Hainan – State, Society, and Business in a Chinese Province
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Hainan – State, Society, and Business in a Chinese Province This book examines the complex relationship between the state, society, and business in China, focusing on the experience of the island province of Hainan. This island, for many years a provincial backwater, was given pro- vincial rank in 1988 and became the testing ground for experiments of an economic, political, and social nature that have received great attention from Beijing, in particular the “small government, big society” project. This book provides a full account of this transition, showing how Hainan casts important light on a number of highly topical issues in contemporary China studies: central–local relations, institutional reform, state–society relations, and economic development strategies. It provides detailed evidence of how relations between party cadres, state bureaucrats, businesses, foreign in- vestors, and civil society play out in practice in China today. It argues that despite the liberalization of recent years, especially in the economic sphere, the party state remains the most powerful actor in Chinese society, and that path-breaking reform experiments such as in Hainan remain highly vulner- able due to the central government’s hesitation to commit the resources and unequivocal political support needed for the experiments to be successfully realized. Kjeld Erik Brødsgaard is Professor and Director at the Asia Research Center, Copenhagen Business School. He has held visiting research appointments in China, Singapore, and the US, and is a member of the Advisory Board of the EU-China Academic Network (ECAN). His most recent publications in English include The Chinese Communist Party in Reform (2006) and Bringing the Party Back In: How China is Governed (2004). He is currently engaged in a major research project on cadre reform, party building, and public manage- ment in China. China Policy Series Series Editor Zheng Yongnian China Policy Institute, University of Nottingham, UK 1 China and the New International Order Edited by Wang Gungwu and Zheng Yongnian 2 China’s Opening Society The Non-State Sector and Governance Edited by Zheng Yongnian and Joseph Fewsmith 3 Zhao Ziyang and China’s Political Future Edited by Guoguang Wu and Helen Lansdowne 4 Hainan – State, Society, and Business in a Chinese Province Kjeld Erik Brødsgaard Hainan – State, Society, and Business in a Chinese Province Kjeld Erik Brødsgaard First published 2009 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2008. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 2009 Kjeld Erik Brødsgaard All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Brødsgaard, Kjeld Erik. Hainan : state, society and business in a Chinese province / Kjeld Erik Brødsgaard. p. cm. — (China policy series ; 4) Includes bibliographical references and index. 1. Haian Sheng (China)—Politics and government. 2. Hainan Sheng (China)—Economic policy. 3. Hainan Sheng (China)—Social policy. 4. Hainan Sheng (China)—History. I. Title. DS793.H3B76 2008 951.′29—dc22 2008007929 ISBN 0-203-89219-4 Master e-book ISBN ISBN13: 978-0-415-46033-0 (hbk) ISBN13: 978-0-203-89219-0 (ebk) ISBN10: 0-415-46033-6 (hbk) ISBN10: 0-203-89219-4 (ebk) Contents List of figures viii List of tables ix Acknowledgement xi 1 Introduction 1 Outline of the book 3 2 “A place that God forgot” 10 Background and history 10 An important front area 12 3 Establishing a new province 15 “A special zone which is not a special zone” 17 The Hainan car scandal 19 Momentum regained 21 Post-Tiananmen leadership 25 Islanders versus mainlanders 30 4 The economy of Hainan 33 Growth rates and sectoral distribution 34 Agriculture 40 Land reclamation and rubber production 42 Industry 43 State-owned enterprises 44 “The state takes a lot” 46 Non-state sector 47 Private sector development in Haikou city 51 Non-state economy in rural areas 55 The Nongken system 56 vi Contents 5 Foreign trade and investment 57 Regulations and policies 57 Foreign direct investment 59 Foreign trade 64 6 Yangpu Economic Development Zone 71 The most attractive incentive package in China 71 Land lease 73 Special customs zone 75 Yangpu model revived 75 7 “Small government” in Hainan 79 Bianzhi and nomenklatura 79 Party set up in Hainan 82 The organizational history of the CCP in Hainan 82 Liao Xun and “small government” in Hainan 84 Second phase of administrative reform 90 Third phase 91 Small government in Yangpu 94 Core functions of Yangpu administrative organs 99 Civil service system 101 Yangpu party set up 103 1996 proposals 104 Institutional reform 106 8 “Big society” in Hainan 108 Content and aim 108 Social associations 109 “People-run” social undertakings 111 Transitional intermediate organizations 112 Civil society 112 Does China need a small government? 113 9 Hainan and regional cooperation 120 Pan-Pearl River Delta regional cooperation and development 120 The PPRD framework 122 Milestones of PPRD regional cooperation 124 The ASEAN link 128 Different aims 130 Contents vii 10 Hainan and the South China Sea 132 China’s claim 132 Vietnam–China and the South China Sea dispute 134 Gulf of Tonkin economic circle 136 Other clashes 136 Code of Conduct in the South China Sea 137 Hainan spy plane incident 139 Hainan’s role in the South China Sea 141 11 Conclusion 143 Notes 145 Bibliography 169 Index 184 Figures 2.1 Hainan Administrative District, 1980 13 7.1 Administrative party structure of Hainan Province 85 7.2 Government administrative structure of Hainan Province, 1988 (Liao Xun’s idea) 87 7.3 Government administrative structure of Hainan Province, 1988 89 7.4 Government administrative structure of Hainan Province, 1995 92 7.5 Administrative set up, Yangpu Economic Development Zone 95 10.1 The South China Sea (Nanhai) 134 Tables 3.1 Provincial governors and vice-governors of Hainan (April 1988–February 2007) 27 3.2 Provincial party leaders in Hainan (April 1988–February 2007) 29 4.1 Size of GDP and GDP growth rates in Hainan, 1980–2005 35 4.2 Provincial per capita GDP in selected years (in yuan)37 4.3 Provincial and national growth rates in China, 1990–2005 (in percent) 38 4.4 Per capita GDP for China’s provinces, 1999 (nominal and PPP estimates) 39 4.5 Main agricultural products (in tonnes) 41 4.6 Output of major industrial products, 1980, 1998, and 2005 44 4.7 Share of state-sector of total gross industrial output value of all state-owned enterprises and non state-owned industrial enterprises (above designated size) 45 4.8 Relative size of the private sector at the provincial level in China, 1999 48 4.9 Relative size of the private sector at the provincial level in China, 2005 49 4.10 The development of the urban private sector in Hainan, 1977–2005 50 4.11 Relative size of urban private sector in China, 2000 51 4.12 Relative size of urban private sector in China, 2005 52 4.13 Relative size of the private labour force in Haikou City, 1987–2004 53 4.14 Number of employed in individual and private enterprises in Haikou City, 1987 and 1991–2004 54 5.1 Foreign direct investment in Hainan, 1987–2005 (US$ million) 60 5.2 Foreign direct investment in Hainan, 2000, 1993, and 2005 61 5.3 Hainan’s foreign direct investment by 10 most important countries of origin, 1993 62 5.4 Hainan’s FDI by sector in 1993, 2000, and 2002 63 x Tables 5.5 Hainan’s foreign direct investment by 10 most important countries of origin in 2000 and 2002 64 5.6 Hainan’s foreign trade 1987–2005 (in US$ million) 65 5.7 Hainan’s top ten export commodities, 1993 66 5.8 Hainan’s top ten export markets, 1993 66 5.9 Hainan’s export as a share of provincial GDP and China’s total export value 67 5.10 Value of export and its share of GDP at provincial level in China, 2000 and 2005 68 5.11 Hainan’s top ten export commodities, 2000 and 2005 69 5.12 Hainan’s top ten export markets, 2000 and 2005 70 7.1 Size of administrative Bianzhi by province after 1993–95 institutional reform 93 7.2 National classification scheme for civil servants 102 8.1 The growth of Shetuan in Hainan Province, 1993–96 111 8.2 Public sector employment in selected countries (in thousands) 115 8.3 Government revenue as percentage of GDP in China 115 8.4 Government revenue in selected countries as percentage of GDP, 2004 116 9.1 Pan-Pearl River Delta economic indicators, 2003 121 9.2 Cooperation milestones in the PPRD region 125 9.3 The most important traded products between the nine Pan-Pearl River Delta provinces and the ASEAN countries 129 Acknowledgements This project has been more than a decade in the making and many personal and institutional debts that I have incurred along the way must be acknow- ledged. First of all my thanks and gratitude go to my wife Susan, without whose unwavering support the completion of the project would have been impossible.