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Maverick reformer and his Shekou (Part I)

Lin Min

THE history of modern Shenzhen would lose much of its luster without Shekou, the “test tube” of the country’s reform. In many ways, some of Shekou’s reforms in the 1980s were so bold and unorthodox that even reform-minded government officials felt uneasy. Shekou in this particular decade was imprinted with the colorful hallmarks of its outspoken, audacious maverick founder, Yuan Geng, a former guerilla spy chief who had been tapped to run China Merchants Group, the Ministry of Communications’ business arm in Hong Kong.

    Yuan, as an official-cum-entrepreneur at the helm of the Shekou Industrial Zone, established by the group, from 1979 to 1992, not only brought seismic changes in the way the economy was run, but also experimented in democracy and political openness, an area that pit his backers against his detractors in numerous debates across the country.

    He is undoubtedly a pioneer in China’s reform and opening-up drive. As early as October 1978, Yuan began to plan the establishment of the Shekou Industrial Zone, before Bao’an County became Shenzhen City in 1979.

    A man of vision, his plan to develop shipping and industry in Shekou turned out to be successful and far-sighted. In fact, industrialization, foreign investment and foreign trade, as advocated by Yuan, were also behind the nation’s boom over the past three decades.


    Emergence of Shekou

    The history of Shekou would have to be rewritten if Yuan did not impress Ye Fei, then minister of communications, with his opposition to the minister’s proposal to hand over the management of a floundering shipyard in Shanghai to a Danish firm in 1978. To the surprise of most people, Yuan’s fiery remarks did not anger the general-turned-minister. Instead, impressed by Yuan’s boldness, in June 1978, Ye assigned him to head an investigation into the decline of China Merchants Group.

    Yuan, a native of Dapeng in eastern Shenzhen, headed the intelligence unit of the Dongjiang Guerilla Column during the resistance against Japanese invaders in World War II. He knew Hong Kong well and his bold proposal to turn around the moribund China Merchants Group won the approval of the ministry. Yuan soon became the 29th head of the legendary business empire that was founded in 1872 by the Qing Dynasty (1644-1911) minister Li Hongzhang, who pioneered the dynasty’s industrial and military modernization.

    Finding land in Hong Kong almost as expensive as in central Tokyo, Yuan searched for cheaper land for expansion across the border. He found Shekou, then barren land on the southern tip of Nantou Peninsula but a potential ocean shipping hub, a dreamland for overseas investors desperate for cheaper land and labor.

    His proposal to build an industrial zone in Shekou received the go-ahead from the Central Government on Jan. 31, 1979. However, that historic moment was not without regret, Yuan recalled in a recent memoir. He was referring to the fact that he was not bold enough to accept the offer of the whole peninsula.

    In the memoir, Yuan recalled telling Li Xiannian, then vice chairman of the CPC Central Committee in charge of the economy, at a meeting in Zhongnanhai, the CPC’s headquarters in Beijing, in January 1979: “We want to take the first step (in reform). We request the Central authorities to set aside a piece of land in Shekou for the establishment of the China Merchants Industrial Zone.”

    Drawing a circle with a red pencil on the Nantou Peninsula on a map of Boa’an County, Li said: “No problem with land. Take the peninsular!” Yuan was excited but hesitant at the offer, fearing his company would not be able to fund the massive construction on the whole peninsula, as the government had said it would not provide a single fen, except land. In the end, only 2.14-square-km was designated as the Shekou Industrial Zone that would later become one of the cradles of the country’s modern industrial boom and the “test tube” for changes.

    On July 2, 1979, a deafening blast tore apart a hill in Shekou to provide rocks and earth for land reclamation, marking the start of the construction of the Shekou Industrial Zone.


    0.04-yuan bonus causes stir

    Yuan was quick to bring some capitalist practices from Hong Kong to Shekou. When work on the Shekou port began in August 1979, truck divers were paid the same amount no matter how hard they worked, a nationwide practice at the time as the planned economy was yet to be unshackled. Without any incentives, each driver removed only about 20 truckloads of earth a day as required and the project proceeded slowly. To speed things up, in October 1979 Yuan introduced a bonus of 0.04 yuan for every truckload after the required minimum work. The incentive worked miracles, with daily truckloads per head surging to up to 130. However, the practice was halted by authorities for violating government rules on salaries and bonuses and the drivers’ work efficiency declined to 20 truckloads a day.

    Undeterred, Yuan requested a Xinhua journalist to write an internal report, which caught the attention of Central Government officials who ordered the 0.04 yuan bonus to be reinstated. Many projects in Shekou were completed ahead of schedule thanks to the incentive.

    This was one of the incidents that led to a very famous catchphrase, “Time is money, efficiency is life,” being coined by Yuan and his deputies. A giant billboard printed with the catchphrase was erected at an intersection in Shekou in 1983.


    Slogan controversies

    The catchphrase, which would seem bland and self-evident these days, and the high-profile manner in which it was presented, rocked the country and soon attracted salvos from conservatives who said it was a brazen advocacy of capitalism. Some blasted Yuan for cultivating a culture of money worship. “What people in Shekou want is money. Yuan Geng is even worse, he wants to not only make money, but also take lives!” Bao Qifan, vice president of Shanghai International Port Holdings Co. Ltd. who frequented Shekou in the 1980s, recalled Yuan’s detractors as saying.

    The catchphrase, which Yuan held to despite the controversies, underlined the efficiency that helped Shekou become an industrial hub and port of foreign trade within a short period.

    In January 1984, when Yuan met Deng Xiaoping onboard the Ming Hua vessel (now better known as the Sea World) during his visit to Shekou, Yuan deliberately mentioned the catchphrase, to which Deng responded with a nod. Deng later gave his official approval to the slogan in a speech that was subsequently included in Volume 3 of “The Selected Works of Deng Xiaoping,” a “bible” for the country’s officials.

    The slogan was not just for decoration. It was followed by a string of bold reforms. A housing reform put to rest the allocation of homes by the government and State-owned enterprises, which were practiced elsewhere in China. The reform abolished some privileges of the powerful and laid the foundation for the housing market to thrive.

    In another reform in Shekou, Yuan introduced performance-based salaries, scrapping the decades-old Chinese practice that paid salaries according to a person’s ranking instead of his performance.

    (To be continued)



    Yuan Geng

    ■ April 23, 1917: Born in Shuibei Village, Dapeng Township, Bao’an County.

    ■ March 1939: Joins the Communist Party of China.

    ■ 1944: Becomes head of the liaison department of the Dongjiang Guerilla Column, in charge of intelligence cooperation with the U.S. army.

    ■ October 1949: As colonel, leads the Guangdong and Guangxi artillery regiment of the People’s Liberation Army to liberate islets in the Pearl River Estuary.

    ■ 1950: Heads a team of military advisers to Vietnam and advices Ho Chi Minh on intelligence and artillery.

    ■ 1953: Appointed Chinese consul in Jakarta, Indonesia.

    ■ September 1959: Joins the Department of Investigation under the CPC Central Committee.

    ■ March 1968: Wrongly accused of spying for the United States and jailed by the Gang of Four during the “Cultural Revolution.”

    ■ September 1973: Released from prison after Premier Zhou Enlai intervened.

    ■ 1974: Becomes vice head of the overseas affairs bureau under the Ministry of Communications.

    ■ October 1978: Appointed executive vice board chairman of Hong Kong-based China Merchants Group.

    ■ 1992: Retires. Living in Shekou since retirement.



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Maverick reformer and his Shekou (Part I)
Shenzhen Chronology 1983