***An American investment group is planning to build another Hong Kong on an island of mainland China. One of its directors says: 'It's going to be better, more spacious, haw more tourists than Hong Kong.” Some economists haw other ideas. Hai nan has already proved one of least successful of China's Special Economic Zones. It could, one expert tells Gemini News Service, become a ghost town.

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/A to as y«< s twlnklr in . planner's eye Where high rise blocks may one day throb Io the beat of International high finance. 30.000 peasants till their fields

They wait patiently for their land to become the financial hub of the Pacific Rim. an economic miracle which a group of American businessmen has decided should be performed In one of China's most impov ertshcd provinces.

Chester Kim. a director of the Washington Investment Croup, which Is closely connected to the family of Richard Nixon and has dreamt up the copycat city, says

"Our New Hong Kong Inter national City will be like Hong Kong. but It s going to be better. more spacious, tropical. It o going Io have more tourists than Hong Kong docs It's going to be more modern, cleaner.'

Hia optimism Is surprising. Most Investors have already given up on Hainan Island, which lies to the south-west of Hong Kong, as a dead loss. Some economists believe that the New Hong Kong city could become a ghost town

Thomas Chan, a Hong Kong based expert on the economy of southern China, says: "Even if they built It. they may find they can get nobody to come and do business there '

When Beijing declared Hainan China's biggest and best Special Economic Zone (SEZ) In 1987. observers called tt an audacious expert ment that would create the richest province tn the land or an embarasslng foby

Three years later. It looks like the second. Despite a long history of hyperbole, party leader Jiang Zemin on a recent visit could only summon up the description 'fairly good* to describe the climate for investment.

Investors have shunned Hainan because It has poor In fraslructure and no skilled workforce. Chan says: "Setting up an SEZ in Hainan was a very serious mistake for China. They had very high aspirations, but not the ability to achieve them."

Moreover, almost everyone who is Interested in doing business in China as already set up shop in Guangdong Province.

"Hainan Is backward, so

backward." said the party secretary of a Hainan factory sadly, looking out over the mud huts of the countryside. His sentiments are echoed by so many residents of Hainan that it sometimes seems the island has collective inferiority complex

Average wages in the capital Halkou are about one-third of what people earn in the most successful SEZ. Shezhen. "1 suppose our standard of living

has gone up a bit" said a Halkou resident

County towns in Hainan arc dirty, undeveloped places where pigs root around in rubbish dumps for food. The countryside, though lush and tropical is even more pitifully poor.

The coast boasts beaches with local officials who have never left the island compare to Hawaii. Facilities for tourists, however, remain tn the stone age.

The islanders have an excess of coconuts, a lot of rubber and iron ore but nothing that will make their fortune. The island may yet prove to be rich in oil. but more profits from such vita) energy resources flow to Beijing.

Kim's castle-ln-the -air vision of the New Hong Kong city is exactly what one man had in mind when he set up the Hainan SEZ.

That man was Liang Xiang, the former mayor of Shenzhen. China's first and best SEZ. Rather attached to SEZs. Liang Xiang asked if he could made Hainan into one too. He gained the sympathetic ear of the now disgraced party leader Zhao Ziyang, and the SEZ was created.

His ambitions coincided with the fantasies of leaders in Beijing, who dreamed of nurturing an island which would

emulate the boomtown-style development of Taiwan. The two islands are. after all. nearly the same size

In the early euphoria, hundreds of thousands of young people (locked to Hainan from the mainland, thinking that streets were paved with gold. They were soon disillusioned. Now only half a dozen young men stand reading the Situations Vacant posters on a wall in the centre of Hikou.

Like other Special Economic Zones, Hainan did make It to the sleaze phase of development, becoming notorious nationwide.

"Everyone all over the country knew about our prostitutes." said a taxi driver with pride. T drove men around every evening who were looking for a woman, and the prostitutes would be lining the streets. It was as though I was taking the men shopping."

Many of Hainan's top officials were fired in 1985 after a massive car smuggling scandal which left leaders red-faced and broke. In 1989 Liang Xiang himself was fired for "abusing power for personal gain."

Funds invested by the mainland had simply disappeared into conspicuous consumption by bureaucrats.

Hainan never had a chance to progress much beyond the money-grabbing. Just as foreign investors began to wake up to the limitations of Hainan, students demonstrated in Bei-J‘ng-

The subsequent massacre In Beijing further shook the confidence of foreign investors and the conservative backlash in the Communist Party brought reform to a standstill.

The new generation of leaders in Hainan arc eager to prove themselves a lot more reliable and cautious than the car smugglers and lavish diners. They have all but abandoned the fast track school of reform, opting instead for development of infrastructure and agriculture.