1

Introduction
With the dawn of the 21st century, the Asian economies have become important players in the emergence of a global capitalist network. The World Bank has pronounced that nowhere and at no time in human history has humanity achieved such economic progress. One force in the rise of China and Southeast Asia has been the 55 million overseas Chinese. It has been estimated that the GNP of the overseas Chinese community is between 200 and 500 billion U.S. dollars, outranked only by the United States, China, and Japan. In 1992, an article published in The Economist estimated that overseas Chinese hold 2--3 trillion dollars in assets. Overseas Chinese are viewed as bridge builders who, especially after the Tiananmen crackdown, emerged as a critical group providing the capital and expertise to fuel China's economic takeoff. This Chinese transnationalism has brought China's coastal cities into the main stream of the international economy. At the heart of this development stands "Greater China" (da Zhonghua), a term coined by overseas economists to describe the economic integration among China, Hong Kong, and Taiwan, produced by globalization. The city of Xiamen that has felt substantial effects of this Chinese transnationalism. Although reconstruction of Xiamen began during the 1920s and 1930s, a majority of the changes have taken place since 1980.1 Establishment of the Xiamen Special Economic Zone (SEZ) and opening the port to the outside world in October 1980, allowed city development to increase more rapidly compared to pre-Cultural Revolution

Note: In October 1980, the Fujian Provincial Government's proposal was accepted by the State Council to allow Xiamen to become on of four Special Economic Zones (SEZ's) in China. The other zones included Shenzhen, Zhuhai, Shentou, which were all established in 1980 as well. In 1988, Hainan was

eras.2 By the 1990s, Xiamen was transformed from a filthy port city into an environmentally cleaner and safer city. This paper will attempt to outline how the process of urbanization within Xiamen has been closely linked to the development of a Chinese transnational economy. More specifically, it will analyze how Chinese transnationalism has altered the shape of the city and how this will have an important impact on the entire southeast coast the heart of China's economic boom. This paper will examine Xiamen's urban development chronologically beginning with early history. From around Song until early Qing, Xiamen served as a source of Chinese laborers for European plantations in Southeast Asia. Then we will look at the development during the early twentieth century. At that time, many of these Overseas Chinese returned to invest in Xiamen after 1919, and they were instrumental in the city's rapid development. Especially noteworthy was the growth of the housing industry, which will be used as a measure of Xiamen's urbanization. After 1949, the city experienced minimal growth due to its status as a "coastal defense frontline" city. The tension between mainland China and Taiwan made investment in Xiamen unfeasible, since Xiamen Island is located only a few miles from the Taiwanese controlled Jinmen Island. Finally, the paper will focused on the city since becoming a SEZ. Once being designated a special economic zone in 1980, Xiamens economy skyrocketed. The citys gross domestic product (GDP) has grown at an average annual rate of twenty percent from 1980 to 1998. Once again, the Overseas Chinese were the primary driving force behind Xiamens economic growth. Up to 1995, the Overseas

added to the list. The Chinese government intended these zones to be experiment sites and now China sees no need to establish anymore SEZ's.

Chinese communitys investments accounted for over ninety percent of Xiamens total investment. After relations eased with Taiwan in 1988, Taiwanese businessmen became a major foreign investor in Xiamen. Thus, this paper will examine the impact of Overseas Chinese investment on Xiamen's urban development. More specifically it will analyze Overseas Chinese involvement in the citys housing industry. Xiamen's Early History Xiamen, an island located along the coast of Fujian, sits at the mouth of Jiulong River and looks across onto the Taiwan Strait. Its location enabled it to be an important player in the Southeast Asia trading routes since the Song dynasty. Because of its key role in the Southeast Asia trade, Xiamen became a major labor market for the European plantations in Southeast Asia. In addition to the labor trade, the overseas shipping and commerce industry flourished. Besides transporting laborers, the shipping industry also partook in the tea, silk, ceramics, and other major trades. After being defeated in the Opium War, which resulted in the forced opening up of Xiamen along with several other treaty ports of international trade, Xiamen quickly grew into a busy commercial port. City construction still lagged behind, however, except on the nearby island of Gulangyu, where the European and American embassies were located. Most of the construction on the Xiamen Island was sporadic and unregulated. The end of World War I opened up a new chapter for the Xiamen economy. Many Overseas Chinese who had accumulated tremendous wealth during the war began returning to Xiamen. After the war ended, many European colonizers returned to plantations and asked for back payments for the profits made during the war. To escape
2

Brief background info. on the cultural revolution and Mao era.

the heavy taxation and discrimination, many Overseas Chinese began moving their assets by investing in Xiamen. Upon returning, they found a city in waste, suffering from decades of neglect and lack of urban planning. In 1919, a Xiamen city council composed mainly of Overseas Chinese was setup to regulate the rebuilding of the city. The entire city was torn down and rebuilt on the Southeast Asian city model that the overseas Chinese were familiar with. Starting in 1927, city reconstruction rapidly accelerated as world depression set in, and many Overseas Chinese businessmen viewed investment in housing property as a more stable mean to retain their asset. For its own part, the city council actively encouraged Overseas Chinese investment in order to fund city reconstruction. Xiamen Special Economic Zone (SEZ) In October of 1980 Xiamen was designated as one of the first four special economic zones along with Shenzhen, Zhuhai, and Shantou. Initially created as a means of testing capitalism with minimal risk, the SEZs were selected for their relatively small size and isolation from the Chinese economy. The subsequent success of Xiamen and the other SEZs in attracting foreign capital and developing an export-oriented economy led directly to the opening up of other Chinese coastal cities and more recently practically the entire country to foreign investment. Thus, Xiamen has played a major role in determining the shape of the Chinese economy. As a consequence of its status as a special economic zone, Xiamen has developed into a major player in the Chinese economy. Over the last twenty years, Xiamen has

enjoyed a growth rate of 18.6 percent annually.3 During the same period exports grew at 10.55 percent annually from 140 million to 5.88 billion dollars a year. These numbers represent staggering growth. While the numbers have begun to diminish recently, they are still quite impressive. Another indicator of Xiamen's economic importance is the citys ability to attract foreign investment. As of June 2002, 19.6 billion dollars of Foreign Direct Investment (FDI) had been pledged to Xiamen with 13.1 billion dollars actually being invested in the citys 4,462 currently running projects.4 One theme emerging from Xiamen's economic growth is the notion of a transnational Chinese economy. Attracting Overseas Chinese investment was the dominate factor involved in the governments selection of Xiamen as one of Chinas original special economic zones. In the past, Overseas Chinese funds from Southeast Asia were used to build the city into a reparation center for China. Today, China seeks to use Xiamen in a similar fashion. Chinas goal is to attract Overseas Chinese investment and simultaneously give them a closer association with the mainland. A major part of this plan focuses on closer economic and political ties with Taiwan, which has definite historic and cultural links with Xiamen. Taiwanese foreign direct investment (FDI) has amounted to over 2.2 billion U.S. dollars from 1989 to 2000 and nearly 1,000 developmental projects throughout Xiamen. The Xiamen special economic zone has definitely become a model for Taiwan politically, culturally, economically, and environmentally over the past two decades.

3 4

Dr. Liao Shaolins lecture on Special Economic Zones in China (10 July 2002).
Dr. Liao Shaolins lecture on Special Economic Zones in China 10 July 2002.

Xiamen's Urbanization After twenty years of reform and extensive urban development, Xiamen has successfully left behind its status as a "garbage city" and instead transformed itself into a "socialist modernized international port scenic city."5 Turning Xiamen into one of China's model cities was the long-term goal for Deng Xiaoping and other government officials during the last half of the twentieth century. Xiamen has consistently been selected as a model of environmental achievement by the state council. Some of Xiamen's awards include being named the state gardening and afforestation model city, the state hygienic city, the state garden city, and the state environmental protection model city. Indeed, the Xiamen special economic zone has lived up to Dengs expectations. Over the course of twenty years, Xiamen's city planners and government officials adopted specific strategies to help obtain their goals. Rejecting pollution, generating foreign investment, improving the natural environment, increasing public awareness through education, and more importantly maintaining close ties with Overseas Chinese, has enabled Xiamen to develop extensively while still achieving its environmentally clean status. In 1984, certain restrictions on Xiamen's development were removed when local authorities agreed to extend Xiamen's special economic zone to include the whole island of Xiamen and Gulangyu islet.6

Xiamen Urban Planning Bureau The total land area totaled 131 square kilometers, with a population of 360,000 in March 1984 (Qi Luo, 58). The structure of Xiamen city in 1980 consisted of the city center of Xiamen and the original Huli Industrial District. Along with the Master Plan for urban development came five new districts, which still remain today. These include the Siming (Old City) District, Kaiyuan District, Xinglin District, Tong'an District, Jimei District, and the Haicang Investment Zone. The three Taiwanese special economic zones are Xinglin, Haicang, and Jimei.
6

Although the Chinese government played an important role in restructuring the city, the shape of Xiamen's future still belonged to its overseas economic and cultural ties. The Xiamen's ability to attract overseas investment, maintain close ties with Overseas Chinese, and transform itself into an environmentally cleaner city, has clearly allowed the special economic zone to develop into a booming urban landscape. Even further, Xiamen has begun to gain international recognition as the "Green City", which will only improve its economy and environment into the 21st century.

Early Stages of Xiamens City Development

Song and Qing Dynasties Records of Xiamen being a seaport appeared early on. By the Song Dynasty (960 1279), the first administrative office in Xiamen was established, and by Ming Dynasty (1368 1644) a city wall has been built around the island to fence off the Japanese pirates. Because Xiamen was already a major trading partner with Southeast Asia, when the European plantations began demanding large labor supply Xiamen served as a major source of supply. Much of the Chinese laborers were recruited by the Chinese intermediates known as coolies, and Xiamen was a major channel for this labor market. The number of number exiting through Xiamen was enormous. Between 1845 and 1949 approximately 1.2 million Chinese from Xiamen emigrated, 95 percent of which headed toward Southeast Asia. For the entire Minnan region, there were 9.7 million emigrants, or 92,000 annually.7 The usage of steamboats allowed more rapid and more regular shipping of laborers. During this period, massive number of Chinese emigrated out of

Xiamen into Southeast Asia, due partly to domestic political and social unrest, to overpopulation and famine, and also to the eager recruit by Southeast Asian government. Much of these immigrants formed to bulk of the Overseas Chinese that would affect Xiamen development in the 1920s and 1930s. In addition to the labor trade, the overseas shipping and commerce industry began to flourish. Besides transporting laborers, the overseas shipping industry also partook in trading of goods such as opium, textile, tea, and silk.8 During the early Qing dynasty (1646), Qing-rebel Zheng Chengong fled to Xiamen using the island as his military base. Consequently, the Qing government banned trade with Xiamen and forbad ships from traveling to the island. Trade accordingly decreased, recovering only gradually as the threat of rebellion lessened over the years, and control over trade loosened. However, Xiamen economy suffered a series of setbacks during the 18th century. First, the Qing banned Nanyang trade. A few years later, the Qing government forbade the export of tea from Xiamen, which further damaged the economy. End of Qing Dynasty to 1919 A defeat from the Opium War forced the Qing to open up several treaty ports, including Xiamen to European trade. European, American, and later Japanese businessmen began to move into the city. Xiamen quickly grew into a busy commercial port with shipping and trading playing a particularly important role. The industrial sector continued as a minor aspect of the economy, however, comprised mostly of food and

Dai Yifeng, Minnan Hua qiao yu jin dai Xiamen Cheng Shi Jing ji Fa Zhan, in Huaqiao Huaren Lishi Yanjiu No.2 (1994), 66. 8 C.W. Le Gendre, Amoy and the Island of Formosa, (Washington: Government Printing Office, 1871), 67.

utilities.9 The small size of the island and the lack of natural resources placed Xiamen in an excellent trading port position but made it a poorer industrial island. As a result, Xiamen economy has always been extremely reliant on foreign investment, a factor that concerned Xiamen government even today. Data of import and export amount from this period quickly demonstrated this dependence: (Table 1.) Foreign Trading in Xiamen, 1865-1894. (unit: customs unit)10 Year 1865 1870 1875 1880 1885 1890 1894 Export 1,442,409 1,657,761 3,742,437 3,638,288 4,530,529 3,515,619 6,637,484 Import 5,269,715 4,209,162 4,611,312 5,411,745 7,247,224 6,121,468 6,372,311 Total 6,712,124 5,866,923 8,083,749 9,050,033 11,777,753 9,637,087 13,009,795

Xiamen opened to international trade in 1843, and the trade volume grew rapidly in the first twenty years. The trading then dipped, and recovered only after the second Opium War. In 1890, foreign trade showed a significant drop off, due to the ChineseJapanese War that result in Taiwan being given to Japan. Much of the Xiamens tea, which occupied roughly 40 percent of the total Xiamen export, came from Taiwan, and after Japans occupation Taiwans tea was sent to international market directly rather than shipped through Xiamen.11 Because Xiamen economy was so closely tied with the Southeast trading routes, a route change in one of its major export or import goods could easily damage the whole infrastructure.

Zhang Zhongli, Dongnan Yan Hai Cheng Shi yu Zhong guo Jin Dai Hua, (Shanghai: Shanghai Renmin Chuban She, 1996), 210. 10 Ibid, 179. 11 Ibid, 180.

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During this earlier period of international trading the impact of the new investment was largely limited to the harbor and business district, which occupied only a small part of the island. Most of the construction revolved around the shipping and the commercial buildings, with the general city construction lagged behind. Most of the private housing development took place on the nearby island of Gulangyu, where the European and American embassies were located. Many wealthy European and American businessmen built sumptuous European style mansions in Gulangyu. On the main Xiamen Island, however, most of the construction remained sporadic and unregulated. The City in 1919 When the overseas Chinese arrived at Xiamen at the end of 1919, they found a city lying in waste and filth. The incessant rain and uneven topography formed rivers and ponds that greatly reduced city usable lands. Because Xiamen lacked an organized garbage disposal system, locals would dig pits to serve as garbage dumps, which would flood during rainy season and redistribute garbage all over the city.12 By 1919, Xiamen was still not officially a city, and lacked a city council that could guide city development. Consequently buildings were scattered throughout the island without organized planning. The hilly topography also made road difficult, and it often hindered or prolonged transportation within the island. The streets also lacked uniform width, leading an American missionary to comment:
The streets are narrow and crooked, -with the sewer underneath and planly in sightThere is no street either straight, or one even called Straight in Amoy. Thenthere are streets in Amoy so narrow that you cannot carry an open umbrella, but there are others ten, twelve, and fifteen feet wide.13

12 13

Jindai Xiamen Jingji Dang an Ziliou, 637 Philip Wilson Pitcher, In and About Amoy, (Taipei: Ch'eng Wen Publishing Company, 1972), 16-17.

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The lack of organized waste disposal system resulted in filthy streets. The Xiamen geography further compounded the problem, as the island had low basin and would periodically flood during heavy storm, resulting in the formation of mud puddles around the island. In 1919, a Xiamen council was finally setup to overhaul the city. The council consisted of prominent members from the industrial and business circle as well as powerful Overseas Chinese who had returned to Xiamen.14 The entire city was demolished, wall torn down, and streets repaved. Much of the funds for this city reconstruction came from Overseas Chinese returning to Xiamen, mostly from Southeast Asia. The new city layout was thus based on the Southeast Asian colonial city that most of the Overseas Chinese were familiar with. Pictures of Xiamen from pre-1979 showed the city filled with classic Southeast Asian residential-business combined housing, with an extended roof that when built next to one another, allowed an unbroken covered walkway for the pedestrians. The new city design was geared for a harbor-based commercial city, and the city was divided into the docking zone, education and cultural district, and the downtown district.15 Much of Xiamens reconstruction would not be possible without the large investment from these Overseas Chinese. After World War I large numbers of wealthy Overseas Chinese began to return to China with their money. Many of them were plantation managers who made tremendous amount of money from war sales while their European owners went to battle. After the war ended, many European owners returned to the plantations, intending to collect taxes plus interest rate from war sales during the

14 15

Xiamen Cheng Shi Jian She Zhi, 3. Xiamen Cheng Shi Jian She Zhi, 4.

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period of their absence. Many Overseas Chinese resented what they viewed as unfair domination in addition to the resurging racism, and consequently moved their assets back to China. Xiamen, which had previously served as an exit channel for the Chinese emigrants, now became the home of Overseas Chinese and center of their investment. Their return marked a new chapter in Xiamen history. Destroying the Old: (1920 1926) Between 1920 and 1927, Xiamen experienced a slow awakening as increasingly number of Overseas Chinese returned from Southeast Asia and invested heavily in the island reconstruction. According to the data, the entire project cost over 13.3 million yuan, which was partly financed by sales from the new developed areas, of which Overseas Chinese investment occupied around 60 to 70 percent.16 Originally the construction in the city picked up slowly. Although tremendous amount of money was entering in, the immensity of the project, the inexperience of the city council, and argument over the new city layout prevented the rapid overhaul of the city. The lack of funds proved to be a serious deterring factor in city reconstruction during this period. Although the government collected taxes from new land sales, the monstrosity of cost eventually required massive loans to help cover the expense. The government later had to shift the burden onto the business to help cover the cost.17 The numerous technical difficulties facing the engineers during dike building illustrated the cost problem. The first dike was completed relatively successfully and quickly, costing only 668,000 yuan. The second dike, however, was much more difficult, for it lay much further into the ocean, and the soil underneath proved too soft to support

16

Zhang Zhongli, Dongnan Yan Hai Cheng Shi yu Zhong guo Jin Dai Hua, (Shanghai: Shanghai Renmin Chuban She, 1996), 225.

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the dike. The dike kept collapsing, and the problem was finally solved only when Dutch engineers built it with enhanced base support. The total cost of the second dike was 2.20 million yuan.18 Dikes, however, represented only a part of the problem. Xiamen basin lay at below sea level, resulting in the accumulating of water during flood or storm. In addition, the water level could rise up to 20 m during high tide, and the industries nearby had to be elevated or fenced to barricade against the rising sea level.19 The city reform stimulated Overseas Chinese investment in Xiamen housing industry. From 1927 to 1937, there were a total of twenty-one Overseas Chinese investment housing industry companies in Xiamen.20 Over 10,000 private residences, occupying nearly 1.4 million m2, were built, half of which belonged to the overseas Chinese and their relatives.21 From 1927 to 1937, total investment into Xiamen housing industry totaled to around 30 million yuan, 70 percent of which from Overseas Chinese.22 Much of the money entered through the form of remittances. The practice of using remittances as investment started out slowly during the 19th century. The Qing dynasty soon saw the potential benefit of taping the sizable Overseas Chinese capital and made direct attempts to attract such investment. However these attempts largely failed. Nonetheless, by 1905 113.4 million yuan of remittances were drawn. Of this about 18.9 million went to Xiamen. Remittances remained about this size until 1920 with almost no noticeable change as a result of the Nationalist Revolution. Between 1905 and 1920,
17 18

Xiamen Cheng Shi Jian She Zhi, 5. Xiamen Gong shang Ye Da Guan, 3. 19 Ibid, 4. 20 Zhang Zhongli, Dongnan Yan Hai Cheng Shi yu Zhong guo Jin Dai Hua, (Shanghai: Shanghai Renmin Chuban She, 1996), 225. 21 Xiamen Hua Qiao Zhi, 171. 22 Ibid, 125 (also Dong226)

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remittances fluctuated from a low of 11.8 million yuan to a high of 21.6 million for a total of 284.8 million yuan.23 After World War I these numbers began to rise significantly. Between 1921 and 1937 the values ranged from a low of 25.7 million to a high of 72.0 million in 1931 for a total of 897.7 million - a 315 percent increase. This dramatic rise was due to primarily to the circumstances surrounding WWI. During the war the European colonialists fled home leaving their Chinese middlemen in charge. As a result these Overseas Chinese were able to make a large profit. In addition the lack of colonial authority meant that no taxes were collected. At the end of the war, Europeans began returning to their colonies in Southeast Asia with an eye on recouping losses from the war years. The immense wealth of Overseas Chinese immediately took their attention and a plan was announced to impose back taxes for the war years. To avoid these taxes many Chinese merchants began to transfer their wealth back to China. The remittances to Xiamen represented between a fifth and a sixth of total remittances to the entire country. Needless to say this investment had a profound effect on the economy and infrastructure of Xiamen leading to the complete destruction and rebuilding of the city in the 1920s. From 1921 to 1930 Overseas Chinese remittances totaled 465,300,000 yuan, peaking in the 1930s, right before the Japanese invasion.24 The remittance money that poured into the city aided the city reconstruction, spurred new business development on the island, and revitalized the sluggish Xiamen trading economy. The remittance also resulted, in the first time on Xiamen, the formation of organized banking system.

23

George Hicks, ed. Overseas Chinese Remittances form Southeast Asia p 331. The low number is from 1918 and is due to the fighting during WWI. If you remove the numbers for 1917 and 1918 the low for this period is 17.2 million yuan.

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Although Xiamen had been a bustling trading town earlier, it lacked a developed banking system that would facilitate a more advanced commercial network. With the remittances pouring in, banks rapidly spawn across the island. One question that emerged from the study of this investment trend is, what drove the Overseas Chinese to pour such a tremendous amount of money into a city that they have not lived in? One intriguing possibility is the concept of transnational Chinese society, comprised of Overseas Chinese scattered around the world, bounded by a sense of patriotism toward their homeland that transcend the common notion of nation states. In this sense, the meaning of Chinese was no longer restricted to within China, but an identity self-created by ethnic Overseas Chinese abroad. This notion of Overseas Chinese would return with renewed vigor in the 1980s, as Overseas Chinese used their connections to help their businesses in China. Molding into New Xiamen: (1927 1932) In 1927 the situation changed. World Depression set in, and the currency underwent spiral inflation. To protect their assets, massive numbers of Overseas Chinese businessmen decided to reinvest their holdings in a more stable form, namely in the housing industry. For its part, the Xiamen council actively encouraged the investment of Overseas Chinese in order to finance the cost of reconstruction. Between 1875 and 1949, approximately 300 million yuan poured into the housing industry from Overseas Chinese, making up 65.17 percent of total investment in Xiamen. By the 1930s, there were over

24

Dai Yifeng, Minnan Hua qiao yu jin dai Xiamen Cheng Shi Jing ji Fa Zhan, in Huaqiao Huaren Lishi Yanjiu No.2 (1994), 72

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7,000 private houses and over 10,000 private residences in Xiamen, including Gulangyu.25 The city reconstruction accelerated with the increase in funds and concentration of investment. Many older houses were torn town to accommodate the larger newer houses. During this period, the city greatly expanded in size. Comparison of maps (See Attachment)26 from 1908 and 1932 showed that much of the northwest coastal region had been filled, dikes constructed around the new land, and the mountains in southwest leveled to enlarge island surface area. From 1920 to 1936, the city area increased from 2.93 to 6 km2, 27 and by 1945 the city area has expanded to 9 km2.28 By 1932, nearly all marshes and ditches were all filled. The physical flattening of Xiamen topography facilitated road constructions and transportation, allowing not only more surface area but more direct routes between the districts. Over 40 km of roads and 62 main streets were built, and housing space was raised from 1.54 to 3.438 million m2. In 1934 alone, 54 km of road was built within the city, and 41 km outside the city area. The number of cars also increased dramatically to 1900 cars and 3000 drivers in 1934.29 Xiamen reconstruction is notable for several reasons. During this period, 65.17 percent of Overseas Chinese investment in Xiamen were directed at real estates and housing construction, compared to 45.53 percent in Fujian.30 This meant that over half of the foreign investment went directly to housing, far exceeding the amount into finance or commerce. There had been several reasons suggested for this trend. The first was that the Chinese investors used housing properties as a way to retain the value of their assets.

25 26

Xiamen Shi Fang Di Cheng Zhi, 4. from Xiamen Cheng Shi Jian She Zhi. 27 Xiamen Cheng Shi Jian She Zhi, 26. 28 About Urban Planning of Xiamen.

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This factor became especially significant during the early 1930s, when the World Depression made investment into other industries, such as finance, far too volatile to risk. The rapid inflation also quickened the rate which money was converted into physical properties. The Xiamen city council, not missing the opportunity, worked closely with Overseas Chinese in planning the demolition of the old city and construction of the new city. It also provided favorable treatment and conditions to lure Overseas Chinese to invest in the housing industry. Indeed, Overseas Chinese businessmen represented many members of the Xiamen city council. Meanwhile, many investors stayed in Xiamen as their homeland political situation became increasingly hazardous, causing transportation routes to be repeatedly cut off.31 Xiamens special position became even more obvious when one considered that except under Japanese control, Xiamen was the only entry and exit point for Overseas Chinese.32 Therefore, once the shipping routes were interrupted, there was little mobility possibility for Overseas Chinese. Furthermore, Xiamens lack of natural land resources and small size made investment into mass production unprofitable. Except for the food and utilities industry, investment into productive industries was rather limited in Xiamen.33 This resulted in the large percentage of investment into the housing, and this combination of factors allowed Xiamen to undergo rapid urbanization despite the unstable international economy. Finally a True City: (1932 1949)

29 30

Jindai Xiamen Jingji Dang an Ziliou, 459 Jindai Xiamen Jingji Dang an Ziliou, 631 31 Jindai Xiamen Jingji Dang an Ziliou, 631. 32 Lun Minguo Shidai Huaqiao Zai Xiamen Gingji Shenghuo Zhong de Zuoyong, 73. 33 Zhang Zhongli, Dongnan Yan Hai Cheng Shi yu Zhong guo Jin Dai Hua, (Shanghai: Shanghai Renmin Chuban She, 1996), 206.

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The investment peaked around 1932, and dropped off quickly afterwards. The world depression finally dwindled the investment to a pinch and the emerging political turmoil in Asia cut the trade connections. In 1935, Xiamen was finally declared a city.34 In 1937, Japan invaded China, and very quickly the rest of Southeast Asia. Trading routes were interrupted, material resources diverted, and communication severed between the trading ports. Consequently, the investment leveled off and city construction halted as China recast its attention toward the Pacific War. From 1937 until 1945, investment into the city steadily declined to almost null.35 With the end of the Pacific War and surrender of Japan in 1945, Xiamen experienced a brief renaissance in its economy between 1945 and 1949. However, this period was plagued with Civil War in China as well as reparations in other parts of the country, and its economy failed to reach the pre-1937 level. Halting of Development: (1949 1979) In 1949 the Chinese Communist Party officially became the government of China, while the Kuomingtang (KMT) fled to Taiwan and established their government on that island. Xiamen, located only a few miles away from the KMT controlled Jinmen, which lay directly across the Strait from Taiwan, became the coastal frontline defense city. Fortified to defend against possible KMT invasions, the city became a military fortress instead of a commercial trading port. In the early 1950s, some efforts went into reorganizing Xiamen. However, the imminent possibility of war breakout meant little was invested in Xiamens development. Rather, money was poured into the defense section. All connections to Taiwan,

34

Xiamen Chengshi Jianshe Zhi, 2.

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previously an important trading partner, were cut off. In addition, during these years China sought for a self-reliant market system, resulting in cutoff of almost all foreign trade. During these thirty years, Xiamen grew little as a city. The total city area increased only from 9 km2 in 1949 to 12 km2 in 1979. Even by 1979, the city appeared remarkably similar to the city in 1949. The neglect Xiamen received during this period, however, helped to shape the development of the city after its designation as a Special Economic Zone (SEZ) in 1980.

Xiamen as a Special Economic Zone

Extent of Original SEZ Initially, the Xiamen SEZs land area covered 2.5 km2 and solely consisted of Huli District.36 Of the original four export-oriented industrial zones that were established, only Shenzhen had any considerable size at 327.5 km2. The combined total area of the other three was less than 11 km2. Chinese leadership formed four SEZs in 1980, as a way to test market mechanisms in a relatively risk-free manner. If such experiments failed, Deng Xiaoping and other top leaders believed that their economic consequences for the rest of China would be quite limited. Chinese leaders knew that in order to grow rapidly China needed to make use of foreign capital, technology, and experience. The Chosen One: Selection Process When the Chinese government selected cities for the SEZ designation, they were essentially conducting an economic experiment that they hoped could be modeled by the

35

No accurate number for this period could be found , probably due to the improbability of gathering such data during the war period. 36 Note: Development of the Xiamen Special Economic Zone in Huli Industrial District was authorized by the State Council of the Peoples Republic of China in October 1980. Huli District was the original Xiamen Special Economic Zone and construction was approved by the State Council in October 1981.

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rest of the nation. Due to the uncertainly and risks in economic reform, the Chinese rejected using bigger and historically more central cities like Shanghai, despite the fact that Shanghai had more historic links with foreign investment.37 Instead, they chose four relatively undeveloped southern Chinese cities, including Xiamen. Xiamen was selected to lure the Taiwanese investors, as the two had past cultural and economic ties. The islands coastal location was suited perfectly for international trade. Secondly, Xiamens physical isolation from the rest of the mainland meant that economic experiments could be performed with relatively little impact on the citys surrounding areas. Thirdly, since little development has occurred in Xiamen during the past thirty years, the city faced fewer problems and Mao legacy to overcome than cities such as Beijing. Xiamen was selected to be one of the original SEZs for a number of reasons. The main purpose of designating Xiamen as a SEZ was to attract foreign capital, increase international trade, expand foreign currency reserves, and introduce advanced technology and management. Government officials were determined that Xiamen would be successful because of its easily accessible transportation routes, connections to Overseas Chinese, potential for development in its interior, and close proximity to Hong Kong, Macau, and Taiwan.38 According to one Chinese official, Xiamen special economic zone was a measure designed to attract foreign investment and introduce advanced technical and managerial know-how.39 Therefore, Xiamen SEZ was expected to serve as a window and bridge for technology, knowledge, and management.

Located on the northwest corner of Xiamen island, Huli is only seven kilometers from Siming District, better known as Old City. 37 Prof. Liaos lecture.
38
39

Dr. Liao Shao Lins lecture on Special Economic Zones in China July 10, 2002.
Yue-man Yeung and Xu-wei Hu, Chinas Coastal Cities: Catalysts for Modernization (228-9)

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Another significant reason for choosing Xiamen was its close proximity to Hong Kong, Macau, and even more importantly Taiwan. The Chinese feared that most foreigner businessmen would be unsure about the safety of their investments in a socialist country run by a communist party that had just emerged from the Cultural Revolution. Thus, the Chinese government believed that Overseas Chinese would be far more eager to invest in SEZs like Xiamen, which had been a hometown for many Overseas Chinese for centuries.40 Another significant advantage for Xiamen is its close proximity to Taiwan. A majority of foreign direct investment actually flowing into Xiamen originates from Taiwan with 1,087 projects amounting to 2,238.952 million U.S dollars from 1989 to 2000.41 Taiwanese investment is a major player because of the islands cultural, political, and geographic linkages to Xiamen. Just as Shenzhen was expected to play an important role in the process of the future incorporation of Hong Kong into the Peoples Republic of China (PRC), China wanted to exploit these ethnic ties between Taiwan and Fujian to both tap into the booming Taiwanese economy and to draw the Taiwanese economy into greater integration with the Mainland. [Sentence is way to long] In addition, Xiamens historic role as a center of Overseas Chinese activities and business, as has been discussed extensively in this paper previously, clearly contributed to the citys selection. Additionally, easy access to transportation routes was a significant factor in the selection process due to the export-oriented nature of SEZs. Xiamens deep harbor and excellent shipping routes helped fulfill this requirement. Lastly, Xiamens economic status was very important. Because there had been so little invested in the city during the

40

Liao 7/10/02

22

first thirty years of Communist rule, Xiamen was relatively isolated from the Chinese economy. As a result, failure in Xiamen would have little far reaching effects. Economic Growth and City Expansion (1980 2000) Foreign Investment and Taiwanese Connections Initially, Xiamen faced substantially more difficulties than some of the other SEZs, particularly Shenzhen. In addition to the small size of the SEZ, Xiamen also suffered because it failed to accomplish the main goal for which it was created -- to attract Taiwanese investment. Unfortunately, during the first years of the SEZs the Peoples Republic and the Republic of China still refused to allow people, money, or cargo to be interchanged. As a result, there was not a lot of foreign investment in Xiamen during the first four years. Between 1980 and 1983 only 37.06 million US dollars were pledged to Xiamen in FDI and only 7.75 million US dollars were actually invested.42 Exports in l984 dropped 9 percent below what they had been in 1980.43 Between 1980 and 1983 the gross value of industrial output rose only about 3.8 percent a year. However, this lack of foreign investment was compensated for by a large amount of government spending. Between 1980 and 1985 the government invested 1.78 billion yuan on infrastructure in Xiamen. This sum represents 2.7 times the amount invested in Xiamen during the previous thirty years. Most important were improvements to the harbor consisting of the creation of four shipping births two 50,000 dwt [What does this mean-let the reader know!] and two 100,000 dwt. In addition, Xiamen opened a new

41

Almanac of Chinas Foreign Economic Relations and Trade Greater China: the Next Superpower? ed. David Shambaugh New York: Oxford University Press, 1995. (79 80). 42 Jude Howell, The Political Economy of Xiamen Special Economic Zone, in Y. M. Yeung and David K. Y. Chu, ed., Fujian: A Costal Province in Transition and Transformation (Hong Kong: Chinese

23

airport in 1983, constructed the Yongan-Xiamen power line in 1983, installed advanced digital telephone technology, created an advanced microwave telecommunication system, built hotels and restaurants, and developed industrial zones, factories, and housing.44 Within the Xiamen SEZ, the Huli Processing Zone was created to employ and house 70,000 workers.45 As a testimony to the extent of the governments investment, the GDP actually grew by about 10 percent a year between 1980 and 1983, even though every other economic indicator was substantially weaker. Thus, although foreign investment had yet to flow, Xiamen was developing the infrastructure to facilitate economic growth and foreign investment. The municipal government also used this time to increase the educational level of its residents and to construct laws and regulations that were necessary for the successful luring of foreign capital.46 With the relative success of the SEZs, they all gradually expanded in size except for Shenzhen which was already quite large. However, in part because of the lack of FDI entering Xiamen during these early years, Xiamen was the last to be expanded. In 1985 Xiamen was enlarged from the original 2.5 km2 to 131 km2 covering the entire Xiamen and Gulangyu Islands.47 This was a far greater expansion than occurred in the other two smaller SEZs, with Xiamens new size it was almost twice that of the other two combined. This expansion was far more significant than the size alone indicates, because
University Press, 2000) p 122. 43 Ibid, p. 121. 44 Li Si-Ming and Zheng Xun-Zhong, Xiamen: Regional Center and Hometown of Overseas Chinese, in Yue-man Yeung and Xu-wei Hu, ed., Chinas Coastal Cities: Catalyst for Modernization (Honolulu: University of Hawaii Press, 1992) p. 228. 45 Ibid. 46 Wei Sung Shou and Zhu Lishui, The Growth of Foreign and Taiwan Investment in the Xiamen Special Economic Zone, in Sumner J. La Croix, Michael Plummer, and Keun Lee, ed., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong (Armonk, New York: M.E. Sharpe, 1995) pp. 115. 47 Li Si-Ming and Zheng Xun-Zhong, Xiamen: Regional Center and Hometown of Overseas Chinese, in Yue-man Yeung and Xu-wei Hu, ed., Chinas Coastal Cities: Catalyst for Modernization (Honolulu:

24

the SEZ now incorporated the existing industry and businesses on all of Xiamen Island. The decision was made to treat these businesses the same as any other new business in the SEZ. As a result the Xiamen economy began to take off. Simultaneously FDI began to flow into the island at greater rates. In 1984 and 1985, 411.38 million US dollars were pledged to Xiamen and 113.72 million were actually invested. In these early years, the bulk of the funds were coming from Hong Kong and Singapore. However in 1986, the amount of pledged capital dropped substantially and actual investment decreased by over 50 percent. While pledged capital grew greatly in 1987, the amount actually invested dropped to just over half of that invested in 1986. Therefore, changes in Taiwan would soon lead to a renewed vigor for investment in Xiamen. The aim of creating Xiamen as a lure for Taiwanese investment has been very successful. In 1984, even when still illegal at home, Taiwanese businessmen covertly traveled to Xiamen to start up businesses there.48 In that year eighteen small projects began.49 During this period, the size of investment remained small and money had to be carefully filtered through a third country, often the Caiman Islands.50 This situation changed considerably after the lifting of martial law in Taiwan in l987. The following year Taiwan indicated that investment in China by non-sensitive medium and small companies by means of a third country would be overlooked.51 Simultaneously, Xiamen

University of Hawaii Press, 1992) p. 229. 48 Liao interview 7/10/02 49 Wei Sung Shou and Zhu Lishui, The Growth of Foreign and Taiwan Investment in the Xiamen Special Economic Zone, in Sumner J. La Croix, Michael Plummer, and Keun Lee, ed., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong (Armonk, New York: M.E. Sharpe, 1995) p. 115. 50 VP Components interview 51 Wei Sung Shou and Zhu Lishui, The Growth of Foreign and Taiwan Investment in the Xiamen Special Economic Zone, in Sumner J. La Croix, Michael Plummer, and Keun Lee, ed., Emerging Patterns of East

25

sought to ease FDI to the SEZ and to alleviate investors concerns. To do this the Xiamen government both helped facilitate indirect Taiwanese investment through Hong Kong while also trying to spread word about the success of the early investments in Xiamen. In conjunction with economic theory about economies at low levels of capitalization, profits were enormous in the early years. A typical example of an early investor was a Taiwanese electronics maker who increased his capital from 0.5 million US dollars to 3 million in just 3 years - a staggering 82 percent per year increase. In addition, the creation of the Xinglin and Haicang Taiwanese Investment Zones did a great deal to attract Taiwanese interest. In these areas, although officially not in the SEZ, Taiwanese firms enjoyed the same preferential taxation schemes that they had in the SEZ proper. In 1989 the combination of these factors led Taiwanese and other FDI in Xiamen to skyrocket. Total actual investments increased to four times the level of 1988. Simultaneous to this investment boom, in 1989 the SEZ was expanded to its current size of 160 square kilometers. Investment continued to climb in 1990, but investment fell substantially in 1991. Investment grew dramatically in 1992 in correspondence with the establishment of the Jimei Taiwanese Investment Zone. Taiwanese investment in Xiamen climaxed in 1993 and has slowly decreased since then. (Graph 1)

Asian Investment in China: From Korea, Taiwan, and Hong Kong (Armonk, New York: M.E. Sharpe, 1995) p. 116.

26

FDI to Xiamen 1983-2000

3000

2500

2000 Million $US

Contracted FDI
1500

Invested FDI

1000

500

0 Contracted FDI Invested FDI

83 37 8

84

85

86 49 34

87

88

89

90

91

92

93

94

95

96

97

98

99

OO

150 262 40 73

134 265 835 419 199 1698 2404 1865 2062 1650 1656 1688 1287 802 18 48 210 72 133 564 1037 1241 1322 1350 1379 Year

Chinese Thing Dr. Cook gave me Li Si-Ming and Zheng Xun-Zhong, Xiamen: Regional Center and Hometown of Overseas Chinese, in Yue-man Yeung and Xu-wei Hu, ed., Chinas Coastal Cities: Catalyst for Modernization (Honolulu: University of Hawaii Press, 1992) p. 230. The Editorial Board of the Almanac of Chinas Foreign Economic Relations and Trade, Almanac of Chinas Foreign Economic Relations and Trade (Beijing: China Foreign Economic Relations and Trade Publishing H Zhonggou duiwai jingji maoyi nianjian 2001 Xiamen jingji tiqu nianjian Almanac of Xiamen Special Economic Zone 1990, 1992-1999

Contracted FDI to Xiamen increased dramatically in 1992 peaking in 1993 and remaining relatively level since (See Graph 1). However, Overseas Chinese investment also saw a large increase in 1992 and peaked in 1993, but has steadily decreased since then (See Graph 2). Most of this decrease appears to be coming from Hong Kong, but Taiwan and Singapore have also decreased to a lesser extent. Additionally, much of the apparent decrease from Hong Kong may actually be indirect investment from Taiwan. From another perspective, we can see that the Overseas Chinese percentage of FDI to Xiamen has been decreasing steadily since 1990 when it was about 97 percent (See Graph 3). This decrease remained slight until 1994 when there was a drop of 10 percent bringing the percentage to 80 percent. After an anomalous increase in 1996 the

27

percentage plummeted in 1997 and 1998 to below 50 percent and rebounded only slightly in 1999. Another observation is that the vast majority of investment in Xiamen by Overseas Chinese is coming through Hong Kong (See Graph 2). Unfortunately it is difficult to determine exactly where this money is originating. From 1980 to 1989, just as much Taiwanese money flowed through Hong Kong as was invested directly. [Reword] However, it is likely that this percentage decreased substantially in latter years as the Taiwanese authorities eased restrictions. (Graph 2)
Southeast Asian Contracted FDI to Xiamen
3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00
e 0 1 2 3 4 5 6 7 8 ag 19 9 19 9 19 9 19 9 19 9 19 9 19 9 19 9 19 9 er 19 9 9

Million $US

Total Total Southeast Asian Hong Kong and Macao Taiwan Other Southeast Asian

19 8

0-

19

89

Av

Year

Graph 3

28

Southeast Asian Investment in Xiamen as a Percentage of Total

1 0.9 0.8 0.7 Percentage 0.6 0.5 0.4 0.3 0.2 0.1 0 1980- 1990 1989 1991 1992 1993 1994 Year 1995 1996 1997 1998 1999 Projects Contracted FDI

Almanac of China's Foreign Economic Relations and Trade 1991 p 301 Zhonggou duiwai jingji maoyi nianjian 2001 Xiamen jingji tiqu nianjian Almanac of Xiamen Special Economic Zone 1990, 1992-1999

Overseas Chinese, and especially Taiwanese, used substantially higher proportions of their own money in FDI projects than non-ethnic Chinese (See Graph 4). Taiwanese investment never fell below 90 percent of their projects while often remained in the very high 1990s. Other transnational Chinese were lower but usually higher than the rest of the world. However, non-transnational Chinese investment shows a slight increasing trend. The explanation for these observations is that the close cultural and linguistic ties between Taiwan and Xiamen allow for lower barriers in trade and investment. Thus, Taiwanese require less local help in their business transactions.

29

Overseas Chinese, often of Fujianese origin, also have smaller barriers to entry than nonethnic Chinese and require less Chinese assistance. However, they are not as closely linked to the Taiwanese and need more assistance. Others, mainly westerners, needed substantially more assistance in their early operation but have become more accustomed to the business environment and thus are less dependent on Chinese help over time. (Graph 4)
Percentage of Foreign Capital in Contracted Southeast Asian FDI Projects to Xiamen

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

Percentage

% Taiwan % of SEA invetment % Rest of World

ge 19 90

19 91

19 92

19 93

19 96

19 98

19 94

19 95

19 97

19

80 -

19 89

Av er a

Year

Almanac of China's Foreign Economic Relations and Trade 1991 p 301 Zhonggou duiwai jingji maoyi nianjian 2001 Xiamen jingji tiqu nianjian Almanac of Xiamen Special Economic Zone 1990, 1992-1999

Another issue of interest is the size of Overseas Chinese investments (See Graph 5). This too has seen a steady rise over the last ten years. Much of this is due to an

19 99

30

increase in the expected lifetime of investment projects. As Chinese continue to demonstrate that it is committed to economic reforms, the risks to long term investment have decreased, thus allowing for larger and more expensive plants. [Rework] (Graph 5)
Average Size of Contracted Southeast Asian FDI Projects in Xiamen
7.00

6.00

5.00 Million US $

4.00

3.00

2.00

1.00

0.00 19801989 Average 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

Almanac of China's Foreign Economic Relations and Trade 1991 p 301 Zhonggou duiwai jingji maoyi nianjian 2001 Xiamen jingji tiqu nianjian Almanac of Xiamen Special Economic Zone 1990, 1992-1999

A Transforming Economy: Chinese Transnationalism Opposed to Chinas traditional socialistic and central planning systems, Xiamen has successfully adopted market based socialism. Economic transformations like this

31

reiterate the ways in which opening China to the outside world have impacted SEZs like Xiamen. Indeed, development of a Chinese transnational economy has heavily influenced the process of urbanization within the Xiamen SEZ, since the late-1980s.52 The economy of Xiamen has been transforming in the last twenty years, and the transnational Chinese community has played a dominant part. As of June 2002 there have been 5,510 approved projects in Xiamen, of which 4,462 are currently running. Contracted foreign capital has reached 19.6 billion dollars and paid foreign capital stands at 13.1 billion. Ethnic Chinese have played a critical role in these investments. Actually, 82 percent of the approved projects and 71 percent of the contracted foreign capital are of Taiwanese, Hong Kong, or Singaporean origin. Thus, showing ties to the transnational Chinese economy. These investors focus mainly on manufacturing with some emphasis on cash crops. Most are wholly foreign owned because they have little need to rely on local expertise, unlike foreigners of non-Chinese ethnic backgrounds.53 Foreign Direct Investment has played an important role in determining the nature of industry in Xiamen. Although the Xiamen government has always desired high-tech and capital intensive industries, initial investments were very labor intensive. In conjunction with greater freedoms on the importation of technology from Taiwan, there

52

Dr. Liao shao Lins lecture and interview, Special Economic Zones in China (10 July 2002) Note: Chinas SEZs are relatively independent areas where special economic and management systems and policies are adopted. SEZs enjoy preferential treatment in regards to their land, taxes, and management. For example, during the first three years joint-ventures are tax exempt. In addition, worker and managerial staffs are also independent. Another important characteristic of SEZs is the transformation from state and collectively owned enterprises to that of public ownership. As experiment sites of reform, SEZs like Xiamen are important places for the introduction of foreign direct investment (FDI). Developmentally, the goal was to look outward by focusing on export-oriented economics and maintaining vital economic linkages. 53 Dr. Liao Shao Lins lecture and interview, Special Economic Zones in China (10 July 2002).

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has recently been a shift to more capital intensive industries. Also, there has been a marked change in the structure of the Xiamen economy.

(Table 1.) Percentages of Economic Activity in Xiamen (1980 2000) Year 1980 2000 Primary Sector 21.6 % 4.2 % Secondary Sector 57.8 52.7 Tertiary Sector 20.6 43.1

Source: Dr. Liao Shao Lin (7-10-02) Special Economic Zones in China

As the above numbers indicate there has been a huge transition out of the primary sector and into the tertiary sector. This indicates a great deal of maturation in the economy. In terms of specific industries they include the chemical, textile, chemical fiber, real estate, and food processing industries.54 In conjunction with the rapid growth of foreign investment, the industrial composition of Xiamen changed dramatically (See Table 1). Industrial production also changed markedly, shedding more light on the types of investments that were being made. There have been large increases in synthetics, electronic components, and telephones with a substantial drop in sugar (a primary industry).55

(Table 2.)
Wei Sung Shou and Zhu Lishui, The Growth of Foreign and Taiwan Investment in the Xiamen Special Economic Zone, in Sumner J. La Croix, Michael Plummer, and Keun Lee, ed., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong (Armonk, New York: M.E. Sharpe, 1995) p. 117. 55 Qi Luo, Chinas Industrial Reform and Open-door Policy 1980-1997: A case study from Xiamen
54

33

Composition of Xiamen's industrial sector, 1981, 1994

GVIO 1981 RMB in Sector Electronics Machinery Food-Processing Textiles Chemistry and Pharmaceuticals Paper & Stationary Building Materials Sub-total Others Total * Data not available Qi Luo China's Industrial Reform and Open-door Poliocy 1980-1997 Ashgate Publishing Company Burlington, VT 2001 w/ some manipulation 1980 prices % Share * 19.8 26.5 12.9 19.8 4.5 3.7 86.2 17.5 103.7 * 18.2 25.5 12.4 19.1 4.3 3.6 83.1 16.9 100.0 GVIO 1994 RMB in 1980 prices 468.1 446.6 245.2 240.7 158.9 129.7 * 1689.1 566.3 2255.4 % Share 20.8 19.8 10.8 10.7 7.0 5.8 * 74.9 25.1 100.0 Average Annual Change in Growth Rate * 27.09 18.67 25.25 17.37 29.51 * 25.72 30.66 26.73 market share * 8.79120879 -57.6470588 -13.7096774 -63.3507853 34.8837209 * -9.86762936 48.5207101

The current role of trade in Xiamen is substantially different from the historic role as a center of transnational Chinese trade. In 1999 only about 40 percent of imports came from the transnational economy and only about 21 percent of exports returned to the said economy. Rather, the majority of Xiamen trade is shipped to and from the United States, Japan, Korea, United Kingdom, and Germany.56 This is easily explained as a byproduct
(Burlington, VT: Ashgate Publishing Limited, 2001) p. 95. 56 The Editorial Board of the Almanac of Chinas Foreign Economic Relations and Trade. Almanac of Chinas Foreign Economic Relations and Trade (Beijing: China Foreign Economic Relations and Trade Publishing House, 2000) pp. 369-370.

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of Xiamens attempt to be an export-oriented economy. Thus, while the investment into Xiamen has come primarily from the international Chinese community, the products are not within the network but instead shipped to developed countries. Throughout the last two decades, Chinese transnationalism has altered the shape of Xiamen. Once a SEZ was established, Xiamens urban landscape was transformed from a filthy port into a Green City. Xiamen did not evolve into an environmentally cleaner and safer city or gain the status as one of Chinas dominant SEZs without certain advantages. As a hometown for considerable amounts of Overseas Chinese, foreign investment has flowed regularly into city development since the early 1980s. Compared to the Maoist era, where development was miniscule due to a closed-door policy, overseas investment and urban development increased dramatically. In all, there is a direct correlation between overseas investment and Xiamens urban development. As foreign capital skyrocketed during 1980, 1984, 1989, 1992, and 1996, the number of urban development projects also increased dramatically. Once construction slowed down during the late-1990s, foreign investment tapered off as well. Master Plans and Development Expectations Although Xiamen officially became a city in 1933, the majority of its development has taken place since 1980. Between 1981 and 1985, city planning and development were well on their way. During this period the urban planning was amended and reviewed several times. The end result consisted of an urban master plan, a city structural plan, a city development plan, and several individual sub-plans for Xiamens counties, districts, cities, towns, villages, residential areas, and street designs. For many government officials, the goal was to devise a master plan that would transform

35

Xiamen into an international modernized metropolis (Insert Map 1 Urban Planning of Xiamen Book page 11).57 Xiamens overall urban development objectives were divided into three distinct stages by city planners. The first stage consisted of near future, which focused on all city development leading up to the year 2000. Some goals included changing Xiamen into a Gulf City rather than solely an Island City.58 With this expansion of development onto the mainland, city planners expected Xiamens population to reach almost 1.5 million with an increased land area to 560 km2. The second stage of Xiamens urban development master plan lasts from 2000 to 2010. Within this ten year period, the framework for a metropolis is expected to be formed. And finally, the third developmental stage is to take place from 2010 onward. Designated as the long-range plan, it emphasizes Xiamens transformation into a booming metropolis with a modern port, an information center, and more importantly becoming an international city (Insert Map 2 Urban Planning of Xiamen Book page 12).59 As for the citys actual structure, it is best described by Xiamens Urban Planning Bureau as a myriad of stars surrounding the moon. Another way of putting it is the development of one central urban area surrounded by several satellite towns. For instance, Xiamen Island would act as the center and its surrounding islands and districts on the mainland represent the satellite towns. To better understand what Xiamens urban

57 58

A Survey of Xiamens Urban Master Plan Urban Planning of Xiamen book, 9. A Survey of Xiamens Urban Master Plan Urban Planning of Xiamen book, 9. Note: The reference to a Gulf City is used to describe the governments main goal of moving development away from Xiamen Island and Gulangyu Islet. Their objective is to expand the city outward and off the islands. Thus, allowing preservation of Xiamen and Gulangyu islands to continue. Also, expansion onto the mainland is quite beneficial to businesses and industries since regulations are less strict. There are different standards of environmental protection on the mainland compared to its environmentally conscious counterparts. Tongan County is one of the more relaxed areas and thus it attracts large amounts of industry, which has begun to take over agricultural lands.

36

planners visualized for the citys structure refer to (Insert Map 3 Urban Planning of Xiamen Book page 14). Xiamens Urban Planning Bureau further divided city development into four main parts. These four parts included a central, western, northern and eastern division, which exist today. The central or core area consists of Xiamen Island,60 the western part is Haicang Taiwanese Investment Zone,61 the northern part is Jimei, Xinglin, and Tongan County, and finally the eastern portion is made up of Xiamens surrounding island groups (Insert Map 4 Urban Planning of Xiamen Book page 13).62 As Xiamens urban planners devised development schemes for the ever expanding island city, they also tried to emphasize six main principles throughout the process. Urban planners wanted to protect Gulangyu islets environment and history, explore Xiamen Islands development in moderation, develop Haicang Investment Zone actively, strengthen amenities of Xinglin District, improve Jimei District, and create favorable conditions so Tongan County would develop fully.63 These principles have been some of the driving forces behind city development since Xiamen gained its status as a special economic zone in 1980. These principles are administered even today. A Changing Urban Landscape In Fujian Province, the level of urban development is higher along the coastline compared to its interior. Since 1979, the gap increased between coastal and interior

59 60

A Survey of Xiamens Urban Master Plan Urban Planning of Xiamen Book, 9. Note: Within Xiamen Island is the New Proper (heart), Old Proper (south), Gulangyu islet and Wanshishan (landscape and scenic areas), Port area (north), and the High Technology and Industrial areas (east). Urban Planning of Xiamen Book, 9. 61 Note: The western part consists not only of Haicang Taiwanese Investment Zone, but also Songyu, Xinyang, and Muluan groups. Urban Planning of Xiamen Book, 9. 62 Note: The island groups include Maxiang, Xindian, Luiwudian, Dadeng, and the long-range plan is to eventually obtain Jinmen Island from Taiwan. Urban Planning of Xiamen Book, 9. 63 Urban Planning of Xiamen Book, 9.

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regions in Fujian, due to the provinces re-distribution of industrial activities. While agriculture and smaller towns are predominantly found throughout Fujians interior, landscapes along the coastline reflect large urban areas. Xiamen has definitely become a major focal point for Fujian province headed into the 21st century. The citys connections with Overseas Chinese, proximity to Taiwan, selection as a SEZ, and role in the transnational Chinese economy have already been touched upon, but sound developmental strategies and environmental consciousness have transformed Xiamen tremendously over the past two decades.64 There is a noticeable difference between Xiamen today and the city in 1980. According to one resident from Xiamen, In the 1980s, Xiamen was a dirty backwater town with inadequate and unreliable water, frequent power outages, heavy pollution, and abysmal infrastructure.65 Based on pictures and materials written about the early stages of Xiamens development during the 1980s, it is quite evident that considerable amounts of improvements were needed. For one thing, the city lacked tall buildings and foreign enterprises typically left the city instead of doing business within the SEZ. During Mayor Hong Yong Shis administration, things began to slowly move in the right direction.66 A top priority for the Xiamen SEZ and Mayor Hong was the development of an adequate infrastructure. Urban development and land use are heavily impacted by infrastructure. Within the older city areas like Xiamens Siming County, infrastructural developments tend to lag behind urban development. However, in the newer sections of

Wong Kwan-yiu and Yao Shimou, Urban Development, in Fujian: A Coastal Province in Transition and Transformation, eds. Y.M. Yeung and David K.Y. Chu (Hong Kong: The Chinese University Press, 2000), 294-5. 65 Bill Brown, Amoy Magic: Guide to Xiamen. (Xiamen: Xiamen University Press, 2000), 30.

64

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Xiamen the opposite situation has occurred. Once the provision of infrastructure is in place, expansion of an urban area is more realistic. In Xiamens case, the city expanded because of its rather extensive infrastructure, especially its transportation system.67 Some of the improvements included widening roads, which helped alleviate traffic problems. Construction of a causeway, bridges, highways, harbors, and a new airport are a few other factors that helped transform Xiamen into a major city.68 Thus, Xiamens initial development of a well-rounded infrastructure greatly impacted the citys overall layout. The establishment of a newly formed infrastructure allowed agricultural or non-urban lands to become urbanized. Actually, 1.78 million yuan worth of investments went towards developing infrastructure for the SEZ between 1980 and 1985. This figure is 2.7 times the number completed thirty years before the SEZ was created, which is a staggering amount of increased investment.69 The SEZs goal of developing suitable infrastructure for the district was achieved by 1983. Some of the improvements included constructing the Xiamen International Airport, Yongan - Xiamen power transmission line, and a telecommunication system. From 1980 to 1991, Xiamens total built-up area increased from 14.23 km2 to 44.90 km2. In 1991, the increased land use predominantly centered on creating urban roads, being 5.6 times higher than 1980 construction. Green areas and open space increased 3.8 times,

Ibid, 30. Ibid, 30. 68 Wong Kwan-yiu and Yao Shimou, Urban Development, in Fujian: A Coastal Province in Transition and Transformation, eds. Y.M. Yeung and David K.Y. Chu (Hong Kong: The Chinese University Press, 2000), 294. 69 Si-Ming Li and Ling-Xun Zhao, Xiamen: Regional Center and Hometown of Overseas Chinese, in Chinas Coastal Cities: Catalysts for Modernization, eds. Yue-man Yeung and Xu-wei Hu, (Honolulu: University of Hawaii Press, 1992), 229.
67

66

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industrial usage increased 2.05 times, and residential areas were only 0.75 times higher than accounted for in 1980.70 Within the SEZs original Huli Processing Zone, the goal was not only to continue improving the citys transport and communication systems, but also to construct factories and residential housing. Once construction started, a majority of Hulis agricultural land was converted into an industrial town with over 70,000 inhabitants.71 The Huli Processing Zone was initially established as an experiment site for the Xiamen SEZ, but was later turned into an industrial district. In February 1984, Chinese leader Deng Xiaoping visited Xiamen and encouraged further development. However, before development began certain restrictions on Xiamens future development were lifted by Dengs request, which proved a major decision. In March, Xiamen local authorities removed restrictions and Xiamens SEZ expanded to include the whole island of Xiamen and Gulangyu Islet. Xiamens total land area increased to 131 square kilometers by 1985.72 As a result, foreign investment rose dramatically especially by 1988 and rapid urban growth followed. Actual foreign investment in 1993 was nearly six times that recorded in 1988. Therefore, the built up area of Xiamen expanded from 15 km2 in 1980 to 58.1 km2 by 1995. For Xiamen, this

Wong Kwan-yiu and Yao Shimou, Urban Development, in Fujian: A Coastal Province in Transition and Transformation, eds. Y.M. Yeung and David K.Y. Chu (Hong Kong: The Chinese University Press, 2000), 295-6. 71 Hong Buren, Old Photos of Xiamen, (Xiamen: Peoples Fine Arts Publishing House, 1999), 4-5 and SiMing Li and Ling-Xun Zhao, Xiamen: Regional Center and Hometown of Overseas Chinese, in Chinas Coastal Cities: Catalysts for Modernization, eds. Yue-man Yeung and Xu-wei Hu, (Honolulu: University of Hawaii Press, 1992), 230. 72 Lecture by Dr. Liao Shao Lin, given at Shanghai Jiaotong University, China. 10 July 2002 Special Economic Zones in China.

70

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development happened exceptionally fast. Construction of the citys central business district was deemed the most important phase of development for the island.73 There are a total of three districts on Xiamen Island, which include Huli, Kaiyuan, and Siming or the Old City. Many of the projects in Huli District centered on the core area of the city. Its business center was completed in 1994 and shortly thereafter, the renewed center of Hulis developments focused on commercial and residential housing. The port zone and Huli Industrial District are located just north of the original city center. Light industries, housing, and a financial center lie at the districts heart. Being the original site for the Xiamen SEZ, the Huli Processing Zone and its predecessor impacted the citys development into the 1990s and 2000s.74 In April 1988, the State Council gave Xiamen provincial level authority for administering its economy in April 1988. Thus, more foreign investment was allowed to flow into Xiamen and its newly formed districts. By May 1989, the State Council made the citys Xinglin District and Haicang Investment Zone into Taiwanese Investment Zones. Xinglin is located northwest of Xiamen Island along Maluan Bay. As for Haicang Investment Zone, it is situated directly south from Xinglin District and is at the mouth of the Jiulongjang River. Construction of these two zones started shortly after they were approved by the State Council to become districts in [years?]. Consequently, with the rise in developmental projects, the citys land area increased to 160 km2 and investment continued to rise well into the 1990s.75

David K.Y. Chu and Y.M. Yeung, Developing the Development Corridor, in Fujian: A Coastal Province in Transition and Transformation. (Hong Kong: The Chinese University Press, 2000), 318. 74 Brian Hook, ed. Fujian: Gateway to Taiwan, vol. 2, Regional Development in China (Hong Kong: Oxford University Press, 1996), 318-9. 75 David K.Y. Chu and Y.M. Yeung, Developing the Development Corridor, in Fujian: A Coastal Province in Transition and Transformation. (Hong Kong: The Chinese University Press, 2000), 319.

73

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Since the State Council approved the establishment of Jimei on December 13, 1992, the Taiwanese Investment Zone entered a new stage of Chinas export-oriented economy. The original satellite town and todays Jimei District are connected to the northern portion of Xiamen Island by the Xiamen Bridge. Throughout Jimeis development stages, it has enjoyed the favorable policies of Xiamens SEZ. Today, its urban landscape is heavily shaped by the Chinese transnational economy. In recent years, the economy of Jimei has developed quite rapidly. Over eighty joint-ventures have already started operations in the district. During 1994, the total output value of jointventures reached 316 million dollars, which was 45 percent of the total industrial output value of Jimei district.76 In December 1991, Fujian provincial government allowed all eleven of Xiamens rural townships to elevate in status to city townships.77 Four districts were added to Xiamen SEZ, which included Jimei, Xinglin, Kaiyuan, and Tongan. Seven districts resulted and made up the existing Xiamen SEZ by 1994. Therefore, there were seven districts under the jurisdiction of Xiamen City, which included Siming, Kaiyuan, Huli, Gulangyu, Jimei, Xinglin, and Tongan (Insert Map 5 - About Urban Planning of Xiamen Book page 2).78 Currently, the extent of Xiamens urban area includes Huli Industrial District, Kaiyuan District, Siming District and the heightened development of Xiamen City. Gulangyu District (islet) lies southwest of Xiamen Island and is a major environmental haven for Xiamen City. As for the mainland, Tongan County lies to the northeast, Jimei

76

David K.Y. Chu and Y.M. Yeung, Developing the Development Corridor, in Fujian: A Coastal Province in Transition and Transformation. (Hong Kong: The Chinese University Press, 2000), 318-9. 77 Hong Buren, Old Photos of Xiamen (Xiamen: Peoples Fine Arts Publishing House, 1999), 4-5. 78 Xiamen City Map and Urban Planning of Xiamen. A Survey of Xiamens Urban Master Plan, 9.

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District to the north, Xinglin District to the northwest, and Haicang Taiwanese Investment Zone to the west of Xiamen Island (See Map 5).79 (Table 3.): Xiamen City Development (1980 2002)
District/ County Siming District (Old City) Huli Processing Zone & Industrial District Location Year Development Approved 1984 Planning Area (km2.) * Planning Population * Total Area (km2.) * Total Population * Economic Activity and Developments * Investors and Number of Projects *

Southwest section of Xiamen Isl. Northern section of Xiamen Isl.

October 1980 & October 1981

21.89

150,000

Kaiyuan District

Jimei District

Gulangyu Islet

Xinglin District

Haicang Investment Zone

Central region of Xiamen Isl. Directly North of Xiamen Isl. on the mainland, linked by Xiamen Bridge Island to the west of Xiamen Island West of Jimei and Northwest of Xiamen Isl. on the mainland Directly west of Xiamen Isl. on the mainland North of Jimei and situated on mainland Northwest of Xiamen Island

1984

Port warehousing, transport services, industry, special land use along the port, free trade zone, residential areas *

December 1991 and on Dec. 13, 1992 (Taiwanese Investment Zone)

14

140,000

40

1984

1.78

Light and heavy industry, high-tech, agriculture, telecommunications October 15, 2 * * Free port, Business, Xiangyu Free Trade 1992 international trade, Zone Taiwanese trade, and transit trade Source: (*) Data Missing ; Xindeco Business Information Company. Xiamen Investment Procedures. Invest in Xiamen. 1996. http://www.chinavista.com/xiamen/invest/proced/htm. (5 August 2002). Tongan County
79

1989 (Approved) November 1992 (Taiwanese Inv. Zone) May 1989 (Approved) November 1992 (Taiwanese Inv. Zone) *

21.21

12-15,000 (Planned to Decrease from 25,000) 180,000

Culture, education, sight-seeing, tourism, light and high-tech industry, agriculture production, basic infrastructure, tourism Tourism, natural landscapes

Taiwanese

79.31

100,000

Industry, warehousing, communication

Taiwanese (170 projects)

100

600,000

Vital port area, big industrial zone

Taiwanese

21.45

200,000

1,079 (total land area) *

520,000

Note: The total land area of Xiamen City is 1,500 km2, with a sea area of nearly 300 km2. From 1982 to 1997, the built proper of Xiamen City expanded to nearly 70 km2, from a mere 12 km2 of the old city boundaries. The permanent population of Xiamen Citys urban area increased to almost 500,000 people from no more than 200,000 in 1982. In 1999, the population of Xiamen City reached over 1.29 million for the whole city and of that figure 600,000 lived in urban areas. For more discussion on this seeUnited States Embassy Beijing. Xiamen Chinas Showcase City. The United States Embassy Beijing Homepage. http://www.usembassy-china.org.cn/english/sandt/Xmenwb.htm., (6 June 2002), 1-2.

43

As Overseas Chinese investment increased during the late 1980s and into the mid1990s, the citys urban landscape has more recently been taken over by high-rise buildings. Although many of the newly constructed structures were and still are being used for foreign enterprises, a majority of the urban landscape consists of housing developments. These apartment style buildings dominate the citys layout. Actually, a majority of housing in Xiamen retain colonial styles of architecture, which reflect the citys close ties with Southeast Asia and the Overseas Chinese. Although one would expect many of Xiamens buildings to be constructed during the 19th century, they are instead reconstructed replicas of the original buildings from the 1840s. Because so many of the original structures were falling apart, the government decided to rebuild them during the 1990s. Other problems plagued the city during the early 1990s. Power outages were especially problematic. 80 Now, electrical blackouts are almost non-existent in Xiamen since Songyu Power Plant installed two 300,000 kw generators. These generators do provide adequate amounts of energy to the citys consumers even today. Communication wise, telephone service has improved tremendously over the past decade as well. One resident asserted,
In 1989, I made two phone calls across campus and neither got through. Now we have direct dial service to 1800 Chinese cities and over 210 countries or regions. In less than a decade, weve gone from tin-can phones to having two phones at home, a fax machine, internet, and access to e-mail access.81

This statement illustrates just how fast Xiamen has transformed itself, from a dirty port city into a large modernized metropolis in less than twenty years. Xiamen has also made its way into the ever expanding Chinese transnational economy, which has greatly impacted the citys urban landscape since becoming a SEZ as well. Even more

80

Bill Brown, Amoy Magic: Guide to Xiamen. (Xiamen: Xiamen University Press, 2000), 30.

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importantly, improvement in Xiamens infrastructure enabled construction of housing and the real-estate industry to flourish. Indeed, better utilities have also allowed the SEZ to become an environmental model city for the rest of China. Housing Industry The relationship between FDI, and in particular Overseas Chinese FDI, and the housing sector is much more complicated than that of most other industries. Sufficient housing is necessary to facilitate FDI because the workers must have places to live close to the factories. FDI increases the demand for housing in Xiamen in three important ways: 1) it created more demand for workers, 2) it raised the standard of living, and 3) it prompted many Overseas Chinese to return to Xiamen to oversee their investments. Another factor that complicated this picture was that Overseas Chinese have invested in the housing sector in Xiamen. The establishment of a SEZ in Xiamen in 1980 created a great need for housing. In fact, this need had manifested itself during previous thirty years, when the population in the city had increased 225 percent while housing only increased 80 percent. Because of the lack of housing construction in the Mao period, the government realized that it would be impossible to attract sufficient numbers of workers from the surrounding region to start up the proposed new factories in the SEZ unless it took decisive action. From 1980 to 1985 the Xiamen government spent 720 million yuan in residential construction.82 By 1987 10,000 households had been moved intro these units. In the SEZ, the Huli Processing Zone developed housing for 70,000 residents. In addition, a great deal of new building occurred on the western side of the island, including the

81

Bill Brown, Amoy Magic: Guide to Xiamen. (Xiamen: Xiamen University Press, 2000), 31.

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construction of the Hubin Overseas Chinese New Village and the Lianhua New Village, which contained 100 new blocks of flats over 31 square kilometers. At about the same time that FDI started to enter Xiamen, the real-estate market began to liberalize. In 1985 twenty percent of the housing was privately owned, though mostly by corporations. Also in that year, in an early attempt to test the market for real estate, 102 units for desirable newly married couples were sold with subsidies or rented at cost in Xiamen for the first time.83 Also in 1985 one of the earliest examples of FDI in housing occurred in the form of 20 million U.S. dollars of foreign capital to develop realestate by the Xiamen Real Estate Company.84 In another round of housing sales in 1986, Xiamen had the highest prices at 450 RMB per square meter.85 The high price can be explained as a combination of the legacy of insufficient housing from the 1950 to 1980 era, the relative lack of space in Xiamen because it is an island, and the economic upturn caused by FDIs and other investments. These rising housing sales stimulated the establishment of four real-estate companies in Xiamen in 1987.86 To better rationalize the housing sector between 1988 and 1992, Xiamen attempted to create a radical and comprehensive reform package. After four years of consideration, in May of 1992 such a program was announced. It was largely based on an earlier program in Nanping, Fujian, but also drew on the reform experiences in Shanghai in l992. It raised rent to 77 percent of the cost, set up a housing provident fund

Lui Yuchang and Haung Zimen, A Complete Guide to Xiamen (Xiamen: Lujiang Publishing house, 1989), 55. 83 Rebecca L. H. Chiu, Housing, in Y. M. Yeung and David K. Y. Chu, ed., Fujian: A Costal Province in Transition and Transformation (Hong Kong: Chinese University Press, 2000) pp. 432 and 438. 84 Lui Yuchang and Haung Zimen, A Complete Guide to Xiamen (Xiamen: Lujiang Publishing house, 1989), 55. 85 Rebecca L. H. Chiu, Housing, in Y. M. Yeung and David K. Y. Chu, ed., Fujian: A Costal Province in Transition and Transformation (Hong Kong: Chinese University Press, 2000) p. 433. 86 Ibid, 433.

82

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with 5 percent of the employees earning from both employee and employer, and initiated other such programs to encourage rationalized pricing and home purchase. Also created was a Xiamen Housing Authority.87 These changes greatly promoted home ownership while at the same time helped create a market in which Overseas Chinese would be willing to invest. Namely, it created a housing market in which people paid the market rates for their housing. In January of 1995 Xiamen initiated another round of reforms. The key component of this program was to set different regulations and prices for varying income levels. Upper income earners would have to buy their housing at the market price, while others would be able to buy at cost or at the standard rate. This round of reforms had a profound influence on Xiamens economy compared to the 1992 reforms. As testimony to their success, 63 cities and counties throughout China had formulated similar programs by February of l998. In 1999 alone, 121.31 million US dollars of FDI were invested in the real-estate sector, much of it coming from Overseas Chinese.88 By the late 1990s the housing situation in Xaimen had become fairly good as evidenced by the fact that Xiamen has 11 percent more living space per capita than Shanghai.89 Overall, Xiamen has had the best performance in Fujian in terms of housing since the mid-1980s.90 The housing stock of Xiamen has reached the second highest in Fujian at 12,090,000 square meters 17 percent of the total housing stock in Fujian.91 Thus, the last twenty years has seen the emergence of a free market, the growth of FDI, and the improvement of the quality of the housing sector in Xiamen.

87

Rebecca L. H. Chiu, Housing, in Y. M. Yeung and David K. Y. Chu, ed., Fujian: A Costal Province in Transition and Transformation (Hong Kong: Chinese University Press, 2000), 446. 88 Ibid, 446-449. 89 Ibid, 432, 438.

47

Investment in Xiamen has been largely split between industry and real-estate (See Graph 6). In the early 1990s investment in both sectors remained about the same percentage of the total and in 1993 FDI to real-estate actually outstripped industry (See Graph 7). However, beginning in that year industry saw a steadily increasing share of FDI while real-estate a steady decrease. By 1998 over 75 percent of investment went to real-estate while less than 15 percent went to real-estate. This trend can be attributed to two factors. First the housing market has matured due to greater levels of capital in the housing sector leading to less demand for new capital. Secondly this divergence corresponds to the increase in western capital flowing into Xiamen. Because this investment in primarily in industry its percentage has increased. (Graph 6)

Contracted FDI into Xiamen by Sector

3000 Million US $ 2000 1000 0 Total Industry Real Estate Commerce 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 520 174 172 2 2404 1865 2062 1650 1656 1688 1287 941 119 886 1137 877 1165 1302 1082 387 450 565 154 250 211 240 123 121 75 318 1298 601

Year

Graph 7

90 91

Ibid, 434. Ibid, pp. 436-7.

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Percentage of Contracted FDI to Xiamen by Industry

1.00 Percentage 0.80 0.60 0.40 0.20 0.00
89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 19

Industry Real Estate Commerce

19 8

0-

Year

Xiamen jingji tiqu nianjian Almanac of Xiamen Special Economic Zone 1990, 1992, 1994-1999

The real estate market continued to boom. In 2000, investment in fixed assets in Xiamen amounted to RMB 17.451 billion. A floorage of 2,974,100 square meters of commercial housing was built in 2000, an increase of 654,800 square meters over that of the previous year, or 28.23 percent. The floorage of commercial housing actually sold was 2,498,00 square meters, growing by 770,300 square meters over that of the previous year, or 44.57 percent (Xiamen Social and Economic Development in 2000, page 3. http://www.xiamensupplier.com/economy.htm/.) Reword this section and use!]

Environmental Conditions of the City

A Long Haul: Continuing to Move Forward During the mid-1980s Xiamens urban landscape transformed greatly due to construction projects throughout the city. However there was definitely room for environmental improvement. Although Xiamens environmental conditions drastically

49

improved compared to its first developmental period during the 1920s, the city was still not living up to its potential. According to one Xiamen resident, Her streets and sidewalks were covered with litter and a film of black coal soot coated much of our town, and our lungs as well.92 Even after decades of urban development, it took awhile for the government to address these problems and take appropriate action towards cleaning up Xiamen. By the mid-1990s, Xiamen was successful in adhering to the Municipal Government and SEZ standards created to improve the citys environment. The city adopted strategies of rejecting pollution, increasing public awareness, increasing green space, and setting and implementing environmental standards (See Table 4). The ability of local citizens to improve the conditions of their environment succeeded because of their higher education, awareness, willingness, training, ability to set standards and abide by them, and to take action when needed.93 (Table 4.) : Xiamen Municipal Governments Ten Commandments 1.) 2.) 3.) 4.) 5.) 6.) 7.) 8.) 9.) 10.) Dont litter Dont spit Dont abuse the greenery Dont damage public property Dont run red lights Dont be unruly on buses Dont use coarse or inappropriate language Dont smoke in pubic buildings Dont honk automobile horns on the island Dont affix unauthorized posters in public places

Source: Bill Brown Growing, but Green, Xiamen Outlook. http://www.chinafair.org.cn/chinafair-eng/xm-outlook/business5.htm. (20 June 2002), 1-2.

92

Bill Brown, Growing, but Green, Xiamen Outlook. http://www.chinafair.org.cn/chinafair-eng/xm outlook/business5.htm. (20 June 2002), 1-2. 93 United States Embassy Beijing, Xiamen Chinas Showcase City. The United States Embassy Beijing Homepage. http://www.usembassy-china.org.cn/english/sandt/Xmenwb.htm. (6 June 2002), 2.

50

Transformation into a Green City There were several motivating factors behind Xiamens selection to be made into Chinas Green City. Chinese officials desperately wanted to attract overseas Chinese investment, stimulate tourism, present a livable environment for overseas Chinese, create a political, economic, cultural, and environmental model for Taiwan, establish an environmental model for the rest of China, and finally gain international recognition. These were just a few desires held by the Chinese government prior to Xiamen gaining its status as a Green City. 94 Years of widespread construction, public support, and government action across Xiamen Island, Gulangyu, and the mainland definitely helped transform Xiamen from a dirty port into an environmentally suitable and developed city. The focus on and addition of city green space was one method chosen by government officials to transform Xiamen SEZ into a model city. Xiamen was capable of transforming due to its natural landscapes. Xiamen is very unique compared to many of Chinas major cities. This coastal city has scenery built on the basis of natural resources. Mountains cover almost 40 percent of the land area and most of this landscape is covered with vegetation. However, as foreign investment began to take off during the 1980s and 1990s, much of the natural vegetation was cleared for construction. As urban areas sprawled out and the population increased, land was used at a rapid rate. Thus, certain measures needed to be taken by the Xiamen Municipal Government to not only improve the environment, but increase the amount of greenery throughout the city.95

94 95

Xiamen Urban Planning Bureau Book Lecture Presented By Dong Xing Yuan and Dunhu Chang on The Making of a Green Xiamen. (10 July 2002) Xiamen, China.

51

The increased green space on Xiamen Island and the mainland is due to the systematic planning of a Greenbelt in 1994. The planning structure for Xiamens green space centered on increasing afforestation, public green space, scenic green space, road afforestation, and green space inside residential areas. The total planning area was 128 km2, which excluded reclaimed lands. Most of the green space consists of natural vegetation like trees, shrubs, and flowers within or along gardens, botanical gardens, fields, parks, yards, roadways, lakes, ponds, and sidewalks. Roads have been afforested using fruit trees, shrubs, and flowers, while in more natural settings various types of tropical trees and plants are being planted. Public green space typically centers on large protected parks and fields, where people can enjoy resting or playing sports. Scenic green space extends throughout the city, but predominantly is found on Gulangyu islet. This island has preserved much of its natural landscape and tourists flock here to admire the beauty. On Xiamen Island and the mainland, a significant amount of greenery is found in the sub-tropical botanical gardens. While in downtown urban areas, artificial scenery has been created to make areas appear greener.96 By the end of 2001, the Greenbelt rate in finished urban areas was 38.21 percent and the public green area per capita totaled 9.7 m2. As for the rate of space allotted to greenery in finished residential areas, it has reached nearly 45 percent. Almost 40 percent of the land throughout the city is strictly for green areas. These numbers show just how far Xiamen has come over the past two decades with environmental improvements. Today, green space accounts for 40 to 45 percent coverage in Xiamen

52

SEZ. Xiamens success with its increased green space can be attributed to the movement of less valued industry from Xiamen Island to the mainland. In addition, collaboration between Xiamens government and public has allowed the city to transform into an environmentally cleaner city.97 Model Status By the mid-1990s, Beijing actually recognized Xiamen as the cleanest city in China. While the environment of Xiamen SEZ continued to improve, it received several notable honors. For instance, Xiamen was selected as Chinas model of environmental protection, state gardening and afforestation model city, state hygienic city, and the national garden city. Through this long and arduous process of development and environmental improvement, Xiamen has lived up to its expectations and continues to influence other Chinese cities. Indeed, Xiamen has been transformed from a filthy port city into an environmentally cleaner and safer city at the dawn of the 21st century.98

Conclusion
Over the past twenty years Xiamen has experienced phenomenal growth, vying to be the next economic center in the South China region. It has accomplished such tasks by drawing on both historical ties and current economic incentives to allure Overseas Chinese investment. Even though investment from Overseas Chinese has decreased over the past five years, and a number of American and European firms are entering Xiamen,

Ibid, and United States Embassy Beijing, Greener Than Green: Xiamen, A Model of Environmental Achievement. The United States Embassy Beijing Homepage. http://www.usembassychina.org.cn/english/sandt/Xiamweb.htm. 97 Lecture Presented By Dong Xing Yuan and Dunhu Chang on The Making of a Green Xiamen. (10 July 2002) Xiamen, China. And United States Embassy Beijing, Xiamen Chinas Showcase City. The United States Embassy Beijing Homepage. http://www.usembassychina.org.cn/english/sandt/Xmenwb.htm. (6 June 2002), 2.

96

53

the latter represents a small fraction of the enterprises. The Overseas Chinese, along with the Hong Kong and Taiwanese businessmen, still remain the most influential group, and even today they often receive preferential treatment when setting up businesses in China. The networking of Overseas Chinese in creating these rapidly developing economies comes from and simultaneously reinforces the notion of a Chinese transnational economy. The concept of a Chinese community bonded not by nationality but rather by heritage ties is not new, but it has continuously adapted to the changing world economy. For Xiamen in the 1920s and 1930s, its economy was tied into the Chinese economy across Southeast Asia, especially with places like Manila and Thailand. From the 1980s to now, the Chinese business community in Xiamen composed of investors primarily from Taiwan, Hong Kong, and Singapore. Consequently, Xiamen economy depends heavily on investors from these regions. The impressive economic growth Xiamen experienced has held direct consequences for the housing industry and the overall urban environment. From the 1920s to 1930s, the city growth resulted in the demolition of the old city wall, the filling of the ocean, leveling of the mountain, and general physical alterations of the land. The increased land area stimulated the housing industry, and by the mid-1930s there were over 7,000 houses in Xiamen. The predominance of wealthy Overseas Chinese merchants from Southeast Asia in Xiamen economy directed the development of the housing industry and the urban design into one that closely paralleled the Southeast Asia colonial city model. Many of the houses and the streets resembled the designs one might see in Manila or Jakarta.

98

United States Embassy Beijing, Xiamen Chinas Showcase City. The United States Embassy Beijing Homepage. http://www.usembassy-china.org.cn/english/sandt/Xmenwb.htm. (6 June 2002), 2.

54

Similarly, from the 1980s to the present, Overseas Chinese exert significant influence on Xiamen urban development. Although the housing industry no longer occupies as large percentage of the overall investment as it did during the 1920s and 1930s, the Xiamen Urban Planning Bureau remains forcefully conscious of the Overseas Chinese investors needs. When Xiamen first became a SEZ in 1980, the government offered special incentives for the Taiwanese investors.99 Those special privileges have been expanded to all foreign investors in 1986, but now there are three new districts specifically designed to lure Taiwanese investors.100 Indeed, one of the motivations behind the citys decision to improve the environment was the raise the real estates values and to use the citys clean environment reputation to attract foreign investors. The city government hopes that by capitalizing on the citys cleanness and scenery, Xiamen will be a more attractive investment location for the foreign investors. Today Xiamen is looking forward to expanding into a greater bay metropolis. The island of Xiamen has become the core of the city, and the towns and industrial areas on the mainland serve as satellite economic regions that will support and aid the development on the mainland. The hope is that by better connecting Xiamen Islands economy to the mainland, it will be able to have a greater impact on the local economy. This plan also expands the city space, which will help overcome the obstacle of limited land availability on the island. Furthermore, the division also allows the Xiamen city council to move the more polluting industries off the island to the mainland, limiting the island to pollution-free enterprises and tertiary industries such as tourism.

99

100

Overseas Chinese Affairs Bureau Ask cross straits

55

Now at the start of 21st century Xiamen faces new challenges in its path to become another center in the South China region. Xiamens success in urbanization raised its living standard, but also created higher wage demand, thereby driving away foreign investors into more inland and less developed cities. This, coupled with the Asian economic crisis, has decreased investment into the city. Second, now that China has opened up the country to foreign investment, Xiamen must compete with other regions for attention. Since the incentives originally offered to foreign companies in SEZ are now replicated across China, Xiamen can no longer rely on its status as SEZ to attract foreign investment. Finally, the political decisions regarding Taiwan can greatly affect the citys economy, especially since Taiwanese businessmen comprise such a large percentage of the foreign investors. Finally, Xiamen has dealt with pollution problems by moving polluting industries away from the island. However, the city continues to receive waste from Jiulong Jiang upstream, resulting in extremely polluted harbors and beaches around the island. The future for Xiamen may lie in de-isolation of the economy, creating better connections with local economies inland. More reliance on domestic industries may buffer the city against tumults in the Asian economy, at the same time aiding the local economy. As for environmental regulations, Xiamen must push its water control concerns to at least the provincial level.