A sub-provincial recipe of coastal development in China: The case of Qingdao

China Quarterly

Volumn , Issue 160, 1999, Pages 919-952

  Chung, Jae Ho ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

COASTAL DEVELOPMENT; COASTAL ZONE MANAGEMENT; POLICY STRATEGY; REGIONAL PLANNING;

CHINA;

EID: 0033384455     PISSN: 00094439     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (123)

1. See Alexander Gerschenkron, Economic Bachvardness in Historical Perspective (Cambridge, MA: Harvard University Press, 1962), pp. 12-20; Tony Smith, "The underdevelopment of development literature: the case of dependency theory," World Politics, Vol. 31, No. 2 (January 1979), pp. 251-59; and Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton: Princeton University Press, 1990).
2. Jdnos Komai, The Socialist System (Princeton: Princeton University Press, 1992), pp. 387-392, and Highway and Byivays: Studies on Reform and Poslcommunht Transition (Cambridge, MA: MIT Press, 1995), p. 99; and Steven L. Solnick, "The breakdown of hierarchies in the Soviet Union and China: a neoinstitutional perspective," World Politics, Vol. 48, No. 2 (January 1996), pp. 209-238.
3. See Frederic C. Deyo, "Coalitions, institutions, and linkage sequencing - toward a Strategic capacity model of East Asian development," in Frederic C. Deyo (ed.). The Political Economy of the New Asian Industrialism (Ithaca: Cornell University Press, 1987), pp. 227-247; T.J. Pempel, "Of dragons and development," Journal of Public Policy, Vol. 12, No. 1 (January-March 1992), pp. 79-95; and Anis Chowdhury and lyanatul Islam, The Newly Industrialising Economies of East Asia (London: Routledge, 1993), chs. 3, 5-8.
4. For the business elites in China as a growing social group but still subject to the party-state, see David S. G. Goodman, 'The People's Republic of China: the party-state, capitalist revolution and new entrepreneurs," in Richard Robison and David S. G. Goodman (eds.). The New Rich in Asia: Mobile Phones, AfcDonalds and Middle-Class Revolution (London: Routledge, 1996), pp. 225-242. For an assessment of China's business elites as possessing a considerable degree of structural autonomy from government, see Margaret M. Pearson, China 's New Business Elite: The Political Consequences of Economic Reform (Berkeley: University of California Press, 1997).
5. See Mark Schneider and Paul Teske, Public Entrepreneurs: Agents for Change in American Government (Princeton: Princeton University Press, 1995); and Andrew G. Walder, "Local governments as industrial firms: an organizational analysis of China's transitional economy "American Journal of Sociology, Vol. 101, No. 2 (September 1995), pp. 263-301.
6. For studies dealing with development at the provincial level of analysis, see David S. G. Goodman and Gerald Segal (eds.), China Deconstructs: Politics, Trade and Regionalism (London: Routledge, 1994); David S. G. Goodman (ed.), China 's Provinces in Reform: Class, Community and Political Culture (London: Routledge, 1997); and Peter Cheung, Jae Ho Chung and Zhimin Lin (eds.). Provincial Strategies of Economic Reform in Post-Mao China: Leadership, Politics, and Implementation (Armonk, NY: M. E. Sharpe, 1998).
7. See Jae Ho Chung "Studies of central-provincial relations in the People's Republic of China: a mid-term appraisal," The China Quarterly, No. 142 (June 1995), pp. 506-508.
8. The significance of this policy resides in that the rise of prefecture-level cities (dijishi) empowered to rule counties officially heralded the formation of a new layer of authority between provinces and counties, by replacing prefectures (digit) which, as "field offices" (paichu jigou) of the provinces, had an ambiguous administrative status. Prefecture-level cities were formed via three ways: through the merger of a province-administered prefecture-level city (shengxia dijishî) with the prefcctural administration (diqu xingzlieng gongshu); through the upgrading of a county-level city (xianjislti); and through the upgrading of a county-turned-city (xiangaishî). See Diao Tianding, Zliongguo difang jigou gaiyao (Overview of Local Government Organizations in China) (Beijing: Falii chubanshe, 1989), pp. 169,204-208; and Liu Junde, Zliongguo xingzlieng quhua de lilunyu shijian (Theory and Practice of Administrative Zoning in China) (Shanghai: East China Normal University Press, 1996), pp. 160-69.
9. Figures are from Wu Peilun, Dangdai Zliongguo zliengfu gailun (Overview of Contemporary China's Government) (Beijing: Gaige chubanshe, 1993), pp. 25, 182-83; Liu Junde, Theory and Practice, p. 176; Zheng Dingquan, "1995 nian woguo difang xingzheng quhua gaikuang" ("An overview of China's local administrative structure in 1995"), inJingji yanjiu cankao (Reference Materials for Economic Research), No. 994 (22 December 1996), p. 38; and Zliongguo tongji nianjian 1997 (Statistical Yearbook of China 1997) (Beijing: Zhongguo tongji chubanshe, 1997), p. 3.
10. Zhongguo chengshi tongji nianjian 1993-1994 (Statistical Yearbook of Urban China, 1993-1994) (Beijing: Zhongguo tongji chubanshe, 1995), pp. 26-27.
11. See Jae Ho Chung, "The expanding space of provincial politics and development: thematic suggestions for the future research agenda," Provincial China, No. 4 (October 1997), pp. 8-16.
12. See Yao Shimou, "Woguo chengshi jingji yanjiu chutan" ("A preliminary investigation of China's urban economy"), Chengshi wenti (Urban Problems), No. 5 ( 1989), pp. 2-9; David Zweig, "Internationalizing China's countryside: the political economy of exports from rural industry," The China Quarterly, No. 128 (December 1992), pp. 716-741, and " 'Developmental communities" on China's coast: the impact of trade, investment, and transnational alliances," Comparative Politics, Vol. 27, No. 3 (April 1995), pp. 253-274.
13. South China Morning Post (Hong Kong) has carried a monthly special on several dozens of sub-provincial cities since 28 June 1992. Both Renrnin ribao (People's Daily) and China Daily carry irregular specials on sub-provincial cities.
14. For overviews of the issue, see Barry Naughton, "Cities in the Chinese economic system: changing roles and conditions for autonomy," in Deborah S. Davis, Richard Kraus, Barry Naughton and Elizabeth J. Perry (eds.). Urban Spaces in Contemporary China: The Potential for Autonomy and Community in Post-Mao China (New York: Cambridge University Press, 1995), pp. 61-89; and Kam Wing Chan, "Urbanization and urban infrastructure services in the PRC," in Christine P. W. Wong (ed.). Financing Local Government in the People 's Republic of China (Hong Kong: Oxford University Press, 1997), pp. 83-125.
15. See, for instance, Joseph Fewsmith, "Special Economic Zones in the PRC," Problems of Communism, Vol. 35, No. 6 (1986), pp. 78-85; George T. Crane, The Political Economy of China's Special Economic Zones (Armonk, NY: M. E. Sharpe, 1990); and Jude Howell, China Opens Its Doors: The Politics of Economic Transition (Boulder: Lynne Rienner, 1993), ch. 4.
16. Examples include Paul E. Schroeder, "Territorial actors as competitors for power: the case of Hubei and Wuhan," in Kenneth G. Lieberthal and David M. Lampton (eds.), Bureaucracy, Politics and Decision Making in Post-Mao China (Berkeley: University of California Press, 1992), pp. 283-307; Dorothy J. Solinger, "City, province and region: the case of Wuhan," in Bruce L. Reynolds (ed.), Chinese Economic Policy (New York: Paragon, 1988), pp. 233-284, "China's new economic policies and the local industrial political process: the case of Wuhan," Comparative Politics, Vol. 18, No. 4 (July 1986), pp. 379-399, and "Despite decentralization: Wuhan's disadvantages and dependence, and ongoing central power in the Inland," The China Quarterly, No. 145 (March 1996), pp. 1-34.
17. See John Fitzgerald, "Autonomy and growth in China: county experience in Guangdong province," Journal of Contemporary China, Vol. 5 (1996), pp. 7-22; Marc Blecherand Vivienne Shue, Tethered Deer: Government and Economy in a Chinese County (Stanford: Stanford University Press, 1996) and Andrew G. Walder (ed.), Zouping in Transition: The Process of Reform in Rural North China (Cambridge, MA: Harvard University Press, 1998).
18. While this study has one major case study, Qingdao, occasional references will be made to several other cities whenever comparison is possible and necessary.
19. See Stephen Haggard, Pathways from the Periphery: The Politics of Growth in the Newly Industrializing Countries (Ithaca: Cornell University Press, 1990), pp. 23-t8.
20. For provincial variations, see eight case studies in Cheung, Chung and Lin, Provincial Strategies of Economic Reform.
21. For a comparative study of 14 cities (of which 12 are coastal ones), see Jae Ho Chung (ed.), Cities in China: Recipes for Economic Development in the Reform Era (London: Routledge, 1999).
22. The importance of these factors needs no further elaboration. For exemplary studies on this issue, see "Cujin diqu jingji xietiao fazhan yanjiu" ("Study on the promotion of regionally co-ordinated development"), Jingjiyanjiu cankao. No. 914/915 (25 July 1996) and Woo Tun-oy, "Regional economic development and disparities," in Maurice Brosseau, Suzanne Pepper and Tsang Shu-ki (eds.). The China Review 1996 (Hong Kong: Chinese University Press, 1996), pp. 281-313.
23. For the economic legacy of path dependence, see David Stark, "Path dependence and privatization strategies in East Central Europe," East European Politics and Society, Vol. 6, No. 1 (1991), pp. 17-54. And for the inverse relationship between the past priority for state enterprises and heavy industrial development and the pace of growth, see Margot Schueller, "Liaoning: struggling with the burdens of the past," in Goodman, China's Provinces in Reform, pp. 93-121.
24. For cultural arguments on the East Asian NIEs, see Jon Woronoff, Asia's "Miracle" Economies (Armonk, NY: M. E. Sharpe, 1992), 2nd ed., pp. 128,279,295-96,312. For the case of Shanghai, see Wong Siu-lun, "The entrepreneurial spirit: Shanghai and Hong Kong compared," in Y. M. Yeung and Sung Yun-wing (eds.), Shanghai: Transformation and Modernization under China 's Open Policy (Hong Kong: Chinese University Press, 1996), pp. 26-48. For Wenzhou's entrepreneurial culture, see Li Haoran, Wenzlwu xin yueqian (Wenzliou's New Leap) (Shanghai: Shanghai Academy of Social Sciences Press, 1996), pp. 2-4; and Yia-Ling Liu, "Reform from below: the private economy and local politics in the rural industrialization of Wenzhou," The China Quarterly, No. 130 (June 1992), pp. 292,299, 307-313.
25. See Crane, The Political Economy of China's Special Economic Zones; and chapters on Guangdong and Shandong in Cheung, Chung and Lin, Provincial Strategies of Economic Reform.
26. For an excellent Chinese account of this policy factor, see Sang Baichuan, Quyu kaifang zhanlüe Inn: qlngxle zJiengce yu quanfangwei kaifang (On the Strategy of Regional Opening - Discriminating Policies and All-Directional Opening) (Beijing: Zhongguo qingnian chubanshe, 1996). The disadvantages of lacking these privileges in inland cities are well illustrated in Solinger, "Despite decentralization," pp. 16-32. For the disparities between coastal and inland cities in Shandong due to discriminant preferential policies, see Jae Ho Chung, 'The political economy of development and inequality in Shandong," in Goodman, China's Provinces in Reform, pp. 127-157.
27. No elaboration is needed on the importance of the scope of preferential policies a city gets to enjoy. The timing of their provision is also crucial since earlier recipients would normally have more time to adapt themselves to the new arrangements and could attract more businesses as selective deregulation promises higher profit returns.
28. For Zhangjiagang's success, see China Daily, 15 January 1997; Cheng Li, Rediscovering China: Dynamics and Dilemmas ofRefortn (Lanham: Rowman and Littlefield, 1997), pp. 153-164; and David Zweig, "Institutional constraints, path dependence, and entrepreneurship: comparing Nantong and Zhangjiagang, 1984-1996," in Chung, Cities in China, ch. 7. And for Wenzhou, see Keith Forster and Yao Xianguo, "A comparative analysis of economic reform and development in Hangzhou and Wenzhou cities," in Chung, Cities in China, ch. 3.
29. See Cheung, Chung and Lin, Provincial Strategies of Economic Reform; and Peter T. Y. Cheung, "The political context of Shanghai's economic development," in Yeung and Sung, Shanghai, pp. 66-75.
30. For Wuhan's lobbying efforts, see Schroeder, 'Territorial actors as competitors for power," pp. 283-307; and for Chongqing's such efforts, see Hong, "A tale of two cities: a comparative study of the political and economic development in Chengdu and Chongqing," in Chung, Cities in China, ch. 6.
31. See Wade, Governing the Market, ch. 10; and Christopher Ellison and Gary Gereffi, "Explaining strategies and patterns of industrial development," in Gary Gereffi and Donald L. Wyman (eds.), Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton: Princeton University Press, 1990), pp. 391-94.
32. For the ideological constraints on local leaders in Xiamen in the earlier years of reform, see Howell, China Opens Its Doors, ch. 4. And for the adverse impact of ideological issues on Ningbo's development, see Ge Hongsheng, You Zliongguo tesedeyanhai chengshifazhan zhi lu (The Road to Coastal City Development with Chinese Characteristics) (Beijing: Renmin chubanshe, 1997), pp. 230-240.
33. Considerable variations exist regarding the importance of foreign economic relations in local economic development. The so-called "Pearl [Zhu] River model" (Zhtijiang moshi) -applicable to southern Guangdong, coastal Fujian and Shandong - is known for its heavy dependence on foreign trade and investment. In contrast, the "southern Jiangsu model" (Siinan moshi) and "Wenzhou model" (Wenzliou nioshi) have depended less on foreign economic linkages, although their dependence seems to have increased in the 1990s. For the three models, see Zhou Erjin and Zhang Yulin, Cheng-xiang xietiaofazlian yanjiu (Study of Co-ordinated Development bet\veen Cities and Townships) (Nanjing: Jiangsu rcnmin chubanshe, 1991), chs. 1-3.
34. For the importance of international linkages, see Chowdhury and Islam, The Newly Industrialising Economies of East Asia, ch. 7; chapters by Womack and Zhao, Yahuda, Ferdinand and d'Hooghe in Goodman and Segal, China Deconstructs; and Zweig, "Developmental communities on China's coast," pp. 253-274.
35. See Gernot Grabher and David Stark (eds.), Restniciuring Net\mrks in Post-Socialism: Legacies, Linkages and Localities (Oxford: Oxford University Press, 1997).
36. Qingdao's rapid growth was noted in Hong Kong as well as Western media. See "Heady times for Qingdao," China Business Review Special in South China Morning Post, 30 May 1993; and Dexter Roberts, "From Mao central to capitalist hotbed," Business Week, 9 October 1995, pp. 60-61.
37. For a one-to-one comparison between two "coastal open cities" with deputy-provincial status, see Jae Ho Chung, "Preferential policies, municipal leadership, and development strategies: a comparative analysis of Qingdao and Dalian," in Chung, Cities in China, ch. 4.
38. As early as 1928, Qingdao was already one of the six centrally administered municipalities in China, along with Beijing, Nanjing, Shanghai, Tianjin and Xi'an. See Wu Peilun, Overview of Contemporary China's Government, p. 181.
39. See Qingdao Municipal Office for Historical Research, Qingdao nianjian 1992 (Qingdao Yearbook 1992) (Qingdao: Zhongguo baike quanshu chubanshe, 1993), p. 43.
40. See Chung-tong Wu, Shun-zan Ye and Shi-kuan Zhou, "Qingdao: from colonial port to export base," in Yue-man Yeung and Xu-wei Hu (eds.), China's Coastal Cities: Catalysts for Modernization (Honolulu: University of Hawaii Press, 1992), pp. 85-107.
41. Published materials on Qingdao used for this study made no reference at all to such cultural traits, unlike those on Wenzhou, the Zhu [Pearl] River Delta, Dalian and the Sunan region. Interviewees, too, characterized Qingdao as a highly conservative city with little entrepreneurial heritage to speak of.
42. The ratio between light and heavy industries, in terms of their total output values, was 86:14 in 1950, which went down to 71:29 in 1957 and further down to 58:42 in 1960. The ratio was still 60:40 as of 1978. See Research Office of the Shandong Provincial Party Committee, Shandong shengqing (Facts and Figures of Shandong Province) (Jinan: Shandong renmin chubanshe, 1989), pp. 472-74, 485. For the adverse impact of the Great Leap and the Cultural Revolution on Qingdao's economy, see Pang Xiuzheng, Lin Shuxiang and Wang Yongchang (eds.), Shandong jingjiyanjiu (Studies ofShandong 's Economy) (Jinan: Shandong rcnmin chubanshe, 1996), Vol. 1, pp. 287-88.
43. For an interesting comparison between more successful Chengdu with fewer preferential policies and less successful Chongqing with more privileges, see Hong, "A tale of two cities."
44. The figures for GVAO and GVIO are 14.2 and 26.3 for 1985-90 and 17.1 and 12.6 for 1990-95 respectively.
45. Shandong's exports in 1995 increased over those of 1990 by 185%, a little more than one-quarter of the increase in Qingdao's exports. In terms of foreign direct investment, Qingdao led the province by 400%. For Qingdao's role as the "dragonhead" in Shandong's development, see South China Morning Post, 7 September 1995.
46. Four principal prerogatives came with the designation: the exemption of duties on imports of advanced technologies and equipments for plant renovation (50% taxes were levied since 1994); the granting of authority to establish "development zones" (kaifaqu) where enterprises were allowed "two-year tax exemption and three-year tax reduction," as well as a 15% enterprise tax rate (as opposed to usual 33 to 55%) after the initial five years; the provision of approval authority for foreign-invested projects up to USS5 million in the early years and later to US$30 million; and the authority to approve both in- and out-bound international business delegations without going through the provincial authorities. See "Zhonggong zhongyang guowuyuan guanyu pizhuan yanhai bufen chengshi zuotanhui jiyao de tongzhi" ("Circular on the dissemination by the Party centre and the State Council of summary of the discussion meeting attended by some coastal cities: 4 May 1984"), in the Special Zones Office of the State Council, Zlwngguo duiwai kaifang zJiinan (Guide to China 's Opening to the Outside) (Kunming: Yunnan renmin chubanshe, 1993), pp. 153-59. For the evolution of preferential tax policies for coastal open cities, see Zheng Yanbiao (ed.), Zhongguo yanhai kaifang chengshi liyong walzlfalil wenti (Legal Issues Pertaining to the Use of Foreign Capital by China's Coastal Open Cities) (Shanghai: Shanghai shehui kexueyuan chubanshe, 1994), pp. 102-104.
47. Investment statistics are from interviews in Qingdao in 1994 and the figures include joint-equity and co-operative ventures, assembly-and-processing projects and foreign loans. Another important attachment to the designation was the permission for Qingdao to enact local legislation. In 1984-94, Qingdao enacted a total of 32 local laws and regulations mostly concerning foreign economic relations. See Qingdao ribao (Qingdao Daily), 17 December 1994.
48. Thisjihua danlie policy had been implemented twice in the pre-reform era: on six cities during 1954-58; and on nine cities during 1964-67. SeeZhu Ganwei and Pu Xingzu, Dangdai Zhongguo xlngdieng (Contemporary China's Public Administration) (Shanghai: Fudan University Press, 1993), p. 327. For the content of the CEC policy, see State Economic System Reform Commission (ed.), Zliongguo gaige kaifang shidian (Compendia of Issues and Events in China's Reform and Opening) (Foshan: Guangdong renmin chubanshe, 1993), pp. 133-140.
49. Three CECs of Guangzhou, Nanjing and Chengdu did not get such privileges in fiscal arrangements.
50. Perhaps, the CEC policy was initially intended as an administrative compensation for inland provincial capitals svith limited oversea access. For the designation of CECs, see Dorothy J. Solinger, "The place of the central city in China's economic reform: from hierarchy to network?" in China's Transition from Socialism: Statist Legacies and Market Reforms 1980-1990 (Armonk, NY: M. E. Sharpe, 1993), p. 212
51. Another version, however, suggests that it was Shandong that blocked Qingdao's bid for the CEC designation. According to this version, it was Li Chang'an who objected to Qingdao's joining the prestigious club of CECs.
52. For such tension and conflict, see Schroeder, 'Territorial actors as competitors for power," pp. 293-304; Solinger, "City, province, and region," pp. 172-181 and "The place of the central city in China's economic reform," pp. 216-218; and Zhou Xuewen and Fang Xin, "Jihua danlie shi yu zhongyang he sheng shiquan huafen wenti" ("Problems of delineating the boundaries of authority for the center, provinces and central economic cities") in the Ministry of Personnel (ed.), Difangjigou gaige yanjiu (Study of Local Administrative Reform) (Beijing: Central Party School Press, 1992), pp. 281-87.
53. The same reasoning applied to Hubei's initial acceptance of Wuhan's CEC proposal. See Schroeder, 'Territorial actors as competitors for power," p. 292.
54. Under this arrangement, remittances were determined not by the sharing rate but by the fixed amount. Therefore, the provinces were greatly encouraged to raise more revenues, which would then be reinvested and retained within the region. See Song Xinzhong, Zliongguo caizlieng tizlii gaige yanjiu (A Study of China 's Fiscal Reform) (Beijing: Zhongguo caizheng jingji chubanshe, 1992), pp. 59-62.
55. Interviews in Jinan and Qingdao in 1994; and Guo Yanzhong, "Fenshuizhi yanjiu zhuanji" ("Special edition on the study of the tax-sharing system"), Jingji yanjiu cankao. No. 401 (1 January 1994), p. 41.
56. In August 1993, the State Council decided to deprive the eight provincial capitals of their CEC status, leaving only six non-capital CECs of Qingdao, Ningbo, Dalian, Chongqing, Xiamen and Shenzhen. See Jae Ho Chung, "Central-provincial relations," in Lo Chi Kin, Suzanne Pepper and Tsui Kai Yuen (eds.), China Review 1995 (Hong Kong: Chinese University Press, 1995), pp. 3.18-21.
57. Interview in Qingdao in 1995.
58. For such a package measure, see State Economic System Reform Commission, Compendia of Issues and Events, pp. 137-38; and for the case of Wuhan which received 56 enterprises from Beijing and Hubei, see Solinger, "Despite decentralization," pp. 19-20.
59. Other enterprises which had been planned to be devolved but remained with the provincial or ministerial units include Qingdao Shipping Corporation and Qingdao Engine Plant under the provincial authorities, Sifang Locomotive Company under the Ministry of Railways, Qingdao Textile Machinery Plant under the Ministry of Textile Industry, and Beihai Shipbuilding Company under the Ministry of Communication and Transport. Interviews in Qingdao in 1994.
60. The information on the ferry routes was provided by interviews in Jinan in 1994.
61. There were two special tax incentives for ETDZs in general: the standard tax rate for foreign-invested firms in the ETDZ was 15% instead of 33%; and real estate taxes for
62. foreign-invested firms in the ETDZ were exempted for the first three years. Moreover, the zone's approval ceiling for foreign-invested projects was US$30 million, the same as those for Qingdao and Shandong. Information from Q'mgdao Yearbook 1992, pp. 47, 49; Wang Shengde, 'Tan Qingdao jingji jishu kaifaqu baoshuiqu he gaoxin jishu chanye kaifa shiyanqu de kaifa moshi he xiangguan zhengce" ("On Qingdao's development model and relevant policies for the economic and technological development zone, bonded zone and high-tech industrial development experimental zone") in Yanhai jingmao (Coastal Economy and Trade), No. 5 (1993), p. 34; and interviews in Qingdao in 1994 and 1996.
63. For the most preferential terms granted to the "bonded zones," see the Special Zones Office of the State Council (ed.), Zliongguo duiwai kaifang diqu touzl huanjing lie zliengce (Investment Environments and Policies in China 's Opened Areas) (Kunming: Yunnan renmin chubanshe, 1993), pp. 170-183; and Ling Gao, "Bi tequ geng te de baoshuiqu" ("Bonded zones that are more special than the Special Economic Zones") in Yanhai jingmao. No. 6 (1993), pp. 41-42. Unlike the ETDZ which specialized more in exports, the "hi-tech science park" is devoted to manufacturing industries - like electronics, machinery and biochemical products - more for domestic sales and technology transfer. The "state tourism and leisure zone" is empowered to provide lower tax rates (usually 24%) for tourism enterprises located within the zone and to approve projects on golf clubs, foreign-invested department stores and so on. For "state tourism and leisure zones," see Pang Shaofeng, "Luyou wenhua yu guojia luyou dujiaqu" ('Tourism culture and state tourism and leisure zones") in Yanhai jingmao, No. 6 (1993), pp. 48-50. For Qingdao's high-tech technological and industrial development zone, see Qingdao Yearbook 1992, pp. 66-69 and Qingdao ribao, 17 December 1994. For favourable tax arrangements for these state-designated zones, see the Ministry of Finance (ed.), Zliongguo shuishou Mdu (China's Taxation System) (Beijing: Qiye guanli chubanshe, 1996), pp. 221-26.
64. Interview in Qingdao in 1996. The same 16 cities were also approved to set up their urban co-operative banks. See China Dally, 10 January 1996.
65. Other than SEZs and three provincial-level municipalities, only Guangzhou and Dalian were able to share this privilege. China Dally, 12 January 1996.
66. Interviews in Qingdao in 1994.
67. Qingdao's retention rate of 11.7% in 1985 was less than a third of Chongqing (37.5%), Shenyang (36.9%), Harbin (38.12%) and Dalian (34.14%), and even lower than Wuhan's 20%. See DangdaiZhongguo caizlieng (Contemporary China 's Finance) (Beijing: Zhongguo shehui kexue chubanshe, 1988), Vol. 1, p. 377.
68. The ratio of actual remittances over total revenues, calculated on the basis of the data provided by the Qingdao Finance Bureau, fell from 77.6% in 1986 to 68.4% in 1990 and to 55.7% in 1993. See Christopher Heady, "Municipal public finance," in Wong, Financing Local Government, p. 155.
69. Qingdao Statistical Yearbook 1995, p. 235 and interviews in Qingdao in 1996.
70. Currently, the five cities refer to Jiaozhou, Jiaonan, Pingdu, Laixi and Jimo. The seven districts are Huangdao, Laoshan, Chengyang, Lichang, Sifang, Northern and Southern.
71. For structural constraints imposed by higher-level units, see Hong, "A tale of two cities"; Schroeder, 'Territorial actors as competitors for power," pp. 293-304; and Lam Tao-chiu, "Institutional constraints, leadership and development strategies: Panyu and Nanhai under reform," in Chung, Cities in China, ch. 8.
72. For Shandong's regional development strategy, see Jae Ho Chung, "The political economy of development and inequality in Shandong," pp. 138-142.
73. Yu Dajiang and Li Xingdi (eds.), Huanbohai jingjiquan: Q'mgdao juan (The Bohai-Rim Economic Circle: Volume on Q'mgdao) (Qingdao: Qingdao chubanshe, 1996), pp. 98, 102.
74. See Wang Shengde, "An Pudong moshi jianshe Huangdao xin jingjiqu" ("Establish the new Huangdao Economic Zone in accordance with the Pudong model") in Yanhai jingmao. No. 7 (1993), pp. 11-12.
75. For the pervasive "leftist" influence in Shandong during the 1980s, see Research Office of the Shandong Provincial Party Committee, Shandong sishi nian (Last Forty Years in Shandong) (Jinan: Shandong renmin chubanshe, 1989), p. 140. For Shandong's self-assessment of its conservatism during the earlier period of reform, see Renmin ribao, 15 May 1988.
76. Shandong Provincial Party Committee, Facts and Figures, p. 478.
77. The Huangdao ETDZ did not have a sufficient port facility until 1992 when the construction of the Qianwan Harbour was completed. The Jiaohuang Railway was completed only in 1993. As of 1992, the Huangdao ETDZ's foreign exchange earnings were less than half of those of the Yantai ETDZ. See Shandong Provincial Statistical Bureau, Shandong tongji nianjian 1993 (Shandong Statistical Yearbook) (Beijing: Zhongguo tongji chubanshe, 1993), p. 489.
78. For the reshuffle, see Malcomb Lamb, Directory of Officials and Organizations in China (Armonk, NY: M. E. Sharpe, 1994), p. 1132. Compared with Fuzhou (five each), Xiamen (four and five), and Dalian (five and three), Qingdao's turn-over rate was certainly much higher.
79. Zhang Zhenhuan also served as the deputy head of the Leading Group for the Development of Electronics and Computers under the State Council, and he was also a vice-chairman of the Jiangsu Branch of the Chinese People's Political Consultative Conference until his death in 1994. ForZhang's biographical profile, see Wolfgang Bartke, Who 's Who in the People's Republic of China, 3rd ed. (München: Saur, 1991), Vol. 2, p. 829; and Zhongguo gongchandang retiming dacidian 1921-1991 (Who's Who in the Chinese Communist Party, 1921-1991) (Beijing: Zhongguo guoji guangbo chubanshe, 1991), p. 436.
80. For Yu's biographical backgrounds, see He Pin and Gao Xin, Zlionggong taitidang (Princelings in Communist China) (Hong Kong: Mingjing Publishing House, 1992), pp. 243-246; Zliongguo retiming dacidian (Who's Who in China: Current Leaders) (Beijing: Waiwen chubanshe, 1994) p. 819; and Qingdao nianjian 1995 (Qingdao Yearbook 1995) (Qingdao: Shandong youyi chubanshe, 1995), p. 309.
81. Some suggest that Yu's affiliation with the Ministry of Electronics Industry was facilitated by his father-in-law who served as the deputy head of the Leading Group for the Development of Electronics and Computers under the State Council. This institutional affiliation also allegedly linked him with Jiang Zemin who was the Ministry's leading official in the early 1980s. See South China Morning Post, 30 May 1993.
82. One suggested that this particular connection might have been related to Deng Nan who had long working experiences in the science and technology field where Yu's father and father-in-law worked for a long time.
83. For Hong Kong media's coverage of Yu's accomplishments in Yantai, see "Yantai shizhang Yu Zhengsheng" ("Yantai's Mayor - Yu Zhengsheng") in Guangjiaojing yuekan (Magnifying Glass Monthly), September 1988, pp. 82-83.
84. Formally, Yu became a "centrally appointed official" (Jingguan) in 1990 since mayors and Party (deputy) secretaries of CECs are on the "Job Title List of Cadres Managed Centrally by the CCP." See John P. Burns, "Strengthening central CCP control of leadership selection: the 1990 nomenklatura," The China Quarterly, No. 138 (June 1994), pp. 479-480.
85. Compared with the nation-wide data on mayors for 1986, Yu seems more exceptional than typical, as he is an "outsider" without extensive local work experience before assuming the mayoral position. As of 1986, almost 60% of all China's mayors were natives and another 13% were from the neighbouring provinces, although larger cities tended to have higher proportions of outsiders. See Cheng Li and David Bachman, "Localism, elitism, and immobilism: elite formation and social change in post-Mao China," World Politics, Vol. 42, No. 1 (October 1989), pp. 71, 78-79, 81. For the importance of family backgrounds in the politics of recruitment, see Jae Ho Chung, "The politics of prerogatives in socialism: the case of Taizidang in China," Studies in Comparative Communism, Vol. 24, No. 1 (March 1991), pp. 58-76.
86. An interviewee provided a telling insight. According to him, there are hundreds, if not thousands, of "princelings" who all look for good opportunities to prove themselves. Yet not all of them succeed. That is, even among the princelings, there is fierce competition. He suggested that a good example is a competitive relationship between Yu Zhengsheng of Qingdao and Bo Xilai (Bo Yibo's son) of Dalian. He further argued that, given the handicap Yu has - his brother, Yu Qiangsheng, formerly with the Ministry of Public Security, had escaped to America in 1986 - Yu could not have made it without extraordinary efforts and accomplishments of his own. Yu's accomplishments in Qingdao landed him in the positions of a full member of the 15th Central Committee and Minister of Construction in 1997. For Jiang Zemin's positive assessment of Yu's record in Qingdao, see South China Morning Post, 21 March 1998.
87. Yu's role during 1989-91 remains veiled as he was the second-ranking official, while Guo Songnian as the Party secretary presumably had the final say on all crucial issues. Yu's role became more clearly identifiable after he replaced Guo in 1992 to serve concurrently as mayor and Party secretary.
88. The idea of moving the government complex to the eastern area had been floated since the late 1970s, but no leadership dared to act upon it. Shanghai's Pudong Development is alleged to have worked as a catalyst for the decision. Interviews in Qingdao in 1994.
89. The idea of converting the Qingdao airport into a civilian one originated in the late 1970s. And in 1985 it was allowed for civilian transportation although the ownership of the airport still belonged to the Navy. Yu's family backgrounds allegedly played a crucial role. How to compensate for the Navy's construction of a new airport is a pending issue, as it requires a huge sum of money out of Qingdao's budget. Interviews in Qingdao in 1996; and Li Xingdi,
90. Interviews in Qingdao in 1994.
91. For Western coverage of Yu's role in setting up these zones, see Business Week, 9 October 1995, p. 61.
92. The idea of MPO originated from Shanghai where Zhu Rongji first established a unit called MPO. The idea was soon adopted by Nanjing and later by Qingdao. One key difference, however, is that Qingdao's MPO gets involved only in the process of initiating projects. Once the contract is signed, the main responsibility goes to the functional departments of the municipal government. On the other hand, Shanghai's MPO (zliongdian gongcheng bangongshf) gets involved only in the post-contract phase. Interviews in Qingdao in 1994 and 1996.
93. Details of this organization are provided in a later section.
94. Allegedly, the information on Beijing's feasibility study of "bonded zones" was collected by this office which immediately relayed it to the municipal government. Interview in Qingdao in 1994.
95. These five functions are listed in Qingdao Yearbook 1992, pp. 70-71. Items 1 and 4 are particularly interesting since they make it no secret that the city wants to sustain a good working relationship with the central government and the State Council and to exert influence over the centre's policy.
96. Interviews in Qingdao in 1994.
97. See, for instance, You-tien Hsing, Making Capitalism in China: The Taiwan Connection (New York: Oxford University Press, 1998), chs. 5-7.
98. Refer to Tables 2 and 3 for the very weak presence of foreign economic relations in Qingdao's economy during the 1980s.
99. For the designation, see South China Morning Post, 25 October 1988.
100. See Han Limin and Wu Gang (eds.), Zlianhou Hanguojingjiyu Zliong-Han jinginao guaim (Korea's Post-war Economy and Sino-Korean Economic Relations) (Qingdao: Qingdao haiyang daxue chubanshe, 1995), pp. 222-25. For the visa-issuing privileges granted to Qingdao with respect to South Koreans, see Qingdao Municipal Archives Office (ed.), Qingdao shiztii: waishi qiaowu z/ii (Qingdao Historical Gazeteer: Volume on Foreign Affairs and Overseas Chinese) (Beijing: Xinhua chubanshe, 1995), p. 19.
101. For such perceptions in general, see Howell, China Opens Its Doors, p. 25.
102. Interviews in Qingdao in 1996 and 1998.
103. See He Lianhua, Han Yanwei, Wang Dongkai and Li Binglie, "Qingdaoshi sanzi qiye fazhan de sikao" ("Thoughts on the development of foreign-invested firms in Qingdao"), in Gitojijingji hezuo (International Economic Co-operation), No. 9 (1991), p. 14.
104. The following paragraphs are based upon the interview with Wang Yan, chairman of the Qingdao Sub-Council of the China Council for the Promotion of International Trade (CCP1T) in 1994.
105. Qingdao's efforts in improving its "hard environment" are well noted. By 1990, the chronic problems with steady supply of electricity and water for industrial production were basically resolved. Jiqing Super Highway linked Qingdao with Jinan and Dezhou, and the capacity of Qingdao's harbour was raised from 28 million tons in 1987 to 42 million tons in 1994. See Ma Yannong, "Qingdao fazhan waixiangxing jingji de zhanlüe shexiang" ("Strategic thinking about the development of 'outward-oriented economy' in Qingdao") in Shandongjihuajingji (Shandong 's Planned Economy), No. 4 ( 1987), pp. 20-22; and Qingdao Yearbook 1995, p. 222.
106. The figure of 20 days is only for projects handled by CCPIT. Interview in Qingdao in 1996. In the area of foreign trade, too, Qingdao considerably simplified the inspection procedures. Instead of carrying out inspections by boarding vessels, it opened an office to conduct inspections on land. See South China Morning Post, 5 May 1995. Such measures were also closely related to the city's desire to turn itself into a "free port." See Ling Gao, "Bijian Qingdao ziyougangqu" ("Establish the free-port zone in Qingdao") in Yanhai jingmao, No. 5 (1993), pp. 38-10.
107. Up till very recently, the most complete line of services has been provided only for South Korean investors through the CCPIT system, which was originally developed during the period when China had no diplomatic relations with South Korea. According to an interviewee, the CCPIT of Qingdao recently (May 1994) established the Department of Japan Affairs (Ribeti chu) upon strong requests from Japanese firms which desired to receive the same services. For more details of the services provided by CCPIT, see "Cong shiji chufa chuangchu yi tiao you Qingdao lese de liyong waizi xin luzi" ("On the basis of the actual situation, create a new path of foreign investment with Qingdao's characteristics"), Qingdao zliengkan (Political Readings of Qingdao), March 1994, pp. 59-63.
108. This measure was allegedly taken by Yu Zhengsheng himself who also devised the widely publicized "hotlines to the mayor" for foreign investors.
109. Interview in Qingdao in 1994.
110. The author's interviews with six South Korean firms in Qingdao also supported the argument. After Japanese investors were catered by CCPIT in 1994, the number of Japanese projects in Qingdao also rose from 13 in 1994 to 41 in 1995. See Qingdao ribao, 17 January 1996.
111. For various problems related to joint-equity ventures, see Jonathan R. Woetzel, China 's Economic Opening to the Outside World: The Politics of Empowerment (New York: Praeger, 1989), pp. 114-123. The number of South Korean FWOs in Qingdao was calculated from the CCPIT list of South Korea-invested Firms in Qingdao and the percentage of FWOs in Qingdao was calculated from Qingdao Statistical Yearbook 1993, pp. 277-78; 7992, p. 278; and 7997, p. 269. Considering that Qingdao's general policy was to encourage only medium-sized to large ventures in electronics, machinery and chemical industries to adopt the FWO format, the city was clearly giving South Korean investment a special treatment for
112. the purpose of creating a "long-term" relationship. For Qingdao's general policy in this regard, see He Lianhua et al., "Thoughts on the development of foreign-invested firms in Qingdao," p. 14.
113. For the case of South Korean investment in Qingdao, see Yu Dajiang and Li Xingdi, The Bohal-Rim Economic Circle, p. 116. The strategy of combining agriculture, processing and trade is another priority policy in Qingdao. See Gao Changli, "Shandong nongcun gaige yu xianyu jingji fazhan" ("Shandong's rural reform and its county-level economic development") in Nongye jingji wenti (Problems of Agricultural Economy), No. 8 (1991), p. 18; Dazhong ribao, 25 December 1992; and Qingdao Economic System Reform Commission, "Fahui chengshi gongneng tuidong chengxiang jingji fazhan yu gaige de yitihua" ("Develop towns and villages together by activating the energy of the city"), in He Guanghui (ed.), Chengshi gaige zhi lu (The Road to Urban Reform) (Beijing: Gaige chubanshe, 1992), pp. 272-280.
114. In 1993, there were six foreign-invested projects committed in Qingdao whose size exceeded US$10 million, and four of them came from South Korea. For South Korea's investment in China and the impact of diplomatic normalization on it, see Jae Ho Chung, "The political economy of South Korea-China bilateralism: origins, progress and prospects," in Ilpyong Kim and Hong Pyo Lee (eds.), Korea and China in A New World: Beyond Normalization (Seoul: The Sejong Institute, 1993), pp. 283, 301.
115. Zhao Haicheng, "Lim Shandong jingji kaifangqu yu dongya diqu dejingji hezuo" ("On Shandong's economic open areas and their economic co-operation with the East Asian region"), in Tequyu GangAo jingji (SpecialZones and Economies in Hong Kong andMacau), No. 2 (1991), p. 52; and Qingdao Statistical Yearbook 1997, p. 229.
116. Interviews in Qingdao in 1994 and 1996.
117. Information from Zhang Wanqing, Quyu hezuo yu jingji gangluo (Inter-regional Co-operation and Economic Linkages) (Beijing: Jingji kexue chubanshe, 1987), pp. 185-192; Zhongguo hengxiang jingji nianjian 7992 (The Yearbook of Chinese Horizontal Economy) (Beijing: Zhongguo shehui kexue chubanshe, 1993), pp. 275,277; and interviews in Jinan in 1995 and in Qingdao in 1996.
118. The Qingdao municipal government has sought to help out Korea-invested firms in difficulties induced by Korea's recent financial crisis by way of devising various measures including tax respite and exemptions of various surcharges. See Duiwai jingmao yanjiu (Studies of Foreign Economic Relations), No. 826, 27 May 1998, p. 12.
119. China Dally Business Weekly, 15 October 1995.
120. For obvious reasons, Hong Kong media had a very close coverage of this controversy. See South China Morning Post, 25 January, 27 April, 23 August, and 15 and 18 September 1995.
121. By November 1993, the total number of various kinds of development zones in China dropped from 3,000 to 500 and over 90% of those established by sub-provincial authorities were closed down. Zliongguo gaige kaifang shhru nian dashiji (Fifteen-Year Chronology of China's Reform and Opening) (Beijing: Xinhua chubanshe, 1994), pp. 225, 238, 240.
122. Other notable examples include Xi Jinping (Xi Zhongxun's son) as the Party secretary of Fuzhou; Zeng Qinghong (Zeng Shan's son) as the deputy Party secretary of Shanghai; Liu Yuan (Liu Shaoqi's son) as Zhengzhou's deputy mayor; Chen Yuan (Chen Yun's son) as a member of the Beijing Party Committee; and Bo Xilai (Bo Yibo's son) as Dalian's mayor.
123. For a useful discussion of political entrepreneurs and their roles in the promotion of growth, see Schneider and Teskc, Public Entrepreneurs, chs. 5-6.