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SCMP Reporter

SHENZHEN has played up its contributions to Hong Kong in an effort to preserve its status as a national pace-setter.

In speeches to the congress of the municipal Communist Party, officials including party secretary Li Youwei emphasised the need to speed up Shenzhen's reforms better to promote economic integration with Hong Kong in 1997.

Mr Li, who is also mayor, attempted to rebut arguments by conservative planners that preferential policies granted to the Special Economic Zone should be repealed in the interest of lessening regional disparities.

Xinhua (the New China News Agency) quoted Mr Li yesterday as saying the zone must keep up its fast-paced market reforms 'so as to develop its positive function in maintaining Hong Kong's stability and prosperity'.

The senior cadre said the zone should lead the nation in building up a 'system of the market economy', adding this should be accomplished around 1997.

'Shenzhen must take full advantage of its geographical superiority in being close to Hong Kong to expedite the construction of a modern international city,' Mr Li added.

He stressed that to achieve a market economy, Shenzhen must, like Hong Kong, conduct business according to international norms.

'We must begin a comprehensive integration with the world economy,' Mr Li said. 'We must more flexibly use internationally accepted methods to attract foreign capital and to boost co-operation with multinationals.' The mayor pointed out that in three years or so, all enterprises in the zone would have 'management autonomy and become financially self-sufficient'.

Areas where he envisaged increased co-operation with Hong Kong included the financial markets, port facilities 'and other functions of a modern city'.

'We must do well the work of dovetailing [with Hong Kong] in the mechanisms of market operations,' Xinhua quoted Mr Li as saying.

 At the opening session of the congress on Tuesday, Mr Li defended the zone against accusations by conservative cadres that it had ripped off the hinterland.

'The zone has been making more and more contributions to the country and it has benefited the inland economy,' he said.

Sources in the zone said the local leadership was preparing books and films to dramatise its achievements in the past 15 years.

They added that Mr Li, who is a protege of Vice-Premier Li Lanqing, had been lobbying Beijing to continue granting the zone special policies in the area of taxation and foreign investment.

The leadership has argued that it needs the preferential treatment to offset a dramatic rise in wages and property prices, which have decreased the zone's attractiveness to investors.

Shenzhen projects that by 2000, its gross domestic product would reach 150 billion yuan (HK$137.7 billion). Exports would amount to US$30 billion (HK$231.78 billion) while its per capita GDP is expected to increase to 37,500 yuan.



Shenzhen defends privileged position