Fujian province (120,000 square km) is a region of high, thickly forested mountains and narrow, fertile valleys. The sub-tropical climate gives an average of 300 frost-free days a year. Fujian's population numbers over 28 million.
Sandwiched between Zhejiang to the north and Guangdong to the south, Fujian is famous for its craggy coast, whose trading ports have been important economic centres for south China since the 14th century. To the east, across the Strait of Taiwan, lies the island of Taiwan. Despite the relative prosperity of Fujian's seaports with their international links, the province's hinterland remains poor and inaccessible. Many Chinese now living in Taiwan, Singapore, Malaysia, Indonesia and the Philippines are the descendants of economic refugees from these inhospitable areas.
Fujian's economy is buoyant, but perhaps over-dependent on imports. According to Chinese statistics, in the first three months of 1993, it exported US$381.6bn worth of goods and imported US$558.92bn. That represents a 20.9 per cent increase in exports over the same period last year, and a whopping 65.2 per cent increase in imports.
Fuzhou, the provincial capital, has a population of 5.3 million. Light industry accounts for the bulk of the city's economic activity, particularly textiles and food processing. Fuzhou is the centre of the lacquer-ware industry. China supplies two-thirds of the world market for lacquer-ware. Outside Fuzhou City, at Mawei (see below), an economic and technical development zone has been set up.
Fuzhou has recently set itself the ambitious goal of catching up with Guangzhou by 2000 and with the Asian "four dragons" by 2010. Perhaps the city's optimism is justified. In 1993, Fuzhou was revealed to be one of China's 50 richest cities, with an output of YlObn in 1992. One of the ways by which Fuzhou plans to realise its aims is by encouraging foreign businesses to develop and manage large tracts of land. An example of this approach was the announcement, in November 1992, that a Li Kashing company was investing Y13.5bn to develop 44 hectares of land into shops, offices and houses.
Another policy aimed at ensuring rapid development is to allow foreign firms the right to manage local factories independently. The first such case is the Fujian Machinery Factory, which is managed on a trial basis by the Taiwan Youjia Group. The city is also aware of the need to develop its tertiary industries, as well as its infrastructure. It is hoped that this will be achieved by wooing foreign banks, retail stores and five-star hotel- chains, by completing the new Changle International Airport and city expressway, and by developing Fuqing Bay Port.
Mawei: Fuzhou Economic & Technical Development Zone
Mawei is 48 km downstream from Fuzhou, and serves as the capital's seaport. It proximity to Taiwan (109 nautical miles), and the resultant heavy Taiwanese investment, are factors greatly to its advantage. The Fuzhou Economic & Technical Development Zone (FETDZ) was launched in 1985, and by 1991 had received foreign investment amounting to US$429m. The FETDZ authorities stress the favourable infrastructure for industry in the zone. There are abundant supplies of electric power and water for domestic and industrial use. The long-term aim of the FETDZ is to create a 'Mm River delta', along the lines of the Pearl River delta, using Taiwanese money as an engine for development.
Xiamen and the SEZ
Formerly known as Amoy, Xiamen lies on a series of islands linked to the mainland by two causeways. The city lies 161 km to the west of Taiwan, to which large numbers of Fujianese migrated in 1949. Xiamen's population is just under 1 million. The city has been an important fishing and trading port for centuries. Its climate, unspoiled beaches and natural beauty offer great potential for development as a tourist resort.
It was reported in February this year that Xiamen ranked as the tenth most economically powerful city in China. It owes much of this pre-eminence to its designation as a Special Economic Zone (SEZ). Xiamen was given the status of SEZ in 1979. At the outset, the SEZ covered an area of only 2.5 square km. Since then it has expanded to cover the whole island (131 square km). 70 per cent of the total value of industrial output is derived from light industries. In 1992, Xiamen received US$1.7bn worth of overseas investment. US$564m of this has so far been utilised.
As is the case elsewhere in Fujian, the authorities have courted investment from Taiwan. As trade between that island and the SEZ increase, Xiamen hopes to attract financial institutions with Taiwanese capital to service this open trade. The Xiamen Foreign Exchange Swap Centre officially opened in July 1989. The Centre operates a membership scheme. Non-members are denied access to the Centre, but may engage in transactions through a broker.
Xiamen has been successful in using its relatively low land and labour costs to attract overseas joint ventures. Recently, the Hong Kong Aircraft Engineering Co (HAECO) signed an agreement to open a new aircraft engineering and maintenance base in Xiamen, which is due to open in 1996. The venture, to be known as Taikoo (Xiamen) Aircraft Maintenance Co, will be 51 per cent owned by HAECO and Cathay Pacific. Other shareholders have not yet been decided. But it is likely the Xiamen city government will take 25 per cent of its shares.
Putian's population is 2.55m. It, too, lies directly across the sea from Taiwan. The city is a port and was designated an open coastal economic zone in 1988. Putian is an important producer of shoes, turning out 32m pairs a year. Its other main industries are electronics, machinery and ship-breaking.
Quanzhou lies on Fujian's southeast coast. Its population is 5.4m. The city has a long history as a trading port. Quanzhou and its surrounding area specialise in producing goods destined for export, such as textiles, leather-ware (gloves and blousons) and rattan basketware. By 1988, 68,000 township enterprises operated in the area, employing 500,000 people and providing by value two-thirds of Quanzhou's total industrial and agricultural output.
Shishi, in southern Fujian, is an important textile centre, which makes clothes and accessories, mainly for export to Hong Kong. Chengdai, on the Jindong Plain (on the shores of Quanzhou Bay), is an important shoe-making centre. It uses machinery made in Taiwan. Cizao specialises in making industrial ceramics. Annual production is worth more that RMB100m. Luncang, on the Xixi River, makes central heating equipment. Output by value exceeds RMBI00m per year, accounting for 89.5 per cent of Luncang's total output.
Fujian is rich in natural resources, including coal, iron, manganese, tungsten ferro-silicas and building materials. But often deposits are small and scattered, thus making extraction expensive. A deposit which is believed to contain 500,000 tonnes of copper has been found in the Ziju Mountains in western Fujian. The province's abundance of water resources give it a potential hydro electric generating capacity of 10kw.
Agricultural and fisheries
Although most of the province is mountainous, with only a narrow fertile coastal plain, 80 per cent of its people are peasants or fishermen. Fujian is one of China's leading producers of tea. Tea from northwestern Fujian is exported to Britain and Germany under the name of Lapsang Souchong. Other cash crops include rice; sugar cane, tobacco, peanuts and fruit. Fujian is China's most heavily forested province. Its reserves of timber exceed 400m cubic metres. It is planned that a further 1.3m hectares of land will be planted with trees by 1995, increasing forest cover from 43 per cent to 55 per cent. The fishing grounds off Fujian are among the best in China, providing the province with a major export product. In 1988, Fujian provided 8,000 tonnes of prawns, 40 per cent of which were sold to Europe.
Fujian is eager to develop its agricultural potential. In April 1992, 29 agricultural zones were set up on 10 coastal islands. The provincial government has made no secret of its desire for foreign investment in agriculture, and it seems likely that Fujian will continue to promote this sector as an alternative to the more immediately seductive options of investing in manufacture or infrastructure. The disparity in development between rural and urban areas was highlighted in the recent rumblings of discontent among Fujian's farmers (in common with farmers elsewhere in China). China's central government ordered the provincial governments to slash taxes and duties on peasants, in the hope of defusing the resentment over their relatively poor standards of living.
In 1988 Fujian's total industrial and agricultural production amounted to RMB55.7m. The province's industrial production includes metallurgical goods, chemicals, plastics, electronics, textiles, and paper products, as well as foodstuffs. Fujian's 420,000 private companies employ 752,000 people, and provide goods and service worth RMB2.1bn per annum. In 1989, Fujian produced K50, pairs of shoes, which represented 4.7 per cent of industrial output. With Guangdong and Guangxi, Fujian forms the South China Economic Zone, which aims to concentrate on electronics, light industry, foodstuffs and oil.
In 1992, foreign interests contracted US$6,35bn worth of investment in Fujian, of which US$1.42bn has so far been utilised. China's State Council has recently sanctioned the further opening of Fujian province to foreign investors. Examples of the new policy include the following developments.
* The establishment of bonded areas with their own customs controls (such as the 0.6 square km Xiamen-Xiangyu Bonded Area, and the 1.8 square km Fuzhou Bonded Area).
* The creation of additional investment areas (such as the 78 square km Xiamen-Jimei Investment Area).
* The formation of technological development areas (such as the Rongjiao Economic & Technological Development Area in Fuging).
The provincial government has decided to focus its efforts on constructing 34 large and medium-sized projects involving transport, communications and energy, to improve the investment environment. Other initiatives include an experimental registration system for Foreign-funded enterprises, and the encouragement of state enterprises to trade direct with foreign firms.
In June 1992, Fujian province invited foreign companies to develop shopping centres in Fuzhou, Quanzhou and Liangzhou specifying a minimum investment of Y50m and a minimum size of 20,000 square metres. This move was followed in August 1992 by a ruling that foreign supermarkets would be allowed to open in coastal towns. Xiamen has witnessed a 'first' in overseas investment in mainland China, with the establishment in 1986 of the Xiamen International Bank. This is the country's first joint venture bank. Its four JV partners are the Industrial & Commercial Bank of China, Huafu, the Xiamen SEZ Construction Development Corporation and Minxing Holdings Co, listed in Hong Kong.
The distribution of international hotels in Fujian is rather haphazard. Fuzhou has a glut, while other major .centres, such as Xiamen, Putian and Quanzhou have too few. Hoteliers in Fuzhou complain of being forced to charge rock bottom room rates. The tourist boom of the late eighties was mainly generated by Taiwanese visitors attending family reunions (Taiwan has only allowed free movement of its inhabitants for the last six years). In 1990 half of the foreign tourist arrivals in Fujian were from Taiwan. Now, however, many of the reunions have taken place, and the Taiwanese are travelling to other parts of China. This has forced hotels to look to domestic and non-Chinese tourists to fill their rooms.
Inland communications remain difficult. Roads are poor and rivers unnavigable. But Fujian's 3,000km-long coast allows easy access by sea. There are ten places with the potential to house 10,000 tonne berths.
To increase economic growth, Fujian has launched 10 important transport-related projects, with an estimated total cost of over RMB200bn. The project include upgrading the main north-south highway system by building a new RMB15m four-lane super-highway reserved for cars and lorries. The new super-highway, measuring 300km, will link Xiamen with Fuzhou, and will permit speeds of up to 100kph. The existing road is shared by carts, bicycles and tractors, which hamper efficient traffic flow.
At present, only one railway line links Fujian with the rest of China. As part of Fujian's policy of upgrading key transport arteries, the province's main north-South railway linking Xiamen with Yingtan in neighbouring Jiangxi province, is being electrified. As a result, capacity will be increased and travelling times halved. It is intended that two new lines will be built by 1997. One, costing an estimated RMB1.4bn and scheduled for completion in 1988, will connect Nanping and Hengfeng in Jiangxi. The other
will run the 150 km between Zhangping and Quanzhou, and will serve Fujian's southern coastal belt. It is due to be completed in 1995 and is mainly financed by the Y6.5bn loan from the Japanese government.
The main areas for port development will be Fuzhou, Xiamen and Meizhou Bay. Mawei, Fuzhou's river port, will be enlarged to accommodate five deep water berths, each with a capacity of 1000 tonnes. The bulk of the cost for this scheme has been borne by the provincial government and the Ministry of Communication. Xiamen's port can currently handle 1.9m tonnes for freight per year. But the completion of the Dongdu Wharf will raise capacity to 4m tonnes. Four new berths are being built there, at a cost of RMB300m, a third of which has been provided by the World Bank. Meizhou Bay will specialise in heavy duty cargo. The intention is to end up with three berths, one of which will be able to handle oil tankers of up to 300,000 tonne capacity. The total cost of this project is likely to exceed RMB300m.
As business and tourist traffic to the province have escalated, Fujian's airports have come under increasing strain. Xiamen's Gaoqi International Airport, which was completed in 1983, using loans from the Kuwaiti government, is operating at near-capacity. Fuzhou is planning to cope with airport under-capacity by opening its Changle Airport in the near future.
Fuzhou and' Xiamen are the principle hubs of Fujian's air network. The main carriers flying to the province are Chinese, and include Air China, China Eastern, China Northwest, China Southern, China Southwest, Shanghai Airlines and Sichuan Airlines. Fujian also has its own carrier, Xiamen Airlines Ltd, with a fleet of Boeing 737 and 757 aircraft. The airline is a joint venture between the Civil Aviation Administration of China (CAAC) and the Xiamen municipal government.
From Fuzhou there are scheduled services to cities including Guangzhou, Changsha, Chengdu, Chongqing, Dalian, Haikou, Hangzhou, Harbin, Kunming, Nanjing, Beijing, Shanghai, Shenyang, Shenzhen, Taiyuan, Tianjin, Wuhan, Xian and Zhengzhou. Xiamen offers services to all of the above, plus to Changchun, Fuzhou, Hefei, Luoyang, Ningbo, Qingdao, Urumqi, Wenzhou Yantai.
On an international level, both cities have non-stop flights to Hong Kong. Hong Kong's Dragonair also connects Xiamen and Hong Kong. In addition, Xiamen is linked to Jakarta, Manila (also served by Philippine Airlines), Penang and Singa
pore (also flown by Singapore's Silk Air).
Although Fuzhou at present has enough power to meet existing demand, the distribution system is extremely poor. Blackouts, even in cities, are common. The network's reliance on hydro-electric power (HEP) leads to erratic supply when rainfall is low. In an attempt to regulate the supply, a 1,400 MW HEP plant is being constructed at Shuikou. This project is scheduled for completion in 1995. Last year construction started on Zhangping No.2 Power Plant, a 200MW thermal power station, which should be in service by the close of 1994. It is jointly funded by Chinese and Hong Kong interests. Throughout the province, Fujian aims to increase its power capacity by 2,5000 MW to 13.62 mMW. *
This feature was compiled by the commercial section of the British Embassy, Beijing
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