Capitalism's test ground is China's new boomtown

LETTER FROM SHENZHEN/Clifford Coonan: Typhoons are common in southern China, and Shenzhen's people, most of whom made their …

LETTER FROM SHENZHEN/Clifford Coonan: Typhoons are common in southern China, and Shenzhen's people, most of whom made their living fishing the Pearl River delta, were used to them.

But nothing could prepare the people of this sleepy hamlet for the storm which hit in the wake of the edict from the capital Beijing, in 1980, decreeing that their town should become a Special Economic Zone, a testing ground for capitalism in China - "socialism with Chinese characteristics", as the Communist Party calls it.

Back then there were just 30,000 people in Shenzhen, which lies immediately across the border from Hong Kong. Now there are nearly eight million people here, living and working in the city's thronged mass of skyscrapers. Imagine somewhere like Bray increasing to a city the size of London in the years since Charles Haughey first became Taoiseach, and you get the picture.

Listening to business people in the city talk, it's easy to imagine you are in a bar on Wall Street in the heady days of the Reagan era. Maximum bullish, to steal a phrase from one analyst describing an earlier Chinese boom of the 1990s.

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"This country is going to be unrecognisable in five years. The trick is to see who can stay the pace," said one Irish mergers and acquisitions specialist.

We're in a bar in one of the city's plush hotels, shouting to be heard above a Filipino band doing a perfect rendition of Mustang Sally. It really feels like the 1980s. And what about the big question everyone is asking about China's economic boom: is anyone really making money?

"Believe you me, you can be very sure people are making a lot of money in this town. This is a place to make money," says another Irish businessman based in Shenzhen.

Somewhat uncharitably, the Lonely Planet guide describes Shenzhen as a place "without culture or spirit", a "tacky prologue" to China or Hong Kong. It certainly lacks culture, but Shenzhen has plenty of spirit, the kind that an unfettered desire to make money brings.

Shenzhen is China's Dodge City, the hustler capital of New China, with an average age of less than 30. Shanghai has its big manufacturing industries and gleaming skyscrapers housing top financial institutions. Beijing is home to the Forbidden City, and bears the gravitas of power that central government brings with it.

But Shenzhen is a classic frontier town, a place on the make, unashamedly nouveau riche.

There are few better situated cities on China's booming east coast. Dapeng Bay lies east and the Pearl River to the west, which gives it a lot of access to the outside world.

Around 35 per cent of production is in high-technology goods, slowly replacing textiles and machinery. Half of all Chinese IT products are made here. And as the big banks dotting the skyline attest, it is increasingly becoming southern China's financial centre.

Landing in Shenzhen airport is a shock after the dry, reserved environment of Beijing. The tropical blast that hits you as you get off the plane reminds you of landing in Hong Kong, and the hills covered with palm trees and lush vegetation, combined with occasional signs of large-scale quarrying, are also familiar from there.

And Hong Kong is not far away. But orderly Hong Kong seems a world away as you arrive in the chaos of Shenzhen city, the sky obscured by a yellowish haze of pollution, cars whizzing around without any evidence of traffic rules in play, and an army of street hawkers hard at work.

Beggars crowd the walkway leading from the opulent Shangri-La hotel to the border itself, where you literally walk across the frontier to Hong Kong and take a local train into the former colony's downtown.

If the immigration check at the crossing is not crowded, as it usually is on Friday nights and before holidays, you can walk from your hotel in the mid-morning, take a train and be in Hong Kong in time for an early dim sum lunch.

It's hard to find any evidence of Communist Party rule in Shenzhen these days. Unlike Beijing and Shanghai, where party emblems abound, Shenzhen's emblems are the brand names of locally made clothes and computer parts.

But the city's political credentials are impeccable. Deng Xiaoping, the leader who set the ball rolling in China in 1979 when he proclaimed, "to get rich is glorious", came to southern China on his emperor-like Southern Tour in 1992, seeking to shake China out of the torpor and political isolation brought on by the 1989 massacre. A speech signalling economic reform given at Shenzhen train station was a defining moments in China's economic liberalisation.

The establishment of the Shenzhen Special Economic Zone dovetailed with the maturing of Hong Kong's economy from manufacturing to other areas, like trade and financial services. Hong Kong investors quickly established plants across the border. Some Hong Kong businessmen set up second families in Shenzhen - it's a lot cheaper to keep a mistress in a flat in southern China than in Hong Kong. The phenomenon of the ernai, which translates as "second breast", is still in evidence as the concubines of Hong Kong billionaires strut through Shenzhen's glitzy shopping malls wearing white seal furs against the chill of the air-conditioning.

Like many new cities, no one comes from Shenzhen; everyone is from somewhere else. Even though it is a southern Chinese city, where Cantonese is the lingua franca, most people use Mandarin, as it is the only dialect common among the millions of migrant workers.

Last year, China overtook the United States as the world's largest recipient of direct foreign investment, and Shenzhen is evidence writ large of this.

City officials boast how Shenzhen's economy has grown by 1,000 per cent in less than a quarter century - it even grew by over 16 per cent last year, when the economy was hit by the SARS virus.

Of course, Shenzhen also hosts the underbelly of development - appalling pollution, drugs, prostitution and crime are more common than in other cities.

A favourite joke told in the city is about a man who goes to a hair salon for a short back-and-sides and is laughed out of the shop.

The working girls are there to make money. Their skills do not necessarily extend to cutting hair.

Clifford Coonan

Clifford Coonan

Clifford Coonan, an Irish Times contributor, spent 15 years reporting from Beijing