Hainan tourism suffers downturn

By Juliana Liu
Business reporter, BBC News, Hainan

The number of visitors to Hainan is down on last year

As China grapples with slowing growth, Asia's top business leaders and officials are gathering for the annual Boao Forum this weekend. How quickly China will recover, and whether it will be able to drive growth elsewhere, will be the hot topics at the event in Hainan.

The tropical island of Hainan is a steamy southern outpost of China, away from the crowds and pollution of mainland China. But even here, the pain of the financial crisis is still spreading.

Tourism is a mainstay of the economy, which otherwise depends on agriculture. Chinese and overseas visitors come to see the island billed as the Hawaii of the East.

Hainan's beaches may not be as stunning as Hawaii, but they have been a lucrative pull for Gu Ju, chairman of Haikou Wanzhong Tourism.

A native of Sichuan province, the 45-year-old left his predictable job as a civil servant in 1993 to "jump into the sea", as he called it. The phrase is a Chinese colloquial expression for leaving secure government jobs for the private sector.

'Prepared for loss'

I believe in the government. Look at how things have steadily improved over the years Gu Ju, chairman, Haikou Wanzhong Tourism

With companies in tourism and construction, Mr Gu is a wealthy man. But he is bracing himself for an unprecedented year.

"I am 100 per cent sure that we will make a loss this year," he said, while supervising a day-long tour of the provincial capital Haikou.

"But we are prepared for it. There's really nothing we can do about it. There's nothing wrong with our company. The problem is with the wider market. People don't have as much money in their pockets."

In the middle of April, still considered high season, Mr Gu's tour had only about a dozen visitors. He said his visitor numbers are down at least 30 per cent on last year.

Enduringly optimistic

But like most Chinese, Mr Gu was a strict saver. He believes years of saving during the boom years will tide his company over until 2010. He is also enduringly optimistic about China's future growth.

"I believe in the government. Look at how things have steadily improved over the years," Mr Gu said, even as he criticised everything from China's under-developed legal system to the bad manners of some Chinese.

He joins a chorus of voices praising Beijing's handling of the economic crisis. China still has the world's fastest-growing major economy, trillions of dollars in foreign exchange reserves and, most crucially for a crisis-hit economy, the goodwill of its citizens.

Especially after a successful Group of 20 summit in London, Beijing is opening the Boao Forum for Asia conference full of confidence. The presence of former US President George W Bush at the forum is another feather in Beijing's cap. Mr Bush's family has been doing business in China for years.

Economic recovery?

Professor Wang says the government stimulus package is working

There are risks to calling China's economic recovery too soon. After all, an estimated 40 million people have lost their jobs, mostly from factories in the deep south. But most economists believe China's growth has stabilised.

"From the March figures, we can see that major economic indicators are on their way back up," said Professor Wang Yiwu, head of Hainan University's China Modern Economic Research Institute. Like many of his generation, Mr Wang studied Russian before relations with the Soviet Union fell apart. Now he keeps his studies firmly at home.

"The government stimulus package is already working," he said, walking along the university's campus, dotted liberally with coconut palm trees. "But I have some concerns. I think the stimulus measures have some negative side effects. Some money will be given to inefficient industries. There will be more corruption as officials take money for themselves. And there will be unnecessary construction projects."

Mr Wang, who also holds an official government position, added Beijing was aware of the problems and was trying to address them.

How quickly China will recover, and whether it will be able to drive growth elsewhere, will be debated at the Boao forum. The global business elite may be craning their necks for a look at Mr Bush, but they will be here to listen to Chinese Premier Wen Jiabao for any clues to the future of the Chinese economy.