Hammer blow to Guangzhou as heavy industry goes to Zhanjiang

The decision to move a major petrochemical refinery from Nansha to Zhanjiang has left the Guangzhou district at a crossroads.

In 1988, the late tycoon Henry Fok Ying-tung launched his plan to turn the small villages into a modern town for Hongkongers and local people. Through the 1990s, while the population inched towards its current 280,000, Nansha retained a low profile.

It was not until 2002 that Guangzhou officials really started to take notice - seeing it as ripe for development, with harbour facilities to match. The city took over Panyu , which included Nansha, and started to build plants for heavy industries such as iron and steel, car manufacturing and petrochemicals.

Jin Xinyi, secretary general of the Shenzhen Chamber of Commerce and an analyst of the regional economy, said that Lin Shusen, the then party secretary of Guangzhou, had mainly focused on multinational corporations, which he thought could turn the district into a heavy chemical and industrial base with a harbour. In 2005, Mr Lin announced a plan to promote Nansha's position, saying that a 527 square kilometre area, including Guangzhou's only sea port, had been placed directly under the municipal government. This gave him a free hand in drawing up more plans, including the controversial oil refinery and petrochemical plant.

The plan, first proposed by the Kuwait Petroleum Corporation in 2005 and accepted by Guangdong and mainland oil refiner Sinopec, pledged a total investment of US$5 billion, at the time the biggest foreign-invested project on the mainland.

Strong opposition from Hong Kong over the environmental impact of the plant, coupled with his own reservations, prompted Guangdong party secretary Wang Yang to announce last month that it would be relocated to Zhanjiang, a relatively undeveloped port city in the west of the province.