Liao Xiaoping, a member of Shantou Development and Planning Bureau in South China's Guangdong Province, said that the GDP of Shantou (one of the fifth Special Economic Zones in China) would increase by 4 per cent this year. 4 per cent—this increase rate is far below the average of Guangdong province, even lower than some western regions. However, for Shantou, a city which has undergone great affliction, 4 per cent is high enough, for that it was -2 per cent last year, the lowest in the past decade.

　　"There are too many uncertain factors last year" Liao Xiaoping recalled, "we predicted the increase rate of last year would be 9 per cent, which was in line with the goal of Guangdong Province. But in May, Chaoyang (a county-level city) required to adjust its GDP increase rate, and then the figure dropped greatly."

　　Chaoyang, with a population of 2.45 million is the largest county-level city in China. Its GDP counts for one third of Shantou while its credit crisis is the worst. Someone said that Chaoyang people wrote false value added tax invoices and had bad influence on thirteen provinces and municipalities. It affected the economysgroupsof half China.

　　Fewer people wanted to do businesses with Chaoyang; added the influence of September 11th attack, Chaoyang's economy got crashed immediately. It's GDP decreased by 21 percent last year. Shantou's GDP was held back just by this 21 percent. The fiscal income was declined even more.

　　But Liao Xiaoping denied the hearsay that the enterprises in Shantou would move out of the city in large amount, "Shantou's economy in fact was continuing developing last year and the social economic activities were still active, which could be concluded by the increase of electricity consumption. The manufacturing was still in Shantou, but the managing and marketing ware transferred to other places. Many places would no longer use invoices of Shantou because of the declaration of the State Administration of Taxation last year. While at the same time, many other places were very avid for scrambling for tax resources and exporting licenses. Thus the products manufactured in Shantou were streamed out and the taxes hence belonged to the fiscal income of other places."

　　He said, from the enterprises"reporting forms, you can only tell that they are sustaining loses because there is no added value. Usually they sell goods with immediate payment, so the added value can not be displayed in the reporting forms. But the bank deposit and consumption of electricity were increasing rapidly. Shantou's GDP would possibly have an increase of 4 per cent last year if there had not been that taxation case.

　　Liao Xiaoping said that he thought "entity decides idea" Chaoshan (Chaoyang and Shantou) people are eager for quick success and instant benefit, dream to become wealthy overnight. This psychology has influenced its economy.

　　To develop modern industry

　　In February this year, the Guangdong government officials went to Shantou to investigate and prescribed a recipe: to develop modern industry. Somebody said Shantou had not finished industri-alization; it was still at the stage transforming from primary commodity economy to industrialization. However, the establishment of Special Economic Zone created bubbles in Shantou's economy.

　　The secretary of the Shantou Municipal Party Committee, Li Tongshu sighed with emotion that the "fishfolk thoughts"of Chaoshan people was dangerous. Li expressed that they would carry out an education project of brainwashing for those entrepreneurs. Now, all circles in Shantou have reached an agreement: without solid industrial foundation, the third industry will just like a tree without root, it cannot maintain a sustainable development. The deputy secretary, Xie Mingjia held an idea that Shantou would be an industrial city.

　　Long Hu district, an economic focus in Shantou, has become a positive model. Long Hu district also suffered recession in the Asia financial crisis, but three years later when the economy of Shantou in a whole was in stagnancy, Long Hu's economy soared on the contrary. Its fiscal income increased by 15 percent last year.

　　There is no secret in the development of Longhu's economy. Long Hu spared no effort to develop private industries during the past three years. When the government of Longhu district began to do this, it begot mock of many people, who thought they were not attending to their duties: "Long Hu's economy is overseas-oriented, why should it be transferred""But now, Long Hu's way has been affirmed as a "correct path"and introduced to the whole city.

　　Industrialization paradox Insgroupsto change its economic structure, Shantou came on with several measures to set up "sreen channel"for developing industries, the sole aim was to reduce managing cost. Whereas the high prices of electricity and some other fundamental supplies became a big barricade. Those who wanted to invest in Shantou would first ask the government to give a preferable treatment in electricity price. But in the current situation, the government has no authority and no money to give a promise, thus many investments flow to other place. Besides, since Shantou is lack of natural resources, the charges of transportation and storage are very high.

　　However, there are still many people who think Shantou should emphasize on possessing and circulation industry, and try best to realize the three direct links between Taiwan and Nan'ao County.

　　Economic development driven by Industrialization means the investment will be government-oriented. Then the government will be on the preponderant position. Some people worry that Shantou's economy may lose creativity and vigor; property right system and legal system will be confined by the functioning economic mode now.swheresis Shantou's way out"

　　Shantou

　　Location: Southeast of Guangdong Province

　　Acreage: 2064 square kilometers

　　Population: 4588.3 thousand

　　Downtown area: 310 squarekilometers

　　Population: 1187.1 thousand

　　Coastline: 298 kilometers

　　Shantou is one of the five Special Economic Zones in China, a coast city near to Hong Kong, Macao and Taiwan. It became a treaty port in 1861, one of the earliest treaty ports in China. In the 1930s，the throughput of Shantou port was the third largest in China.

　　Shantou Special Economic Zone was set up in 1981. It has the experimental and legislative rights authorized by the central government. There are three key zones open to the outside world namely Tax-free zone, Hi-tech industry developing zone and Nan誥o Island experimental zone. The GDP of Shantou in 2000 was 47.8 billion Yuan, per GDP 10509 Yuan in the whole city, 20005 Yuan in the Special Economic Zone.

　　Shantou is also a famous city inhabited by relatives of overseas Chinese and returned overseas Chinese. The overseas Chinese are 2160 thousand living in more than 40 countries and 800 thousand living in Hong Kong, Macao and Taiwan. Therefore, Shantou has close relations with the outside, which plays a very active role in Shantou's development. Many overseas Chinese and moneybags in Hong Kong, Macao and Taiwan have invested in Shantou. Li Jiacheng alone has invested 9 items about US million in total.

　　On December 13, 2001, Xinhua news agency disclosed the investigation result of Shantou Puning Tax cheating case. The total amount involved was 3230 billon Yuan, the highest in China's history. 6 involved people were sentenced to death. The direct result was that many quitted their investment and Shantou's companies lost their trustworthiness. The State Administration of Taxation declared Shantou "a danger place"thereafter.

　　Hyperlink

　　Credit standing highlighted

　　Shantou Special Economic Zone in South China's Guangdong Province is bouncing back to economic health by helping its enterprises restore credit trustworthiness.

　　The local government formally launched a website containing credit information on over 27,000 enterprises on April 1. Only one month after its debut, the website has attracted over 300,000 hits.

　　Clients who intend to conduct economic and trade co-operation in Shantou can visit the website to learn the credit ratings of their potential partners.

　　It is estimated that the credit information of all of the city's 100,000 enterprises will be putsintosthe website database by the end of this year.