Foreign investment sought for China’s southern isle

Press, 4 February 1987, Page 49

Foreign investment sought for China’s southern isle

By

TIM DONOGHUE,

NZPA staff correspondent Hainan Island

In late 1985 the Chinese official press revealed a corruption racket Involving high-ranking officials on the tropical island of Hainan.

The corrupt officials had abused their special powers by importing cars and consumer goods to China’s southernmost territory and reselling them at a' huge mark-up to inland provinces.

In stark contrast to the rogues of imperial times who were exiled to Hainan Island, the end of the world in Chinese tradition, the modern day smugglers were demoted to humble mainland positions.

However, the island’s new General Office Chief,

Mr Xie Ru Xe at a press conference with visiting journalists, was at pains to point out the island had a bright future and was back on course. He referred to the fact that Peking, about 3000 km to the north-east, had implemented a range of preferential policies designed to attract foreign investment to China’s southernmost territory. These policies, implemented in the early 1980’s, had not changed in spite of the latest smuggling incident, Mr Xie Ru Xe said speaking through an interpreter. Mr Xie Ru Xe said Hainan received approximately SNZI4 million in foreign investment last year.

Forty projects were open for foreign investment.

Among them were the construction of a cement plant, importation of a production line for carpet weaving, coffee, cocoa, pineapple planting and processing, and the raising of pigs and prawns. One Hong Kong-Hainan Island joint venture scheme already under way in Haikou involves the South China Agar Agar Company which processes and exports powdered seafood to Hong Kong. The joint venture, which employs 183 workers in Haikou, was established last year after the injection of $3 million from Hong Kong.

Mr Xie Ru Xe said Hainan Island was an attractive proposition for foreign investors because: • Of attractive income tax exemption provisions

affecting joint ventures: • It was endowed with rich mineral, oil and natural gas deposits: • Its 1000 km coastline hasabundant fish supplies: • It possesses tourist potential • Local level island authorities could approve the establishment of foreign financed projects with an investment of under $lO million. Mr Xie Ru Xe offset his optimism by stating that Hainan Island, until 1980, effectively closed off from the outside world, was still very backward. “Please forgive. Please forgive,” Mr Xie Ru Xe’s interpreter said while referring to some of the island’s amenities and services confronted by visiting journalist during a recent vist.

It is easy to forgive Hainan Island, the spot where the New Zealander, Rewi Alley, aged 89, in recent years has escaped Peking’s cold winters. For the tropical island has perfect conditions for growing tropical crops and the six million residents enjoy some of China’s best aquatic resources. Before 1979, China’s economic policies gave investment priority to the production of grain. Hence the tropical island was denied the revenue- to develop the crops it was most suited to produce. However, in 1980 Hainan was declared an

open area and from the beginning of January this year was given provincial level authority. The more positive approach the Chinese authorities are taking towards Hainan is reflected in the fact that the State has declared the island one of seven national tourist spots. The decision by China Resources to' assist the island to purchase a fleet of 2000 to 3000 tonne ships for coastal work also reflects the changed attitude.

In part this decision reflects a desire to prevent almost all the island’s exports moving through Hong Kong. China Resources, China’s official trading arm in Hong Kong, is planning to invest about $2O million for the island’s development during the seventh five-year-plan. In the oil industry discussions are under way between China’s Offshore Oil Corporation and the American firm, Atlantic Richfield Company. These discussions concern the development of the mammoth Ylnggehai Basin natural gas field to the south of the island. ARCO’S natural gas discovery has estimated reserves of 90 million cubic metres. Mr Xie Ru Xe said the parties were discussing a proposition to build a 1000 km pipeline to supply Guangzhou with natural gas.