China's Hainan Revitalizes Economy After Bubble Burst

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Last updated at: (Beijing Time) Monday, October 21, 2002

China's Hainan Revitalizes Economy After Bubble Burst

The hangover from a construction binge which burst Hainan's economic bubble about six years ago, cost China's southernmost province dearly.

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The hangover from a construction binge which burst Hainan's economic bubble about six years ago, cost China's southernmost province dearly.

But now the gloomy picture, characterized by many abandoned unfinished housing schemes, has turned rosy with magnificent construction projects and bridges being built and factories operating at full swing.

Thanks to economic restructuring, Hainan posted an average annual GDP growth of 8.6 percent in the 1998-2001 period, surpassing the national figure for four consecutive years.

The island province was designated as a special economic zone in 1988. At that time, Hainan differed much from other special economic zones like Shenzhen, Zhuhai, Shantou and Xiamen, with 34,000 sq. km of islands and islets, and 80 percent of its populationof eight million were rural dwellers.

Largely due to the lack of strong industries, the province suffered an economic bubble fueled by a housing boom in the early 1990s.

By the end of 1998, Hainan had 7.03 million square meters of unsold housing, or 10 percent of China's total, while its population accounted for only 0.6 percent of the national total.

This taught the province a grim lesson and forced local authorities to develop industries by making the most of what Hainan had to offer.

In line with Hainan's natural conditions, the provincial government put forward in early 1996 a package of development plans which focused on high-efficient agriculture, tourism and modern industry for the 1996-2000 and 2001-2010 periods.

The strategy to develop "green" agriculture with high technology and promote the industrialization of farming pays off, and Hainan has become an important winter vegetable supplier for the rest of China.

From 1998 and 2001, streamlined tropical agriculture, now one of the pillars of the provincial economy, maintained an annual growth rate three times higher than China's average for the primary sector.

Tourism has become another driving force in Hainan's economy. Last year the province received 11.24 million tourists from both at home and abroad and earned 8.789 billion yuan (nearly 1.1 billion US dollars) in revenue, respectively 12 and 37 times that in the year when the largest special economic zone in China was set up.

Currently, its tourism income contributes more than 15 percent of the province's annual gross domestic product.

Growth in the industrial sector, which used to be one of Hainan's weak points, has picked its pace in the last couple of years, concentrating on developing farm produce and seafood processing, oil and gas production, machine building, biological pharmaceuticals, and new and high technologies.

Last year Hainan had a gross industrial output value of 24.1 billion yuan (2.9 billion US dollars), 10 times that its 1989 figure.

This year province has set 100 construction priorities, including 21 industrial projects with a combined investment of 21.26 billion yuan (2.6 billion US dollars).

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