A local lawmaker said the development of Hainan, China's youngest and also biggest special economic zone (SEZ), could offer precious lessons for the country's campaign to open up its western regions.

In an interview with Xinhua Monday, Mao Zhijun, vice chairman of Hainan Provincial People's Congress, said that Hainan's experience shows the development of a region could not be successful by solely relying on preferential policies given by the state.

"It is imperative to develop local industries and local economies in a well-organized and step-by-step manner at a time when a large amount of outside investment flows in," said Mao.

China now has five special economic zones -- Shenzhen, Xiamen,

Zhuhai, Shantou and Hainan, all in the southern coast. The first four were set up in August 26, 1980 and celebrated their 20th anniversary last Saturday.

Hainan became a special economic zone in April 1988. The Chinese government also approved special preferential policies in the early 1990s for the development of the Pudong New District in Shanghai along the eastern coast of the country.

Hainan, a former prefecture under Guangdong Province, used to be one of the China's poorest and most backward regions. In 1987, its revenue was only 270 million yuan.

Since it became a province and also a SEZ in 1988, Hainan has witnessed a great economic boom but also sustained setbacks in economic development.

In the past 12 years, some 13.33 billion US dollars of investment flew into the island, US$6.7 billion of it overseas capital.

In 1988 alone, Hainan registered more than 10,000 new companies. And in the four years that followed, the island witnessed a growth of 30 to 40 percent in its gross domestic product annually. It even had the highest economic growth in the country in 1992.

Nowadays, the 3,400-square-kilometer province has become one of the most popular tourist destinations in China. It has two international airports, one in Haikou, the provincial capital, the other in Sanya on the southern tip of the island. It also boasts a highly developed expressway network.

High-rise buildings have mushroomed in major cities and people from other parts of the country flocked to Hainan to seek their fortune by starting up new businesses.

However, most investors pumped huge investments into real estate developments to reap short term profits, turning Hainan into one of the worst "bubble economy" in China. Chi Fulin, head of the Hainan Reform and Development Institute, said through adjusting efforts in the past few years, the island province has got rid of bubble economy and moved into a period of economic recovery and growth since 1998.

According to him, Hainan's GDP growth rate rose from 7.8 percent from 1998 to 8.2 percent in 1999, slightly higher than the national average.

"In the next step, Hainan must turn its unique natural resources into economic benefits so it can realize a double-digit GDP growth."

Though Hainan has not met its pre-set development goal as a special economic zone -- attaining or even surpassing the level of economically developed regions in the country by the turn of the century, it has shown potential in developing tourism.

In 1999, more than nine million people visited Hainan. Tourism earnings accounted for 15 percent of Hainan's GDP and it is estimated the proportion will rise to 20 percent in five years.

"As new industries in Hainan are adapting themselves to the international market, inflow of overseas funds and advanced management expertise will help raise the province's economic development," said Mao Zhijun, who also served as vice governor of Hainan.

According to him, Hainan's tourism sector have been expanding markets in Europe and America. And cooperation with Taiwan experts in developing subtropical agriculture is getting along quite well.

China is considering exploring oil and gas resources in the South China Sea with multinationals, and Hainan will become an important base for processing the offshore oil and gas, Mao said.