PUBLISHED : Thursday, 22 August, 2002, 12:00am
UPDATED : Thursday, 22 August, 2002, 12:00am

Jake van der Kamp is on holiday.

THE CENTRAL CHINESE city of Taiyuan is famous for coal, coke, iron, steel - and prostitutes. According to official press estimates, the city has 40,000 of them, of whom half come from the three northeast provinces, 10,000 from Sichuan and the rest from other areas.

'My father and mother were both laid off,' explained one, 20, from the northeast province of Heilongjiang. 'So I came to Taiyuan in February. I earn 300 to 400 yuan a day and send my parents 400 yuan a month. If I sent more, they would become suspicious. My plan is to work in this business for five years, become rich and become a professional woman.'

An expressway from Beijing means people from the capital can reach Taiyuan in five hours, enabling them to spend the weekend enjoying its entertainment industry. It has boomed in Taiyuan since 1994 for the same reasons that it prospered in the northeast industrial city of Shenyang, which had an estimated 100,000 'ladies of the night' until last year, when a police crackdown followed the arrest of its mayor and a dozen other city government members for corruption.

Both Taiyuan and Shenyang are in China's rust belt, heavy industry cities that prospered in the Maoist era but in the past 20 years have fallen behind the boom towns in the south and east.

The power industry and processing of primary raw materials account for more than 70 per cent of Taiyuan, capital of Shanxi province, which has the richest coal reserves in China. State firms account for more than 80 per cent of its tax revenue. It has attracted little foreign investment and private domestic investment is limited.

An official survey of air quality in 47 major cities found that Taiyuan's was the most polluted, leading local people to joke bitterly - 'we provide light and heat to others and keep the filth and dirt for ourselves'. Taiyuan generates most of the electricity used in Beijing and Tianjin.

Looking for places to invest, private businessmen opened nightclubs and karaoke bars in 1994, because they provided the highest return on capital. Initially, clients came from thousands of migrant coal miners living away from home and, as its reputation spread, from all over north China.

The biggest club was Jin Chang Cheng (the vessel of gold and wealth), with 50,000 square metres and hundreds of women, owned by a man named Huang, one of five sons of a poor farmer who used it to earn 100 million yuan (about HK$93 million), which he has invested in real estate, supermarkets and petrol stations.

The club's most luxurious section was 'Cesar's Palace', with 17 rooms and a large dance floor, on which Huang lavished four million yuan for decoration. But he paid the price of becoming too famous and his club was shut down at the start of July 'for repairs to the fire safety system', according to a club official, who said that it planned to re-open in January.

The city government regards this with ambiguity, grateful for the income it generated but fearful of criticism from Beijing. Xia Jingchun, head of the city's Cultural Management Bureau, explains this puzzle, in the best 'bureaucratic speak'.

'The entertainment market in Taiyuan is worth 500 million yuan. It could double that in the future. Entertainment and culture can become an engine of growth and a pillar industry of the city.' By this, he means music, Internet cafes, films, books, artistic performances and dancing.

'The company of ladies is a special industry in China. They drink with you, dance with you and sing with you but there is no sex involved. We should not call them prostitutes. That is a profession and the government would issue licences. But this profession does not exist in China.'