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A Sub-Provincial Recipe of Coastal Development in China: The Case of Qingdao*

Published online by Cambridge University Press:  12 February 2009

Jae Ho Chung
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No monocausal explanation will suffice to account for the complex process of economic development. At different times and under different politico-economic circumstances, different combinations of actors and institutions are involved as agents of development, which include factories, investment banks, entrepreneurial bourgeoisie, foreign capital and the state. When “telescoping” the arduous process of development is the key imperative, the role of the state becomes particularly crucial in designing overall development strategies, governing the market by getting the prices wrong, and controlling the major sources of financing development. It should be noted, however, that the state is a multi-layered structure of authority with its own intra- and inter-governmental dynamics. As the extensive literature on the East Asian Newly Industrializing Economies (NIEs) almost uniformly adopts the highly encompassing term of state, it largely fails to differentiate the roles performed by the central and local governments in executing “developmental intervention.”

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Research Notes
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The China Quarterly , Volume 160 , December 1999 , pp. 919 - 952
Copyright
Copyright © The China Quarterly 1999

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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 Peilun, Wu, Overview of Contemporary China's Government, p. 181.Google Scholar

39. See Qingdao Municipal Office for Historical Research, Qingdao nianjian 1992 (Qingdao Yearbook 1992) (Qingdao: Zhongguo baike quanshu chubanshe, 1993), p. 43.Google Scholar

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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, 485Google Scholar. For the adverse impact of the Great Leap and the Cultural Revolution on Qingdao's economy, see Xiuzheng, Pang, Shuxiang, Lin and Yongchang, Wang (eds.), Shandong jingji yanjiu (Studies of Shandong's Economy) (Jinan: Shandong renmin chubanshe, 1996), Vol. 1, pp. 287–88.Google Scholar

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.”Google Scholar

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”Google Scholar in Shandong's development, see South China Morning Post, 7 09 1995.Google Scholar

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 US$5 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, Zhongguo duiwai kaifang zhinan (Guide to China's Opening to the Outside) (Kunming: Yunnan renmin chubanshe, 1993), pp. 153–59Google Scholar. For the evolution of preferential tax policies for coastal open cities, see Yanbiao, Zheng (ed.), Zhongguo yanhai kaifang chengshi liyong waizi falü 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.Google Scholar

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48. This jihua danlie policy had been implemented twice in the pre-reform era: on six cities during 1954–58; and on nine cities during 1964–67. See Ganwei, Zhu and Xingzu, Pu, Dangdai Zhongguo xingzheng (Contemporary China's Public Administration) (Shanghai: Fudan University Press, 1993), p. 327Google Scholar. For the content of the CEC policy, see State Economic System Reform Commission (ed.), Zhongguo gaige kaifang shidian (Compendia of Issues and Events in China's Reform and Opening) (Foshan: Guangdong renmin chubanshe, 1993), pp. 133–140.Google Scholar

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 with limited oversea access. For the designation of CECs, see Solinger, Dorothy J., “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. 212Google Scholar

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. 293–304Google Scholar; Solinger, , “City, province, and region,” pp. 172–181Google Scholar and “The place of the central city in China's economic reform,” pp. 216–218Google Scholar; and Xuewen, Zhou and Xin, Fang, “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.), Difang jigou gaige yanjiu (Study of Local Administrative Reform) (Beijing: Central Party School Press, 1992), pp. 281–87.Google Scholar

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.Google Scholar

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 Xinzhong, Song, Zhongguo caizheng tizhi gaige yanjiu (A Study of China's Fiscal Reform) (Beijing: Zhongguo caizheng jingji chubanshe, 1992), pp. 59–62.Google Scholar

55. Interviews in Jinan, and Qingdao, in 1994Google Scholar; and Yanzhong, Guo, “Fenshuizhi yanjiu zhuanji” (“Special edition on the study of the tax-sharing system”), Jingji yanjiu cankao, No. 401 (1 01 1994), p. 41.Google Scholar

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 Chung, Jae Ho, “Central-provincial relations,” in Kin, Lo Chi, Pepper, Suzanne and Yuen, Tsui Kai (eds.), China Review 1995 (Hong Kong: Chinese University Press, 1995), pp. 3.18–21.Google Scholar

57. Interview in Qingdao, in 1995.Google Scholar

58. For such a package measure, see State Economic System Reform Commission, Compendia of Issues and Events, pp. 137–38Google Scholar; and for the case of Wuhan which received 56 enterprises from Beijing and Hubei, see Solinger, , “Despite decentralization,” pp. 19–20.Google Scholar

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.Google Scholar

60. The information on the ferry routes was provided by interviews in Jinan, in 1994.Google Scholar

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 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 Qingdao Yearbook 1992, pp. 47, 49Google Scholar; Shengde, Wang, “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. 34Google Scholar; and interviews in Qingdao, in 1994 and 1996.Google Scholar

62. For the most preferential terms granted to the “bonded zones,” see the Special Zones Office of the State Council (ed.), Zhongguo duiwai kaifang diqu touzi huanjing he zhengce (Investment Environments and Policies in China's Opened Areas) (Kunming: Yunnan renmin chubanshe, 1993), pp. 170–183Google Scholar; and Gao, Ling, “Bi tequ geng te de baoshuiqu” (“Bonded zones that are more special than the Special Economic Zones”) in Yanhai jingmao, No. 6 (1993), pp. 41–42Google Scholar. 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 Shaofeng, Pang, “Luyou wenhua yu guojia luyou dujiaqu” (“Tourism culture and state tourism and leisure zones”) in Yanhai jingmao, No. 6 (1993), pp. 48–50Google Scholar. For Qingdao's high-tech technological and industrial development zone, see Qingdao Yearbook 1992, pp. 66–69Google Scholar and Qingdao ribao, 17 12 1994Google Scholar. For favourable tax arrangements for these state-designated zones, see the Ministry of Finance (ed.), Zhongguo shuishou zhidu (China's Taxation System) (Beijing: Qiye guanli chubanshe, 1996), pp. 221–26.Google Scholar

63. Interview in Qingdao, in 1996Google Scholar. The same 16 cities were also approved to set up their urban co-operative banks. See China Daily, 10 01 1996.Google Scholar

64. Other than SEZs and three provincial-level municipalities, only Guangzhou and Dalian were able to share this privilege. China Daily, 12 01 1996.Google Scholar

65. Interviews in Qingdao, in 1994.Google Scholar

66. 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 Dangdai Zhongguo caizheng (Contemporary China's Finance) (Beijing: Zhongguo shehui kexue chubanshe, 1988), Vol. 1, p. 377.Google Scholar

67. 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 Heady, Christopher, “Municipal public finance,”Google Scholar in Wong, , Financing Local Government, p. 155.Google Scholar

68. Qingdao Statistical Yearbook 1995, p. 235Google Scholar and interviews in Qingdao, in 1996.Google Scholar

69. Currently, the five cities refer to Jiaozhou, Jiaonan, Pingdu, Laixi and Jimo. The seven districts are Huangdao, Laoshan, Chengyang, Lichang, Sifang, Northern and Southern.

70. For structural constraints imposed by higher-level units, see Hong, , “A tale of two cities”Google Scholar; Schroeder, , “Territorial actors as competitors for power,” pp. 293–304Google Scholar; and Tao-chiu, Lam, “Institutional constraints, leadership and development strategies: Panyu and Nanhai under reform,”Google Scholar in Chung, , Cities in China, ch. 8.Google Scholar

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72. Dajiang, Yu and Xingdi, Li (eds.), Huanbohai jingjiquan: Qingdao juan (The Bohai-Rim Economic Circle: Volume on Qingdao) (Qingdao: Qingdao chubanshe, 1996), pp. 98, 102.Google Scholar

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74. 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. 140Google Scholar. For Shandong's self-assessment of its conservatism during the earlier period of reform, see Renmin ribao, 15 05 1988.Google Scholar

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76. 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.Google Scholar

77. For the reshuffle, see Lamb, Malcomb, Directory of Officials and Organizations in China (Armonk, NY: M. E. Sharpe, 1994), p. 1132Google Scholar. Compared with Fuzhou (five each), Xiamen (four and five), and Dalian (five and three), Qingdao's turn-over rate was certainly much higher.

78. 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. For Zhang's biographical profile, see Bartke, Wolfgang, Who's Who in the People's Republic of China, 3rd ed. (Munchen: Saur, 1991), Vol. 2, p. 829Google Scholar; and Zhongguo gongchandang renming dacidian 1921–1991 (Who's Who in the Chinese Communist Party, 1921–1991) (Beijing: Zhongguo guoji guangbo chubanshe, 1991), p. 436.Google Scholar

79. For Yu's biographical backgrounds, see Pin, He and Xin, Gao, Zhonggong taizidang (Princelings in Communist China) (Hong Kong: Mingjing Publishing House, 1992), pp. 243–246Google Scholar; Zhongguo renming dacidian (Who's Who in China: Current Leaders) (Beijing: Waiwen chubanshe, 1994) p. 819Google Scholar; and Qingdao nianjian 1995 (Qingdao Yearbook 1995) (Qingdao: Shandong youyi chubanshe, 1995), p. 309.Google Scholar

80. 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 05 1993.Google Scholar

81. 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.

82. 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), 09 1988, pp. 82–83.Google Scholar

83. 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 Burns, John P., “Strengthening central CCP control of leadership selection: the 1990 nomenklatura,” The China Quarterly, No. 138 (06 1994), pp. 479–480.Google Scholar

84. 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 Li, Cheng and Bachman, David, “Localism, elitism, and immobilism: elite formation and social change in post-Mao China,” World Politics, Vol. 42, No. 1 (10 1989), pp. 71, 78–79, 81CrossRefGoogle Scholar. For the importance of family backgrounds in the politics of recruitment, see Chung, Jae Ho, “The politics of prerogatives in socialism: the case of Taizidang in China,” Studies in Comparative Communism, Vol. 24, No. 1 (03 1991), pp. 58–76.CrossRefGoogle Scholar

85. 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 03 1998.Google Scholar

86. 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.

87. 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.Google Scholar

88. 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 1996Google Scholar; and Xingdi, Li, “Maixiang guoji chengshi de Qingdao jichu sheshi jianshe” (“Infrastructure construction in Qingdao aspiring to become an international city”) in Dongbeiya luntan (North-east Asia Forum), No. 4 (1994), p. 72.Google Scholar

89. Interviews in Qingdao, in 1994.Google Scholar

90. For Western coverage of Yu's role in setting up these zones, see Business Week, 9 10 1995, p. 61.Google Scholar

91. 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 (zhongdian gongcheng bangongshi) gets involved only in the post-contract phase. Interviews in Qingdao, in 1994 and 1996.Google Scholar

92. Details of this organization are provided in a later section.

93. 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.Google Scholar

94. These five functions are listed in Qingdao Yearbook 1992, pp. 70–71Google Scholar. 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.

95. Interviews in Qingdao, in 1994.Google Scholar

96. See, for instance, Hsing, You-tien, Making Capitalism in China: The Taiwan Connection (New York: Oxford University Press, 1998), chs. 5–7.Google Scholar

97. Refer to Tables 2 and 3 for the very weak presence of foreign economic relations in Qingdao's economy during the 1980s.

98. For the designation, see South China Morning Post, 25 10 1988.Google Scholar

99. See Limin, Han and Gang, Wu (eds.), Zhanhou Hanguo jingji yu Zhong-Han jingmao guanxi (Korea's Post-war Economy and Sino-Korean Economic Relations) (Qingdao: Qingdao haiyang daxue chubanshe, 1995), pp. 222–25Google Scholar. For the visa-issuing privileges granted to Qingdao with respect to South Koreans, see Qingdao Municipal Archives Office (ed.), Qingdao shizhi: waishi qiaowu zhi (Qingdao Historical Gazeteer: Volume on Foreign Affairs and Overseas Chinese) (Beijing: Xinhua chubanshe, 1995), p. 19.Google Scholar

100. For such perceptions in general, see Howell, , China Opens Its Doors, p. 25.Google Scholar

101. Interviews in Qingdao, in 1996 and 1998.Google Scholar

102. See Lianhua, He, Yanwei, Han, Dongkai, Wang and Binglie, Li, “Qingdaoshi sanzi qiye fazhan de sikao” (“Thoughts on the development of foreign-invested firms in Qingdao”), in Guoji jingji hezuo (International Economic Co-operation), No. 9 (1991), p. 14.Google Scholar

103. 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 (CCPIT) in 1994.

104. 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 Yannong, Ma, “Qingdao fazhan waixiangxing jingji de zhanlüe shexiang” (“Strategic thinking about the development of ‘outward-oriented economy’ in Qingdao”) in Shandong jihua jingji (Shandong's Planned Economy), No. 4 (1987), pp. 20–22Google Scholar; and Qingdao Yearbook 1995, p. 222.Google Scholar

105. The figure of 20 days is only for projects handled by CCPIT. Interview in Qingdao, in 1996Google Scholar. 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 05 1995Google Scholar. Such measures were also closely related to the city's desire to turn itself into a “free port.” See Gao, Ling, “Bijian Qingdao ziyougangqu” (“Establish the free-port zone in Qingdao”) in Yanhai jingmao, No. 5 (1993), pp. 38–40.Google Scholar

106. 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 (Riben 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 tese de liyong waizi xin luzi” (“On the basis of the actual situation, create a new path of foreign investment with Qingdao's characteristics”), Qingdao zhengkan (Political Readings of Qingdao), 03 1994, pp. 59–63.Google Scholar

107. This measure was allegedly taken by Yu Zhengsheng himself who also devised the widely publicized “hotlines to the mayor” for foreign investors.

108. Interview in Qingdao, in 1994.Google Scholar

109. 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 01 1996.Google Scholar

110. For various problems related to joint-equity ventures, see Woetzel, Jonathan R., China's Economic Opening to the Outside World: The Politics of Empowerment (New York: Praeger, 1989), pp. 114–123Google Scholar. 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. 277–78Google Scholar; 1992, p. 278Google Scholar; and 1991, p. 269Google Scholar. 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 the purpose of creating a “long-term” relationship. For Qingdao's general policy in this regard, see Lianhua, He et al. , “Thoughts on the development of foreign-invested firms in Qingdao,” p. 14.Google Scholar

111. For the case of South Korean investment in Qingdao, see Dajiang, Yu and Xingdi, Li, The Bohai-Rim Economic Circle, p. 116Google Scholar. The strategy of combining agriculture, processing and trade is another priority policy in Qingdao. See Changli, Gao, “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. 18Google Scholar; Dazhong ribao, 25 12 1992Google Scholar; 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 Guanghui, He (ed.), Chengshi gaige zhi lu (The Road to Urban Reform) (Beijing: Gaige chubanshe, 1992), pp. 272–280.Google Scholar

112. 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 Chung, Jae Ho, “The political economy of South Korea-China bilateralism: origins, progress and prospects,” in Kim, Ilpyong and Lee, Hong Pyo (eds.), Korea and China in A New World: Beyond Normalization (Seoul: The Sejong Institute, 1993), pp. 283, 301.Google Scholar

113. Haicheng, Zhao, “Lun Shandong jingji kaifangqu yu dongya diqu de jingji hezuo” (“On Shandong's economic open areas and their economic co-operation with the East Asian region”), in Tequ yu CangAo jingji (Special Zones and Economies in Hong Kong and Macau), No. 2 (1991), p. 52Google Scholar; and Qingdao Statistical Yearbook 1997, p. 229.Google Scholar

114. Interviews in Qingdao, in 1994 and 1996.Google Scholar

115. Information from Wanqing, Zhang, Quyu hezuo yu jingji gangluo (Inter-regional Co-operation and Economic Linkages) (Beijing: Jingji kexue chubanshe, 1987), pp. 185–192Google Scholar; Zhongguo hengxiang jingji nianjian 1992 (The Yearbook of Chinese Horizontal Economy) (Beijing: Zhongguo shehui kexue chubanshe, 1993), pp. 275, 277Google Scholar; and interviews in Jinan, in 1995Google Scholar and in Qingdao, in 1996.Google Scholar

116. 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 05 1998, p. 12.Google Scholar

117. China Daily Business Weekly, 15 10 1995.Google Scholar

118. For obvious reasons, Hong Kong media had a very close coverage of this controversy. See South China Morning Post, 25 01, 27 April, 23 August, and 15 and 18 September 1995.Google Scholar

119. 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. Zhongguo gaige kaifang shiwu nian dashiji (Fifteen-Year Chronology of China's Reform and Opening) (Beijing: Xinhua chubanshe, 1994), pp. 225, 238, 240.Google Scholar

120. 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.

121. For a useful discussion of political entrepreneurs and their roles in the promotion of growth, see Schneider, and Teske, , Public Entrepreneurs, chs. 5–6.Google Scholar