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Hainan: Floating Between Hope and the Past

Hainan, an island in the South China Sea of the same latitude as Hawaii, has drifted between promise and disappointment over the past 20 years. Once a part of Guangdong, it was made an independent province and a special economic zone in 1988.

This week's special explores the stories of Hainan, from the eager property speculator dashed by an economic bubble, to the optimistic officials penning its future as an international tourist destination.

Yangpu: Returning to Roots
At the entrance to Yangpu, an industry zone near the capital city Haikou, a large banner reads, "Hainan provincial committee made the right decision. Opportunities don't come easy. There should be no delay." 

That was how Deng Xiaoping responded to the Hainan government's proposal to establish Yangpu "Economic Development Zone" two decades ago.

When Hainan was made an independent province in 1988, the newly-formed provincial government proposed selling 30 square kilometers of land in Yangpu to a Hong Kong subsidiary of the Japanese company Kumagai Gumi, now called HKC Limited, and entrust its development to it for 70 years.

The proposal met with strong criticism, with many calling it a humiliation of the nation and a loss of sovereignty. As a result, it wasn't until 1992 that the Zone was established and tariff-free policies were introduced.

Eventually, the industrial zone became a real estate development area. Between 1992 and 1993, Kumagai Gumi sold over 900 mu (60 hectares) of land at three million yuan per mu. At that time, industrial land in Haikou and Sanya costed 130,000 to 150,000 yuan per mu.

"As a result of such high prices nobody showed interest in starting business or investing in Yangpu," said Xia Mingwen, former director of Yangpu Land Development Planning Bureau.

As the bubble in the real estate market began to burst in 1998, Yangpu slid into an economic depression. Later, the Asian financial crisis broke out, ensnaring Kumagai Gumi.

Discounted land prices were offered later in 2000, but no one was attracted, said Huang Yuanbo, chief of the Yangpu broadcasting and TV station and a witness of the depression during that period. 

  Yangpu free port ushering in a new dawn. 

It was not until several years later when Yangpu was gradually revived by big industrial projects, such as APP Jinhai, a paper company founded in 2003, and Hainan Refining and Chemicals under Sinopec, which was established in 2006. These projects drove the province's GDP growth up to 14.5% in 2007.

However, as environmental protection became a major public concern, these projects were also being scrutinized for their pollution.

In September 2007, Yangpu was made the fourth tariff-free port in China. Under such liberal policies, Yangpu once again set out to rebuild itself. 

Hainan's Tomorrow: An Island for the World?
Poised for a new beginning, the island was ready to diversify into other industries.

On May 5, the Hainan provincial government received State Council approval to "explore and experiment in the reform and opening up in tourism" and redouble efforts to build an "international tourism island".

By definition of government officials, "international tourism island" refers to certain areas in Hainan where there are more open tourism polices, featuring "visa-free, custom-free, and opened-up aviation rights".

Sanya, Hainan's tourism powerhouse on the southern coast, makes half of the island's yearly tourism revenue. But some are skeptical of the extent of its globalization. Professor A Yingming at Hainan University called it "inadequate" both in "software and hardware". He likened the city to an unsophisticated country fellow, who would hardly turn international overnight.

Despite high-end services from top-ranking hotels there, foreign tourists complained about inconvenience in transportation which hinders them from shopping and experiencing local life, according to a report by the Institute of Tourism, Zhejiang University. 

Internationalizing the tourism in Sanya was greatly limited by its poor urbanization, said doctor Zhou Lingqiang, deputy dean of the University's Department of Tourism Management. Existing service facilities failed to meet the various requirements of international tourists, he added.

With the proposal of an "international tourism island" approved by the State Council, the next step would be shooting for preferential policies such as visa-free entry and tax-free shopping, said Zhou.

There are also suggestions to develop villas, golf fields, as well as a new form of casino which attracts tourists without breaking from "socialist morals". 

When being asked how to shoot for these preferential policies from Beijing, a senior official of the provincial government said breaking up conventions and experimenting would be the first step. The source added that based on China's experience in reform and opening-up, the point was to "grasp the spirit and try boldly".  

Individual Contribution
In fact, the principle of "try boldly" did have encouraged a great many individuals to seek new opportunities on the island.

Wang graduated from Jilin Art School in 1987. At the time, colleges in China still assumed responsibility for the employment of their graduates. Wang was offered a job in a printing plant in Jilin province.

Unwilling to spend the rest of his life in a small factory, he passed on the offer and headed for Shenzhen, a special economic zone in south China, where he found a job in an interior design firm.

During a dinner with a classmate later, he heard that Hainan would become an independent province. Sensing opportunities there, Wang came to the island.

Others followed. Wang recalls a bulletin board near Haikou's People's Park cluttered with recruitment ads. He applied for an art designer's job in a newspaper. Due to his working experience in Shenzhen, he was hired.

Knowing nothing about setting type or design, he turned to a designer of Hainan Daily. He dove into the craft, and gradually carved a foothold in the company.

A few months later, Wang jumped ship to work for the advertisement department of Hainan Daily. In 1995, he started his own advertisement company, which is still in operation today.

Wang's fervor was shared by Zhang Jun (alias), who worked for a newspaper in Hainan in 1992. With a steady salary and some gray income, he lived a peaceful life until one day, a friend at a trust company suggested him to learn to use credit. Zhang then bought a four million-yuan house with loans from the friend's company, which was resold several months later for a net profit of over three million yuan.

When Zhang went to the friend to repay the loan, he was suggested to go on speculating with the money since the loan had yet to mature. With the first try successful, Zhang took the advice and joined the army of real estate speculation from then on. At the height of the frenzy, he said, his earnings totaled 26 million yuan.

In June 1993, the then-deputy premier and chief of the central bank Zhu Rongji announced an end to real estate developers going public and new bank loan controls in the industry.

Under tightening policies, Zhang and those alike were unable to continue with their business, and neither could their on-hand properties be sold out. Having quit his job and now losing several million yuan, Zhang immediately opened a small company to keep the pot boiling.  



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