Strategic infrastructure

Xiamen Municipality encompasses a broad range of logistics facilities and infrastructure. First and foremost, the port of Xiamen is an important shipping facility that is one of the top-ten ports in China in terms of size and throughput. According to statistics from the Xiamen Municipal Government, the port operates 68 shipping routes to major ports around the world, and sees around 470 ships berth at its docks each month. It is the 23rd busiest port in the world, with a total throughput of 4,627,000 tonnes in 2007. The port encompasses six areas - Heping, Dongdu, Haitian, Shihushan, Gaoqi and Liuwudian - and stretches along 30km of coastline in total.

Xiamen's Gaoqi airport is also one of the busiest airports in China, with direct air links to cities both within China and around the globe. First opened in 1983, the airport has since expanded, and can now handle a total 10 million passengers and 150,000 tonnes of cargo per year. With extensive land-based transportation links as well, including a welllinked railway network and direct highways to Fuzhou and Zhangzhou, Xiamen provides an excellent logistical hub for trade between China and the rest of the world.

e-Commerce development

Xiamen has also been an early trailblazer in the Chinese e-commerce industry. This is a trend that local academics and officials want to continue. The Xiamen Electronic Commerce Association reports that mainland e-commerce expert Professor Li Qi, Deputy Director of the Education Department Electronic Commerce Specialised Education Guidance Committee and Director of the China Information Economy Association e-Commerce Expert Committee, gave a lecture at Xiamen Technical College recently. Professor Li explained that while in developed countries the service industry accounts for up to 70% of GDP, in China the figure is around 40%, not even reaching the average of 43% for developing countries. He sees technology as being the crux of this issue. However, he also noted that Xiamen and Hangzhou have been important test-sites for e-commerce. He believes Xiamen should establish an organization dedicated to researching and planning for e-commerce, and draft a "12th 5-year-plan for e-commerce development" as soon as possible.

Free trade haven

However, it is not just Xiamen's strategic capabilities and technological advancements which have made the city such a fantastic success. Sound economic policy has also been integral to the city's rapid growth.

Xiamen's current path of development was set in the early 1980s when Deng Xiaoping named the city as one of the first Special Economic Zones ("SEZ"). Since then, Xiamen has flourished. From 1980-2000, Xiamen's GDP rose by a staggering 18.6% per year, making the city one of the richest in China by the turn of the millennium. In recent years growth has slowed somewhat, but Xiamen's per capita GDP last year was RMB56,600, still well above the national average.

The Xiamen SEZ originally occupied a 2.5 square kilometre area within the city centre; this was later expanded to include the whole of Xiamen Island, giving a total area of 131 square kilometres. Significantly, the area has born witness to a number of experimental trade policies which have given renewed impetus to the city's growth. One such experiment is the Xiangyu Free Trade Zone ("XFTZ"). First established in 1992, this area was designed as a 'test zone' for the implementation of free trade policies before they were adopted on a wider basis. The zone has been positioned to take advantage of Xiamen's logistical infrastructure to the fullest extent; covering two square kilometres on the North West side of Xiamen Island, it is within easy reach of Dongdu Harbour, Xiamen Railway Station, the Gaoqi Causeway and the Xiangyu Docks.

Cross-straits ties

The XFTZ has focussed on a number of activities, prime amongst which have been international trade and trade with Taiwan. The zone offers favourable taxation policies, including exemption from VAT for goods imported from abroad and for all processing and labour services carried out, and an exemption from income tax for the first two years of profit for all companies who do business there. The area is also unique in that both Chinese and internationally-funded banks have been allowed to invest and do business freely, meaning that Xiamen's banking services are amongst the most advanced in the whole of China.

Similar efforts have been made elsewhere in the greater Xiamen area to boost trade with Taiwan. For example, special Taiwanese investment areas have been established in the Haicang area since May 1989. According to the Xiamen Municipal Government, President Jiang Zemin is quoted as saying that "Haicang should be built into an investment center that attracts investments not only from Taiwan, but also from other countries and regions, and an important development zone pillared by high and new technology" when he visited the area in 1994.

As well as allowing Taiwanese investment and development in areas such as Haicang, a number of other measures have been introduced to further develop cross-straits trade. Annual trade fairs are held in Xiamen to showcase goods from both sides of the straits, and several historic steps have been taken to make transportation easier, including the first direct cargo shipping service between Xiamen and Kaohsiung (in 1997) and the first direct flight from Taichung to Xiamen, which took place earlier this year. These measures have had a remarkable effect: the total value of trade between the two regions rose to over US$2 billion in 2005, an increase of over 16% from the previous year, making Taiwan Xiamen's third-largest trading partner world-wide.

As mainland China and Taiwan forge ever-closer economic ties, Xiamen is very much at the forefront of cross-straits trade and investment. It is not hard to see why - not only do Fujian and Taiwan share a close linguistic and cultural heritage, Xiamen is a mere 3,000 metres away from the Taiwanadministered island of Jinmen. It is this trade partnership with Taiwan, more than anything else, which will spur Xiamen's development in the future.