Deng Xiaoping, one-dimensional and superimposed against a lurid blue sky, still exhorts the people of Shenzhen to follow his open-door policies for 100 years. But it is doubtful if the city's 3.79m citizens need any reminding.
The southern Chinese boomtown, where the late paramount leader trailblazed his reforms with the sentiment 'to get rich is glorious', betrays little sense of having lost sight of capitalist mores since his death last year. Kids hustle pirate CDs, Canto-pop blares out from stalls and fake black Prada bags perch between a sea of twenty-something shoulder blades.
The city, effectively in only its 20th year, appears to be riding out the Asian financial crisis in better shape than its neighbour, Hong Kong; shops are busier, restaurants fuller and the number of downtown beggars run almost neck-and-neck with the territory.
No trade shrinkage
Business also reports little impact from the financial storms ravaging Southeast Asia. The municipal government's Bureau of Foreign Investment says it is still approving on average five foreign projects a day, and the Guangshen Railway Company is witnessing a seven per cent year-on-year increase in passengers. In April and May, freight volumes have also been on the rise.
China International Marine Containers, a Simi-foreign joint venture which is 25 per cent-owned by shipping giant Cosa) and makes shipping containers, increased out-put from 180,000 TEUs (twentyfoot equivalent units) in 1996 to 280.000 TEUs last year. This year manufacturing should top 300,0(0 TEUs.
"People expect a shrinkage in trade this year, but in the past few months we did not see this in China trade," says Yu Yuqun, deputy manager corporate finance at China International Marine Containers. "Our experience shows there's no shrinkage."
China's total exports are down, but in the port of Chiwan through-put for the first four months of the year is up. Volumes last year dou-bled those of 1996, at 210,000 TEUs, and this year's container terminal throughput is projected to rise by half as much again.
However, there are signs that China's own slowing economic growth is starting to put brakes under general and bulk cargo, in particular in construction materials and imported fertilisers, through the same port. And there has been a noticeable decline in exports to Southeast Asia, which is the destination of around one-third of container exports; since January these volumes have dropped by 10-15 per cent.
Shenzhen's still buoyant economy is also evident in the ubiquitous construction projects. Building is underway everywhere, as the city seeks to catapult its infrastructure development into the next century. And everywhere is evidence of foreign money: names like Konka, Philips, Castro] and Shangri-La emblazon the skyline. Hong Kong shops such as Theme, Watson (part of Hutchison Whampoa), Giordano and Esprit dominate the main downtown streets.
Shenzhen's newly-listed companies almost uniformly admit to preferring foreign banks over their domestic counter-parts. "Companies like ours are more appreciated by foreign banks, because they are more experienced than domestic ones,"says Dr Fu Yu-ning, president of China Nanshan Development (Group), which claims to be the first shareholding company in China.
So far, companies say, there are scant signs that these foreign banks are reining in their lending ?as they are doing in other parts of the region, including Hong Kong and that foreign investment has not been unhinged by recent developments in Asia.
Last year, foreign investment into the city grew 18.6 per cent to US$2.87bn. Since 1979, when Shenzhen was founded, foreign investors have injected US$14.74bn in 20,135 projects, with foreign contractual investment totalling US$24.86bn.
Nonetheless, some investments will be threatened by the financial turmoil engulfing Asia. Shenzhen's two biggest investors, Hong Kong and Japan, have both been affected — albeit the slowdown in Hong Kong has been more modest than that suffered by some of its neighbours.
Indeed, for the whole of China, foreign direct investment is estimated by some economists to fall by around one-third this year; from USS45bn to around US$30bn. About two-thirds of the total comes from Asia, most of it spearheaded by the overseas Chinese who have been targets for much of the rioting in Indonesia.
Investment from countries such as Japan, concedes Li Qingsen, deputy director-general of the municipality's Bureau of Foreign Investment, is expected to trail off because of their domestic problems. The obvious impact of the Asian financial crisis, he says, win ye 011 If1'eslmIlen1.
"If a company wants to invest in Shenzhen it will have problems collecting the money from the banks, because the banks will impose strict controls, and this will also impact trade. Foreign countries will have problems raising capital and the cost of exports will be higher, which will have some influence on our trade." he says.
Trade is a key plank of Shenzhen's prosperity. Last year exports totalled US$25.5bn, a vast increase on the 1979 figure of US$9.3m, and accounting for 13 per cent of the country's total trade — the equivalent of Shanghai and Jiangsu province rolled into one. More than half of exports are related to foreign investment. "The great progress achieved here is partly thanks to the input of foreign investors," comments Li.
Santron International, the German producer of the fertiliser, which China Bicycle has been distributing in China since 1995.
None of this has been lost on Shenzhen, which is striving to stay at the head of the pack by enhancing the environment for foreign investors. In February, 22 new rules to this end were promulgated.
Among the incentives, provision is included for exemption of import duties in 'encouraged' sectors. Taxes are also kept low. Li points out that foreign investors pay a tax rate of 33 per cent in the inner areas of China, 24 per cent in the coastal areas, but just 15 per cent in Shenzhen. In reality, there are many zones and development areas across the country which also offer preferential tax rates.
Some high-technology investors pay even less. For example. such a company operating for more than 10 years is not required to pay any tax at all in its first two years of turning a profit, and in the subsequent three years need pay only 7.5 per cent.
Practical hurdles to investment are also.