CONFIDENTIAL
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Guangzhou achieves special economic status
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On 12th May Da Gong Bao quoted Party Secretary and Mayor of Guangzhou as saying that the city is to enjoy a similar economic status to the special zones at Shenzhen, Zhuhai and Shantou. He did not seek formally to make Guangzhou a new zone but said "When we talk about special economic zones, we mean those in Shenzhen, Zhuhai and Shantou. But other parts of Guangdong can also adopt special policies and flexible economic measures. The implication. in this is that overseas investors may soo be able to enjoy the same preferential treatment in Guangzhou as in the special economic zones; i.. 15% profit tax (compared with 33% for joint ventures outside the zones), exemption from selected import duties and a five-year tax holiday. The extension of the principles applying to the special economic zones to Guangzhou and other parts of the province is in keeping with Party 1st Secretary, Ren Zhongyi's call in November last year to make the whole of Guangdong a special economic zone (see "Current Hong Kong China Economic Developments: November 1980").
Plans to make Hainan Island Special Economic Zone
6. Press reports have tended to confirm earlier indications (see Current Hong Kong -- China Economic Developments: March 1981) that Hainan Island will eventually be designated a Special Economic Zone with prefer- ential treatment granted to foreign investors. Overseas Chinese and other foreign investment has apparently already been put into a US$40 million cil palm plantation and a further US$20 million in a cashew plantation. Overseas investment has also found its way into cattle rearing, mining (unspecified) and rubber planting (the Island's most important cash crop). Although less Conveniently situated than Shenzhen or Zhuhai, Hainan will seek to establish direct transport links between the Island and Hong Kong (i.e. without going through Guangzhou). Ferry services and charter flights to Hong Kong are said to be under consideration by the local authorities.
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However, agriculturally and industrially the island remains relatively undeveloped and poor. Rapid economic development as a Special Economic Zone is unlikely and the only direction in which real development will probably take place is tourism where quick returns will be sought on the minimum investment.
Lake and Hot Springs Country Club Ltd.
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Invitations for applications for membership of the above club were advertised in the press at the end of the month. In partnership with the Shenzhen Tourist Bureau, the Hong Kong-based company plans to build a resort on a 1,000 acre site near the Shiyan (Shek Ngan) Lake and Yu Li (Yuk Lut) Hot Springs in Shenzhen. The resort will be built around 300 villas and includes restaurants, tennis courts, swimming pools etc. Phase I of the development is expected to open in December of this year. In their adver- tisement, the company suggest that motor coaches will be available to transport visitors/members between Hong Kong and the Club. Although the
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