01/20/97 CHINA'S YEAR OF THE WHITE ELEPHANT

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CHINA'S YEAR OF THE WHITE ELEPHANT
Leaders resolve to get a grip on Guangdong's maniacal growth
The sparkling $240 million airport in Zhuhai speaks volumes about how this southern Chinese city wants to be perceived. The ultramodern structure--the country's largest airport after the one in Tibet--boasts an arrival and departure board in both Chinese and English, a cushy first-class passenger lounge, and shops filled with everything from XO rare reserve cognac to locally grown lychees. ''We think this airport represents the image of China and of our special economic zone,'' says Yu Rongai, general manager of Zhuhai Airport Group Corp.
There's just one problem: Only a few flights a day land at Zhuhai. The handful of passengers can hear their footsteps echo off the gray tile floors. Located a few miles from a new airport in Macao, Zhuhai's airport operates at just 10% of capacity and isn't expected to break even until 2005.
The Zhuhai airport symbolizes the lofty but ill-conceived desires of officials in the Pearl River Delta, the nerve center of China's richest province, Guangdong. This region has been in the vanguard of China's economic reform, boasting double-digit economic growth over the past 15 years. In a 1992 tour of the delta, paramount leader Deng Xiaoping anointed the region's get-rich growth model as the winning formula for the entire country.
But these days, the Pearl River Delta also illustrates the pitfalls of reckless development. At a time when money was easy--and Beijing's backing solid--independent-minded local leaders launched a building frenzy with little regard to coordination or cost. Now, the delta's cities are paying the price. There is massive duplication of airports, highways, and container ports. A real estate bust has left the region scarred by unoccupied or half-finished buildings. Water, air, and even noise pollution are becoming too serious to ignore.
With Beijing maintaining a relatively tight monetary policy and with foreign investment slowing down, officials in the delta are no longer able to build whatever, wherever, whenever they please. With Deng, 92, infirm and no longer calling the shots, his successors are hesitant to channel more resources to Guangdong. ''Now we have to develop our economy with limited funds and capital,'' says Zhang Gaoli, Guangdong's senior vice-governor.
As a result, Zhang and other provincial leaders are pushing a plan to whip the province into shape with fewer resources. A key element is the Pearl River Delta Coordination Council, composed of the region's top leaders. Their goal: coordinate major projects so that the province is positioned wisely for future growth. The council will debate its strategies to bolster Guangdong's economy in February.
STRICTER CONTROLS. The focal point of the council's plan is Guangzhou, the provincial capital and commercial hub. This involves building a $1.3 billion international airport to replace the run-down existing facility. The group also has a master plan for the delta's 28 cities and towns. Over the next 15 years, officials in the province hope to raise $28 billion, most of it coming from foreign investors. To avoid more chaotic building sprees, the council is to approve all major projects and impose stricter cost and environmental controls.
Guangdong could attract the necessary funds, analysts believe, provided it pays foreign investors a premium to counter the risk of investing in China and makes solid progress in achieving reform. The big challenge will be to curtail the freewheeling independence that the province's cities and villages won during the Deng era. After the leader's 1992 trip, nearly every prosperous city sought Beijing's permission to build an airport, for example. Many got the go-ahead, since they were awash in money from property sales and foreign investment and had cultivated high-level contacts. If nearby Hong Kong and Macao are included, there are now at least eight airports within a 200-kilometer stretch, but none of them suitable for the busy provincial capital. But it was Guangzhou, despite its urgent need for a decent airport, that saw its bid languish, in part because of an ownership dispute between the province and the military.
Delta cities went just as haywire over ports. Shenzhen, a special economic zone, has four major ports nearby. In all, the delta has at least 13 big ports, not including Hong Kong's huge facilities. ''Everyone wants a deepwater port,'' says Richard Yue-Chim Wong, director of the Hong Kong Center for Economic Research. ''But if they all have ports, none can survive.''
One key objective is to coordinate development of the transportation system. A few years ago, nine delta cities built major highways, with few linkups to each other or to other major roads. The estimated $2 billion Guangdong-Shenzhen superhighway, a 123-kilometer toll road built by Hong Kong's Gordon Y.S. Wu, hasn't been raking in the returns expected. That's in part because motorists use an adjacent road that isn't as direct but is toll-free. These days, the emphasis is on repairing and connecting existing roads rather than adding new ones. Instead of building a superhighway from Guangzhou to Zhuhai, for example, authorities will improve the current highway.
NO SWIMMING. Guangdong also faces a surplus of power generation. But authorities plan to nearly quadruple capacity, to 39,000 megawatts, by 2010, even though some foreign analysts think the region's needs will fall far short of that. And while the province has built major power plants, many municipalities continue to rely on their own small-scale, inefficient facilities, which pollute the most. Now, authorities say they will no longer tolerate fla-grant polluters. According to Wang Dingchang, deputy director general of the Guangdong Provincial Planning Commission, ''nonpolluting'' sources such as nuclear and natural gas will account for more than half of energy supply in 2010, compared with 17% now.
Pollution of the once fish-filled network of waterways that fan across the region is ''the most serious problem,'' says Li Yihui, vice-director of Guangdong's Environmental Protection Bureau. Only 60% of the province's rivers and streams reach acceptable safety standards.
One Guangdong city trying to cope is Zhongshan, where per-capita income is $1,450. In the 1970s, the nearby Xijiang, or West River, was so clean residents could swim in it. Now the water is so polluted that it will take up to eight years to clean it, says Vice-Mayor Wu Ruicheng. The city has moved polluting industries away from the river and is building a water-treatment center.
With the days of heady growth nearing their end, Pearl River Delta leaders must use their funds and resources wisely--or risk jeopardizing the future of China's most prosperous region.
By Joyce Barnathan in Guangzhou

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MAP: Guangdong Province, China
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