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Tomorrow's World

Kenichi Ohmae has long argued that regions rather than nation states are the true dynamos of the global economy. But which regions will ...

By Kenichi Ohmae 01 December 2004

Kenichi Ohmae has long argued that regions rather than nation states are the true dynamos of the global economy. But which regions will emerge as the Bangalores and Singapores of the future?
Tomorrows World

Hainan Island, China


The hope of the global economy is that it enables regions to bring in wealth from the rest of the world – rather than robbing their neighbours. This requires that the regions are equipped with well educated and disciplined people under a visionary leader who can communicate with the rest of the world.

The People’s Republic of China has shown the world how region states can prosper. It is more than probable that new regions will develop here, but it is impossible to predict with certainty where these will be. Prosperity will seep out from the half dozen region states along the east coast into neighbouring areas, such as Jilin and Heilongjiang, from Dalian in Liaoning Province. Such an expansion might threaten the viability of existing region states, which may suffer wage increases and pressures on scarce resources. But it is possible that region states will respond to this by a process not unlike a cell dividing in nature. As the cell grows in size another cell nucleus will develop before the formal division takes place.

One potential region to watch is the province of Hainan Island. It lies south of the Chinese province of Guangdong, and is set between the Gulf of Tonkin and the South China Sea. It has a population of around 8 million people; the vast majority are Chinese speakers.

Hainan’s economy was traditionally based on subsistence agriculture. One eighth of the population is made up of members of ethnic groups such as the Li and the Miao, who still lag far behind other residents of the island in income levels. In the 1950s and 1960s tens of thousands of Mainland Chinese were drafted onto the island to establish rubber plantations, a campaign which did untold damage to the island’s environment.

Even so, Hainan has abundant natural wealth in the form of mineral deposits, such as gold and iron ore. It is also well placed to benefit from the ongoing exploitation of oil and natural gas reserves in the South China Sea. Its natural beauty also attracts visitors, mostly from Hong Kong and Mainland China, but increasingly from further afield. It possesses a semi-tropical location: it is as near to Southeast Asia as any part of China can be. Its beaches and holiday resorts have the same facilities as those in Malaysia, Thailand or the Philippines.

In spite of the island’s relative proximity to burgeoning Chinese regions, such as Guangzhou and the Pearl River Delta, it has not taken off to the same extent. This is not due to lack of infrastructure. Recently Wei Liucheng, the former chairman of the China National Offshore Oil Corporation, was appointed governor. He has signalled his intention of acting as the island’s chief executive officer, attracting investment from China and the rest of the world, and also assisting ventures that are already up and running. The island’s openness to the rest of the world is mirrored in the establishment of air routes both to destinations in Southeast Asia and to Europe.

The province’s geography as an island makes it uniquely self-contained. Its government is also outward-looking, in the spirit of other leaders of established region states in China. It may also benefit from its distance from Beijing, from which it is viewed as too remote to warrant any interference.

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