For three decades the southern coastal province of Fujian suffered under economic degradation. As the front-line in the ongoing conflict with Taiwan, just 130 kilometers offshore, Fujian had been designated as a military bastion. With Jinmen and Matsu, two islands under Taiwan's jurisdiction, and just a stone's throw from the Fujian shore, launching regular artillery attacks, the central Chinese government feared destruction on a large scale, and thus limited industrial investment projects in favor of more protected areas. In fact, since the establishment of the People's Republic of China in 1949, through the beginning of economic reforms in 1979, Fujian failed to get even one major investment project. Such factors made its economic development fall below the national average, and lag far behind other coastal provinces. During this period, Fujian received but 1.5 percent of the country's total capital investment, the fourth lowest among the 29 provinces. From 1957 to 1975, Fujian's contribution to the national income declined from 1.56 percent to 1.26 percent, remaining the poorest of China's coastal provinces (He 1991:160; Shieh 2000).
The sparse industrial investment that did come to Fujian was located away from coastal areas. Despite their traditional prosperity, the frontline cities of Xiamen and Quanzhou were starved of industrial investment from the 1950s through the 1970s. The richest and most industrialized city in 1978 in Fujian, in terms of industrial output per capita and rural income per capita, was Sanming, a western inland state-designated industrial center with the province's only integrated iron-and-steel complex and several chemical and machinery plants. To a considerable extent, over these three decades, Fujian was a lopsided planned economy, forcefeeding the interior and starving the coast.
While military conflict retarded the province's industrial advancement, mountainous topography hindered its agriculture and transportation development. With 87 percent of total land area made up of mountains and highlands, industrial and commercial activities were concentrated in less than 10 percent of total land area, chiefly along the coast and plains. In 1978, cultivated area per capita in Fujian, was only 0.06 hectares, or half