Scandal-scarred city refuses to give up ambitions, writes Matthew Miller

On a sleepy summer afternoon, all is quiet along Zhanjiang City's oldest shopping avenue, Zhongshan Second Road. A smattering of pedestrians meander down the pavement, fruit peddlers chat beneath shade trees while a group of motorcyclists, with neither passengers nor cargo to ferry, mark time by riding in noisy circles.

'The economy is not so good right now,' observed a shopkeeper, surveying the scene from his photo supplies counter. 'We are suffering because of what happened.' What happened was September 8, 1998. On that day, some 10,000 central and provincial police officers swept through the area, arresting top party, government and police officials for alleged participation in the largest smuggling and corruption racket since the founding of the People's Republic.

More than 60 local leaders have been sentenced so far in what state media now call the '9898' affair. They include Zhanjiang's former communist party secretary Chen Tongqing, customs chief Cao Xiukang, city vice-mayor Yang Quqing, as well as leading members of the provincial and local marine and border police.

For the new city administration, which came to power on the heels of the arrests, cleaning up has not been as simple as executing and jailing corrupt officials and their business associates. The rackets, which are said to have robbed state coffers of 30 billion yuan (about HK$27.99 billion), have left their own baleful legacy - an economy nurtured on smuggling and access to cut-price oil, steel and machinery.

To understand the extent to which the rackets have debilitated the local economy, one need only glance at the latest official statistics.

During the first half of the year, Zhanjiang posted gross domestic product of 17.19 billion yuan, representing year on year growth of 5.3 per cent.