Kunming has a population of 3.63 million, of which 1.4 million are urban residents. About 80 per cent of the permanent population is Han Chinese.

It is the political, economic, cultural and transportation centre of Yunnan Province.

With an area of 15,000 square kilometres, including the eight counties under its administration, the city is renown for its year-round, spring-like climate - the reason for its name as the Spring City.

The urban part of Kunming covers 53 sq km, which will be extended to 106 sq km, including the establishment of the Kunming High and New Tech Industrial Zone, Dianchi National Tourist and Vacation Zone, and Kunming Economic and Technical Development Zone.

''The country's open policy started in 1979, but Kunming's economic reform did not really start until May 1992, after comrade Deng Xiaoping's visit to southern China,'' said mayor Wang Tingchen.

''Within these 20 months, our growth has exceeded some other cities', despite their having been opened for 14 years,'' he added.

Last year, about 200 foreign companies - including more than 100 from Hong Kong - moved in to invest in the city.

During the year, city authorities approved 197 joint ventures worth of total of US$476.75 million, of which $219.97 million was foreign funds. Registered capital stands at $303.60 million.

In 1992, the city approved 102 joint ventures, compared with 32 before 1991.

There are a total of 331 Kunming-approved joint ventures, giving a total investment of $767.9 million of which $356.26 million is foreign funds. Total registered capital is $486.64 million.

Taking into account ventures approved by the Yunnan provincial government, there are a total of 493 joint ventures in Kunming - one third of all joint ventures for the province.

Total investment of the foreign joint ventures stands at $1.06 billion, of which $479 million is foreign-funded.

They give a total registered capital of $651 million, accounting for more than two-thirds of that of the province.

With an economy which is industry-based, the city ranks 14th among Chinese cities on economic terms.

Last February, the city made a sales drive into Hong Kong, signing projects worth more than $100 million.

However, Mr Wang said not all the investment agreed had been realised.

''Probably investors were cautious about the macro-economic control,'' he said.

The city makes about 10,000 different products, accounting for 40 per cent of the total industrial output in Yunnan.

Its key industries are tobacco, petrochemical, machine tools, tourism, power generation and quarrying.

It is China's second largest cigarette-producing city, churning out about 10 billion cigarettes a year, mostly for domestic sale, although about $40 million worth are exported to the United States, Japan and Southeast Asia.

Other keys to the economy are large phosphate deposits and more than 10 state-owned machine tool plants.

The city is also a large producer of binoculars, claiming to account for one-fifth of the world's total production through three joint ventures.

Since last year, Kunming has hosted an annual export fair, the Kunming Exports Commodities Fair, joining the country's export fairs in Guangzhou, Shanghai, Harbin and Urumqi.

Mr Wang said the city had five strengths - proximity to Southeast Asia, rich natural resources, advanced industrial technology, a good climate and a wide range of ethnic backgrounds.

''Its transportation link with Southeast Asia is more convenient than other Chinese cities. That is why in the country's trade reform, Kunming is the focus of the southwest and acts as a passage to Southeast Asia,'' he added.

Mayor's Assistant Huang Weimin said the city benefitted from the close co-operative relations between Yunnan, Sichuan, Tibet, Guizhou, Guangxi, Chengdu and Chongqing.

''Together we can bring the strengths of each of us into full play,'' said Mr Huang. ''Kunming's status as a window to southwestern China is enhanced by its transport connection with Guangxi province through the Nanning-Kunming railway,'' he said.

Inflation in the city was 10 per cent last year, compared with seven per cent in 1992.

A peasant worker in Kunming makes an annual income of about 800 yuan (about HK$708), which the city aims to increase to 1,000 yuan in 1997.

An average worker makes 3,000 yuan a year, with the 1997 aim set at 10,000 yuan.

The consumer power of the city's citizens is lower than most Chinese cities of similar size, according to Mr Huang. Residents live mostly on domestic products, although goods such as colour television sets and cars are imported.

He said the economic reform has resulted in improved living standard of peasants.

''Some peasants make more money than urban residents. Some of them have an income even higher than the cadres,'' he said. ''They have their own houses and cars.'' Some peasants made a handsome living by cultivating land, or by running rural enterprises. But those on hilly districts were worse off, he said.