprise registration system under which no examination and approval are required

from competent authorities, and controls over the business scope and management power

are lifted Ningbo Free Trade Zone was mainly funded by the Huaneng Group. To form

the United Development Co., Huaneng took up 51 percent of total investment, the rest


26/40

coming from the Zhejiang Provincial government, Ningbo Government and Ningbo Port

Office. The first phase of development involved 30 million yuan (79)

According to a senior official of the development zone, the free trade zone can

handle trade, finance, storage, transport and export processing. The Reward (Ningbo)

Wool Industry Corp., a joint venture with nearly US $ 30 million of mainly Taiwanese

capital, has set up a wool factory in the zone. Some of the foreign-funded enterprises,

with total investment of US $ 1.92 billion are (1) The Petrochemical Project established

by the Concord Gr oup of the Uni ted Stat es . (2 ) The Ch ina Na tional Paper Indus try Co .

Ltd. set up by an Indonesian group company. (3) The Belium Steel Plant, with an initial

product ion of 1.5 mi ll ion ton annually, jo in tly erected by the Concord Group of the

United States, the Baoshan Iron and Steel Complex and the Ningbo Development Zone.

In 1993, the contract for the first phase was signed with total investment of US $ 1.96

bil lion . (4) The Dixie Is land Project. The China In ternat ional Trus t and Inves tmen t Corp .

(CITIC) plans to inject billions of yuan for development over 15 years. At the end of

2000,Zhejiang Province has registered 18,339 foreign funded companies with an

investment of US$43.6 billion. It has established economic and trade cooperation withmore than 200 countries and regions in the world. (80) Investment and cooperation in the

following fields are very prominent ( i )Infrastructure projects: communications, energy,

water supply, sewage treatment.(ii) Farming technology, livestock product processing

breed ing, (i ii )Pe trochemical, syn thet ic materia ls ,new bui ld ing mater ia ls ,(iv) Machinery,

electronics, chemistry and pharmaceuticals,(v)Information, photo-electro-mechanical

integration, bio-engineering, environmental protection, (vi)New technology and new

equipment production projects (vii) Upgrading of the conventional service industry ,new

trades and management, construction, tourism, new business operation, consulting

service (81)The Ningbo has been selected to introduced the policy because i t has

Economic and Trade development Zone(NETDZ) established in 1984 and a Free Trade

Zone (NFTZ) opened in 1992. The Ningbo has a solid foundation of comprehensive

economic strength. Ningbo has become a foreign investors paradise;5,040 foreign

enterprises have been approved till 2001 and 40 of them rank among the 500 top global

firms The NETDZ and the NFTZ are the pillars of development and the locomotives of

Zhejiang opening up to the outside world. Chinas development strategy is not confined

to the economic or technological but it includes and boosts tourism also. In this regard

the tourism and investment attraction department of Ningbo city has launched 72 projectwith a total investment of US$555.43 million to develop tourism and invite investment

both home and abr oad. (82) Intention agreement have been signed for five projects, with

a combined investment of US$108 million of which foreign investment accounts for

US$8.5 mil lion. The other 67 projects are s ti ll under negot iation with var ious

departments, business people and consortia, both China and abroad. Under the new

vision of religion combine with tourism, the Baoguo Temple will be transformed into

pub li c par k fea turing pseudo- cl as si c ar ch itecture and Buddhi st Cul tu re , thus att ract ing

more vacationers, especially those interested in Buddhism, it will cost US$10 million.


27/40

(83)In addition, the Hong tang Sightseeing Agriculture Zone(HSSAZ),with an investment

of US$12.06 million ,wil l include a f ishing park, an orchard and a special animal

breed ing fa rm .The Ch ina Farm His to ry Park( CFHP), loca ted to the east of the ru ins of

Hemudu Culture ,a birthplace of civilization located into a major tourist attraction

displaying Chinese agricultural relics.

WENZHOU : CAPITAL OF ALUNITE

Wenzhou, a city of Zhejian Province, is situated on the southeast coast. It has

warm and mild weather with a mean annual temperature of about 18 C, hence the name

Wenzhou, meaning "warm prefecture" in Chinese. Wenzhou is called the "capital of

alunite". The fertile Wenzhou Plain in the east, criss-crossed by rivers and ditches,

produces abundan t cas h cr ops such as grai n, tanger ines, an d suga r cane. Wenzhou has

always been a commercial and handicraft centre. Its cowbells milk, leather shoes, paper

umbrellas, straw mats and fireworks have a high reputation. In 1983, it exported 19

million tons of dairy products, or half of the nation's total. Wenzhou has fairly welldeveloped food, textile, fine chemical, computer, instrument and meter, shoe-making,

ship building and ship-dismantling, and building material industries. During 1978-83, the

value of industrial production increased 10.6 percent every year, reaching 1,800 million

yuan in 1983.

Wide and with deep water, Wenzhou Port is the cargo clearing house for south

Zhejiang and north Fujian, with an nnual handling capacity of 3.07 million tons. Its has

direct shipping routes to Ningbo, Shanghai and Dalian, and to Japan, Korea and Hong

Kong. Since becoming an open city, Wenzhou has sought to accelerate its economic

growth by attracting investment and cooperation from other countries. In November

1984, the city sent a delegation to Hong Kong, where i t searched for capital and

technology needed to carry out technological transformation in existing enterprises. An

Australian businessman was attracted by the city's ideal conditions for animal husbandry,

which will certainly bring in its cake flourishing meat and milk production, fodder

process ing and lea ther tanning indust ri es . A Japanese ent repr eneur is enchanted by

Wenzhou's extensive coastal shallows, which offer lucrative opportunities for growing

prawns, laver , kelp and sea urchins (84). The success achieved in Wenzhou's first round

of investment negotiations has prompted city off icials to map out plans for moreambitious endeavours. Some for example, have suggested that foreign investment be

used to build a wharf for 10,000 ton ships. They noted that the city's 20 docks, capable

of accommodating only vessels below 5,00 tons, can hardly serve as an adequate outlet

for goods shipped to and from the Changjiang (yangtze) River middle and lower

reaches. The open policy brought the city into frequent touch with visitors from abroad.

Many residents have started learning foreign languages. As Wenzhou, also a famous

tourist site, has the two state-class scenic spots of Yandang mountain and Nanxi River

(85).


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29/40

Guangzhou was the first of the 14 coastal cities to be declared open to the outside

world. Located in the north of the fertile Zhujiang Delta, horde red on the south by the

South China Sea. It has a developed network of land, sea and air transportation. A hub of

domestic and international communications, Guangzhou is the highway centre of

Guangdong Province, the southern terminus of the Beijing-Guangzhou Railway-China's

trunk line for north to south and has one of China's three major international airports.

The establishment of the microwave communication line between Guangzhou and Hong

Kong contact(91).

Since 1979 Guangzhou has signed contracts with a dozen countries and regions.

The central government has adopted special policies and f lexible measures to help

Guangzhou develop its foreign trade.. To help attract foreign investment Guangzhou

offers reduced or exempted taxes on projects which bring advanced technology to China.

According to Liu Nianzu, Vice-Mayor of Guangzhou, in last few year Guangzhou has

taken three steps to help implement the open policy (92).(i) The city government drew up

a seven year plan (it was for 1984-90) to encourage the technological transformation of

its industrial enterprises. The aim was to quadruple the gross output value of industry bythe 1990. Of 226 industrial concerns, 130 should be modernized to reach the world 1980

level by the end of the plan. The city planners hoped to boost advanced light industry

and textile products from just 10 percent of the total output to 30 percent and quadruple

the percentage of light technology products, which today accounted for only 5 percent of

output. (ii) To help attract investment, the city has established Hungpu economic and

technological development zone. (iii) Following the Party Central Committee's decision

in October 1984 to reforms so that they can help develop the open policy. The reform

includes: (a) giving enterprises more decision-making power. After the reform decision,

all enterprises began paying taxes instead to deliver profits. The change has allowed

enterprises to manage their affairs independently, a change welcomed by foreign

investors. (b) Encouraging factories to establish direct trade relations with foreign

enterprises. (c) Reforming the commercial system and consumer goods and a more open

market to purchase the products made by joint ventures. (d) Publicizing the competitive

system and attracting more foreign investment for capital construction. (e) Advertising

for cadres and employing workers under contracts.

Recently, the Guangzhou Economic and Technological Development Zone

(GETDZ) established operat ional mechanism suitable for promotion of overseaseconomic interests. As GETDZ was established in December 1984, Up to March 1993,

about 120 more than 170 enterprises in operat ion were foreign-funded ones. The

industrial output value of the 170 totalled 9.03 billion yuan, with over 90 percent of this

sum from foreign-funded entities. Their exports also accounted for about 50 percent of

the zone's total export value. The zone is moving toward becoming a source of global

product s (93). The considerably improved investment environment in the zone has

resulted in the zone has resulted in a continuous stream of overseas business people

interested in investing in factories from more than 20 countries and regions such as the


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United States, Japan and Hong Kong. The majority of them have achieved 10 million

yuan in annual earnings, while one-third have surpassed 1 million yuan in annual profits.

For instance, a vessel joint venture financed by the United States, Hong Kong and two

other parties reached designed production capacity in only five months and recouped a

total investment US $ 18 million in 22 months. It had been selected as one of the top 10

jo in t ven tures in Ch ina for 1993(94).

In addition to all of this Guangzhou have 80 percent of Guangdong Province's

scientis ts and technicians. I t has 21 universit ies and colleges and more than 300

scientific research centres, altogether staffed with more than 12,500 specialists. Due to

the reform and high-speed economic development, people in Guangzhou have more

opportunities to find jobs today. Employers care about only for one thing when looking

for new employees : they must have the ability to do the work, rather than be college

graduates or not. Many people do their best to acquire more knowledge and skill so they

can secure better occupations in an increasingly competitive market. Private schools

have now emerged to meet their needs. Statistics show there were 125 p rivate schools in

Guangzhou by the end of 1992, graduating 60,000 students annually (95). Recently, newtraining courses in electronics, computer, and motorcycle repair were also established,

bring ing 10, 12 the number of courses offered, wi th 5,000 studen t gradua ting annua lly.

According to one survey, over 180 specialties are now available in private schools

including finance, foreign trade, law, foreign languages, sports and medicine. And the

schools cater to students needs. Students may get time from their regular work to attend

school, and can be either boarders of non-boarders, full or part-time (96). Reforms in

schooling also lead in opening residents schools, such schools are free of change.

There is no unified teaching programme, these schools have a common aim of lifting

citizen standards. Analysts believe the phenomenon derives from changing concepts that

pay more at tent ion to the qual ity of pe rsonal li fe . West Nanhu a Sub di st ri ct s of fice has

opened a school, offering 29 courses that have attended over 20,000 students. They

lectured on family entices and a more attractive daily life usually has a full house (97).

As Guangzhou is a city of fashion, and many fashion designers come from these prorate

fashion schools, New Time Fashion School h as over 40 classes covering everything from

design to pattern cutting with an audio-visual education programmes. This school also

has arrangements with garment factories and stores. At present, many of the schools

50,000 graduates have become well known designers and technicians in Sino-foreignfashions joint ventures (98) .

In 2001,Magneto Encephalography (ME) ,the most advanced equipment ever used in the

field of neuroscience has been developed in Guangzhou and has been clinical ly

applied .Introduced from the US, magneto encephalography has been adapted from

survey submarine technology ,and can precisely locate weak electromagnetic signals in

the brain.( 99).The most important use of ME technology is to pinpoint the abnormal area

causing epilepsy ,making it possible for the disease to the cured. It can also precisely

locate injured cerebral funct ions caused by cerebral t rauma, thus enhancing the


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therapeutic effect for injured optic ,acoustic and trigeminal nerves. In proving the

mystery of brain act ivi ty, i t can be applied in the study of the functional zones of

psycho logy ,sent imen t, cogn it ion, learni ng , memory , ca lculation and inf luence , as wel l

as the influence of noise and music on cerebral nerves and intelligence development.

ZHANJIANG : A RISING PORT CITY

Zhanjiang is located in the northeast part of the Leizhou Peninsula in Guangdong

Province.There are 1,012 industrial enterprises in the city producing machinery,

chemicals, electric power, ships, foodstuffs, sugar, textile, electronics and household

electric appliances. Zhanjiang's main natural resources are erinaceous quartz, volcanic

ash, silica and limonite. Zhanjiang is connected with the southwestern provinces through

the Lizhan Railway (Litang to Zhanjiang). I t has become an important gateway for

imports nd exports in southwest China. Agriculture is an important part of the economy

in Zhanjiang before 1979 much of the 310,000 cultivated hectors in Zhanjiang were sown

to grain. In 1979 when policies changed, the natural advantage of sugarcane wasexploited. By 1983, 56,000 hectors were sown to sugarcane; by 1984 this had been

expanded to 70,000 hectares and in 1985, 90,000 hectares were covered with the purple,

bamboo- like st al ks .112 Deputy director of the economic liaison department of the city's

special development zone planning board, Lin Weiqiang, made it clear that Zhanjing will

one day be an oil city like Houston or Aberdeen. It is already well on its way, with a

satellite communications tower, a computer centre, special wharves, a heliport and

modern residential quarter with homes, schools, shops, hotels and recreation facilities.

French, American, Japanese and British oil companies have set up headquarters

alongside China's Nanhai West Oil Co. Large oil and gas reserves are what attracted

them. In the western part of the South China Sea, 32 exploration wells have been sunk,

and a big oil field has been discovered beneath the Yingge Sea. In the Beibu Gulf, a joint

venture with the French company. Total has begun to extract oil on a trial basis and has

begun fu ll -scale production. East of Ha inan Is land , two of the three we ll sunk in the

Sino-American joint exploration area have stuck oil (100).

Zhanjiang Port is naturally favored with abundant bays and deep, tranquil water. It

has a 97 kilometer-long coastline and a handling capacity per year that reaches 12,000,00

tons. The harbour has 15 wharfs, including 9 berths capable of accommodating shipsabove the 10,000 ton class and oil wharf handling 50,000 to ships. Harbour operation are

virtually mechanized. The harbour is China's closest to Europe, Africa and much of

Southwest Asia and is a direct link with Hainan Island. During the First Five-Year Plan

per iod (1953-57), bu ilding of Zhan jiang as a po rt was li st ed among the impor tant

development projects of the country (101). I t was formally put to use in 1956 and at

present is being enlarged. Af ter the fu lf ilment of the Sevent h Fi ve -Year Plan (1986-90),

13 more ber ths are available. The development of Zhanj iang Por t has spurred

construction in Zhanjiang City and has stimulated the growth of industry (102). With the


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continued opening to foreign trade, authorities had planned to establish their special

development zone. Another industry anxious for foreign co-operation is fish farming.

One of the most successful projects is an oyster farm covering about 600 hectors of

shallow seabed. Since Zhanjiang was declared an open city, it has been given far more

decision-making powers, which have been passed on to smaller managerial units, many

foreign oil executives find their Chinese colleagues rather reluctant to make a decision.

BEIHAI : A TREATY PORT

Beihai, situated on the southern tip of the Guangxi Zhuang Autonomous Region

with Beibu Bay in the South, is a seashore city in south China. It has an area of 275

square kilometers and population of 160,000. Beihai City consists of a mainland

pen insu la and two is lands . With th ree side facing the sea, ridges and peaks on the

western border of the peninsula provide a natural shelter for Beihai City. The climate is

subtropical and the influence of the sea larks it green in all four seasons. Beihai first

became an importan t po rt during the Qin dynas ty (221-207 BC). By the time of the SongDynasty (960-1279), the city was handling a steady flow of imports and exports. From

Beihai's docks Chinese silks and satins, ceramics and pearls were shipped out in

exchange for amber, agate, gold, essence, rhinoceros horns and ivory from Southeast

Asia, Europe and Africa. Beihai became a "treaty port" in 1876, when the Qing (1644-

1911) court was forced by the British to sigh the Agreement of Chefoo. Soon the city

wore a colonial facade, studded with foreign consulates, factories, companies, hospitals,

schools and churches(103).

Since the founding of New China, industrial and agricultural production in Beihaihas developed greatly. To attract the foreign investment needed for modernization,Beihai has, with State Council approval, adopted preferential policies for overseasinvestors and business partners. A reduced income tax on only 15 percent, for example,will be granted to all Chinese-foreign joint ventures, co-operative enterprises and whollyowned foreign enterprises in Beihai. The city government also granted these enterprisesreductions or exemptions on the local income surtax. Overseas investors are exemptedfrom taxes when remitting profits back home after paying the enterprises income tax. Nomatter where the investment originates, a 50 percent reduction in these taxes has alsobeen in troduced on a tr ia l bas is fo r impor ted cons umer goo ds and other marke t goodswithin government-approved annual quotas, except commodity imports limited by statel aw. Favorable condi tions will a lso be provided for those who coopera te intechnologically revamping and expanding the city's 100-odd existing enterprises. All theequipment and mater ials needed in modernizing schemes and in inf rast ructuredevelopment are exempted firm customs duties, product taxes and taxes on increment.These flexible policies helped Beihai 11 enterprises, two contracts and 11 letters ofintent with enterprises from abroad (104).

Notes and References :-

1. Ch in a s For ei gn Po li cy ; New Star Publishers, Beijing, First Edition,1993,pp.1, 2.


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2. Chinas Foreign policy; Foreign Languages Press, Beijing, 1988, pp.5, 8

3 . Ram Dev Bharadwaj ; Chinas Open Door pol icy and Moderniza tion , Strategic

Analy si s, Journal of Institute for Defence Studies and Analysis, New Delhi, Vol.XVI, no.1,

Apri l,1993, pp.53,54.And also see, Sidney Gould (eds) ; Sc ien ce in Commun is t ch ina ,

Washington DC,1961.

4. Xue Muqao; Chinas Socialist Economy,Foreign Languages Press, Beijing,1981,p.235.

5. Roderic Mac Fraquhar; The Origins of The Cultural Revolution,Vol.II, The Great Leap

Forward -1958-1960, New York,1983, p.17.

6. Wang Yan; Financial Reform : Decentralization and Liberalization, in Thomas P. Lyons

and Wang Yan,eds, Pl anni ng and Fi nance in Chi na s Ec onom ic Re for m, Cornell University

East Asia Papersno.46, p.28.

7. Do rot hy Grou se Fon tana i ; Backgrou nd o f t he f al l o f H u a G uo feng ,As ia n

Sur vey,Vol.34,no.16, 1991, p.22.

8. Regarding Huas long-term development programme,see, Liu Guoguang and Wang Ruisum,

Restructur ing of the economy,in Yu Guang Yuan,ed.; Chinas Socialist

Modern izat io n, Foreign Languages Press, Beijing, 1984,pp.71-145. and also see, Dorothy J.

Salinger , Some speculat ions on the return of the regions:Paralles with Past, China

Quarterly,no. 75, September 1978, pp.623-38.

9. Peoples Republic of China, State Statistical Bureau, Sta ti st ical Ye ar bo ok of Ch ina- 19 84 ,

Hong Kong Economic Information and Agency, Hong Kong, 1984, pp.26, and 395.

10. Deng Xiaoping; Uphold the Four Cardial Principles, A speech at a forum on the

pr inci ples fo r th e Pa rty s th eoret ical wo rk, March 30 , 19 79 , in Se lec te d Wor ks of De ng

Xi aop ing (1 97 5-19 82 ), Foreign Languages Press, p. 167. and also refer to Ram Dev

Bharadwaj; Chinas Economic Liberalization, Lancers Books, first published 1995, pp.68,69.

11. Communiqu of the Third Plenum of the Eleventh Central Committee of the Communist

Party of China adopted 22 December 1978, Foreign Broadcast Information Service Daily

Re po rt -C hi na( FB IS) , December 26, 1978,pp. E-4, E-13.

12. Ram Dev Bharadwaj; Chinas Economic Liberalization, Lancers Books, first published

1995, pp.70-71.


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13. Decision on Reform of Economic Structure, China Daily , Beijing, October 23,

1984.

14. Deng Xiaoping; Speech at the Third Plenary Sess ion of the Central Advisory

Commission of the Communist Party of China, October 22, 1984, in Deng Xiaopings

Collections of Talks and Speeches: Fundamental Issues in Present Day-China; Foreign

Languages Press, Beijing,1987,pp. 72.

15. Ibid, p. 73.

16. "Land and Natural Resources" (China-Facts & Figures) , Edited and Publ ished by New

Star Publishers, Beijing, 1992, pp. 2-3.

17. Deng Xiaoping, "promote Educat ion in the Four Cardinal Principles and Adhere to the

Policies of Reform and of Opening to the Outside World", Excerpt from a talk with Prime

Minister Robert Mugabe of Zimbabwe, January 20, 1978, in Deng Xiaoping, Fun da ment alIs sues in Pr esent Da y Ch in a, Foreign Languages Press, Beijing, China, 1987, pp. 171-173.

18. Deng Xiaoping, "We shall Speed Up Reform", Remarks to Stefan Korosec, member of the

Presidium of the Central Committee of the League of Communists of Yugoslavia, June 12,

1987, in Deng Xiaoping's Fundamental Issues in Present day China, Beijing, Foreign

Languages Press, 1987, p. 190.

19 . Ib id. , p. 19 1. a ls o s ee ,,Ram D ev Bha radw aj , Ch in a : Open D oo r Pol icy and

Modernization, Strat eg ic Ana ly sis ,Vol.Xvi,no.1,April,1993

.

20. Qin Shi; China-1993 , New Star Publisher, Beijing, 1993, p. 81.

21 . Ib id., pp. 86-87 see, Ram Dev Bharadwaj; Leadership, Liberalization and development in

China in Ram dev Bharadwaj (eds)In ter na ti onal Po li ti cs Co nt em po ra ry trend Issue s

pu bl is he d by ASC, Ra ni durgavat i Un iversi ty ,Jabal pu r, 20 04 ,pp 32 5-38 0.

22. "Dalian: Northern most Gateway To China" in Su Wenming (ed.), Opening the Door: 14

Coastal Cities and Hainan, Beijing , 1986, pp. 157-160..

23. "Dalian Aims to Become An International City", Bei ji ng Revi ew, Vol. 36. No. 23, June 7-

13, 1993, p. 32.

24. Dal ian, NO. 22 , p . 167 .

25. Dal ian Aims to . .. .No. 11, p . 32

.


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2 6. Ram Dev Bha radwa j, Chinas Economic Liberalization, La nc er s Books,New

Delhi,1995, pp 15 5- 15 6. .

.

2 7. L i T an g Fu tures Sec to r E nt er s O rd er ly D eve lo pment S tage,Be ij ing Re vi ew

,Vol.45,no.3,January 17,2002,pp.28-29

.

.28. Qinhuangdao: China's Key Energy Port", in Su Wenming (ed.), Opening the

Do or : 14 Co as tal Ci ti es an d Ha in an , Beijing, 1986, pp. 175-177.

.

29. Wang Daming, "Qinhuangdao: A Promising Investment Venue", Bei ji ng Re vi ew, Vol. 36,

No . 12, Ma rch 22 -28 , 199 3, p. 18 .

.

30. Qinhuangdao has set up a foreign investment service centre . I t offers consultations,

examines and approves contract

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ramdev bharadwaj - China Foreign Policy