In term of its land, Hainan is the smallest province in China, but taking into consideration its 2.2 million square kilometer of sea territory, it is the largest.

As the country's largest special economic zone (SEZ), Hainan is now looking beyond its land and now wants to tap into the sea. The development of its marine industry, however, is still in its primary stage and is limited to offshore fishing and aquatic breeding.

With the industry designated as the province's most hopeful component to boost the economy, it will be expanded to more areas than before, according to the 10th Five-Year Plan of the province (2001-2005).

Located in the South China Sea and Beibu Gulf and occupying 44.6 percent of the country's sea territory, Hainan has abundance of marine resources, of which natural gas and marine biological resources are the most appealing investment areas to big overseas investors, said Chi Fulin, director of China (Hainan) Institute for Reform and Development. The industry can effectively increase Hainan's international reputation, said the economist.

A report from the China National Offshore Oil Company (CNOOC) shows that the South China Sea, known as the second "Middle East" for its oil and natural gas reserves, has three of China's five most productive natural gas pools.

The exploration over the past two decades helped verify 5.17 trillion cubic meters of natural gas reserve. The US company, Chevron, was among the first group of foreign oil firms to become involved in Sino-foreign oil offshore exploration in the South China Sea.

The managing director of Chevron Overseas Petroleum Inc's Asia Business Unit, Wes Lohec, said earlier this year that the company hopes to get more involved in the development of the offshore natural gas in the sea area, because the market potential for clean energy in China's inland alone is good.

China has pledged to lift the consumption of natural gas in the share of the non-renewable energy from 2 percent to 8 percent by 2010.

By then, Hainan, the closest processing center for offshore energy, will become a crucial energy supplier for provinces on the southeastern coast to help sustain dynamic economic growth. The energy-stringent region has witnessed the fastest economic growth in the past two decades.

The importance of Hainan's offshore energy potential has already been noticed. It provides Hong Kong with 2.9 billion cubic meters of natural gas a year as the fuel for power generating through a 780-kilometer pipeline laid under the sea.

Hainan has decided to turn the northwest tip of the Yangpu Economic Zone, located on the northwest tip of the city, into an energy processing, storing and export port. The port will also support the island's major economic projects, which will cost 53 billion yuan (US$6.38 billion ) to build over the next five years.

The time is ripe for Hainan's marine industry to take off, which has received more help from the Central Government. Chen Qingtai, deputy director of the Development Research Center of the State Council, said earlier this month that marine industrial undertakings will become a theme for the 21st Century. They include items as diverse as fishing, aquatic processing, tourism, biomedicine, transportation and so on.

As one of the most beautiful beaches in the world, the finest ports and 40 percent of China's 1,500 aquatic species, the Hainan SEZ is one of the best to develop the industry in China by opening more areas of the sector to overseas investors.

Under its strategic development plan, the province will build four marine industrial centers by 2010 for aquatics processing, oil and gas refining, tourism and deep-sea biological resources processing, respectively. Witnessing the strong trend, more than 150 companies from southeastern China, like Shandong, Fujian, Guangdong, Shanghai, Hong Kong and Taiwan, as well as Canada and Japan flocked to the island, which has brought in over 1.2 billion yuan (about US$ 144 million) of investment to the industry since 1998.

(People's Daily 09/28/2000)