Cities in China: Recipes for Economic Development in the Reform Era

By Jae Ho Chung | Go to book overview

5

Development patterns and strategies of Xiamen and Fuzhou

Jude Howell


Introduction

The introduction of reforms and in particular the Open Policy have breathed fresh life into the economies of both Xiamen and Fuzhou. Situated in the eastern sea-board province of Fujian, Fuzhou in the north and Xiamen in the south, these two cities have long histories of overseas trade and migration. Their coastal location as well as their proximity to Taiwan, and indeed Hong Kong 1 have given them an important comparative advantage over inland cities in trade and attracting foreign direct investment. Furthermore, with their cultural and linguistic affinities with Taiwan and the diaspora of overseas Chinese spread throughout East and South East Asia they have had a head start in raising overseas capital for domestic development. In both cases geographical location, a history of overseas migration, and a subsequent network of familial ties overseas have facilitated their ability to take advantage of China's Open Policy.

Although both Xiamen and Fuzhou have prospered in the reform period, Xiamen has outperformed Fuzhou in terms of opening up to the international economy, particularly in the 1980s. It has been more adept at attracting and realizing foreign capital and achieving export earnings. It is argued in this chapter that the main reasons for this concern both central government policy towards Xiamen City, and in particular the creation of a special economic zone and the concomitant increased autonomy over economic affairs, as well as the ability of reform-minded local leaders to run with these policy advantages. Other related factors include the superior port facilities of Xiamen and the greater physical and political distance between Xiamen and the provincial centre. As a provincial capital Fuzhou city was always much nearer to the provincial hub of power, hence the risks of undertaking any experimental reforms or pursuing a fast rate of reform were that much higher. Hence in policy and political terms Xiamen has had the edge over Fuzhou.

By focusing on the two cities of Xiamen and Fuzhou we are thus able to highlight the factors which have contributed to the success of both whilst also drawing attention to the reasons for their differential performance. The chapter begins by providing a brief historical overview of the two cities as well as a broad-brush picture of their economic development in the reform period. In the second section we go on to consider the contribution of three sets of factors to the development

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