As one of China's four special economic zones opened in 1980, Xiamen is the only coastal city that has begun to gradually implement certain free-port policies. An interview with Deputy Mayor Wang Jinshui and a two-part special report by our correspondent Zhang Zeyu detail the area's achievements, problems, and measures for implementing the open-port policies. The report also catalogues the social changes that have emerged in the wake of these policies.

Beijing Review: Given Xiamen's characteristics, what sort of plans do you have for its future?

Wang Jinshui: As distinct from the three other special economic zones, the Xiamen Special Economic Zone was established from a former industrial city. Xiamen now has 767 industrial enterprises manned by 110,000 workers. Its 1985 industrial output value surpassed 2.6 billion yuan, making it Fujian Province's second largest producer.

Xiamen is also a major trade centre in southern Fujian. It has 9,000 businesses with a total workforce of 36,000 people, averaging one out of every 10 persons working in trade and commerce; such a proportion is fairly high in the country. Xiamen's foreign trade has also developed. As a long-time port city on China's southeastern coast, Xiamen has established trade relations with 112 countries and regions.

In addition, Xiamen is easily accessible by bus and train through the Gaoqi-Jimei Embankment, which was built in 1955. The city also has an international airport, completed in December 1983 and has opened flights to Beijing, Shanghai, Guangzhou, Hangzhou, Nanjing, Xian, Fuzhou, Hongkong, Japan and the Philippines. Xiamen's harbour is also ice-free year round. Witha 12-metre-deep main channel and 30 berths, the port can be called on by 10,000-ton-class ships.

Surrounded by the sea and the mountains Xiamen has long attracted visitors with its enchanting natural beauty. The city also has a solid cultural, scientific and technological foundation and is home to a number of overseas Chinese.

Bearing these special characteristics and advantages in mind, we would build Xiamen into a comprehensive, outward-oriented special economic zone, which mainly develops industry while concurrently managing tourism, trade and real estate. Since being approved by the State Council, the Xiamen SEZ has expanded from the original 2.5 square kilometres to 131 square kilometres, which includes Xiamen's metropolitan area and the Gulangyu Island. The special zone has step by step put into effect certain free-port policies, thereby providing a better environment for overseas investors.

How much progress has the zone made in the past five years?

From 1980 to 1985 Xiamen has scored these achievements:

With an average annual rise of 15.7 percent, Xiamen's total industrial and agricultural output value has more than doubled that of 1980. During this period, the industrial output value in Xiamen increased at an annual rate of 17.6 percent, while its agricultural output value went up by 6 percent annually.

The 1985 income in the zone was 2.14 times that of 1980.

The investment in capital construction during this period reached 1.7 billion yuan, doubling the combined total of the 31 previous years.

With a new airport, port and an automatic programme-controlled telephone system, the city's infrastructure facilities also have been steadily improved. Altogether 390,000 square metres of workshops and luxury living quarters for overseas business people were also constructed in Xiamen's Huli Industrial District.

With such amenities, the improved environment has succeeded in attracting more and more foreign investors. Between 1980 and 1985, city officials signed 296 contracts for operating Chinese-foreign joint ventures, cooperative enterprises and solely foreign-owned enterprises. These contracts are valued at $1.16 billion, $660 million of which comes from direct foreign investment. About 85 percent of the contracts were signed after the special economic zone was expanded to cover the whole island in 1984. Now one-third of these projects have opened for business.

The number of tourists to Xiamen from Hongkong, Macao and overseas has increased year by year. In 1985, about 80,000 tourists, or twice as many as in 1980, visited the city.

The living standards of Xiamen residents have improved steadily. In the last five years or so, workers' wages have gone up by 57.5 percent, and the per-farmer net income has increased 2.4 times. In addition, the 1985 commodity retail volume reached 900 million yuan, or 2.7 times that of 1980. Savings deposited by Xiamen's urban and rural residents also increased to 420 million yuan in 1985, which is 4 times the 1980 figure.

In which areas of trade and in what form have the overseas business people made their investments in Xiamen?