Hotpot king cooks up a fortune in China's backwater

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The Independent Online

Yinchuan City

"I don't like to go to the south of China, because I feel unbalanced when I come back to Ningxia," said Liu Dehua, who has just returned from a trip to the Special Economic Zone in Shenzhen, bordering Hong Kong. "You see how advanced they are, and when you come back to Ningxia, everything looks wrong in your eyes.

"The government should now shift attention to the north-west of China, otherwise it will be too late," he added. "At the moment, the difference between inland and coastal areas of China is, maybe, 50 years."

Mr Liu, 52, is no scrounger. He is one of the biggest private businessmen in one of China's poorest provinces. His hotpot restaurant in Yinchuan City, the provincial capital of Ningxia, is packed. He has just imported 30,000 ducks from nearShanghai to set up the biggest duck-egg production facility in the north-west. His family is settling into their new 1m yuan (pounds 80,000) house.

His is a rare character in inland China, a restless self-made man and a Communist Party member with an appetite for risk, whose expressive hands never stop moving as he describes his latest business plan.

Toasting our health with Ningxia's best red wine, he says frankly: "The senior leaders in the north-west - their minds are not liberated."

Born in Yinchuan, Mr Liu liberated himself from the state system in1987. The son of a revolutionary martyr killed by the Nationalist Kuomintang in 1947, he says he "was very, very naughty" as a child and left before finishing middle school. He started his state-sector career as an electrician, then became a truck driver and in 1975 joined a collective clothing factory.

At the factory he took control of the vehicle repair shop and quickly turned in a profit for the collective. On the side, he set up a private vehicle- interior fitting shop and by 1988 he had enough cash to buy the Delonglou (virtuous, thriving) building where his restaurant opened the following year.

Mr Liu's empire now includes a petrol station, a sound-and-light equipment business and the most ambitious venture so far - all those ducks, with a predicted daily production of 26,000 eggs.

"I always think, why do I work so hard? My hair went white; it used to be black. In the past I was an extremely open person, I had a lot of hobbies, playing musical instruments and singing, swimming, skating. Now I have abandoned all my hobbies," he exclaimed, with all the theatricality of a former singer in a Cultural Revolution state entertainment troupe.

In 1989, his was the first private restaurant in Ningxia and, with a capacity for 250, it is still the biggest. As Mr Liu knows, the remote Ningxia Hui Autonomous Zone is more than a decade behind much of China in waking up to the message of Deng Xiaoping's "reform and opening" policies. Many of Ningxia's 5 million people still live below the poverty line. The province, a 24-hour train ride from Peking, is drought-stricken, a majority of its big state industries are loss-making, and most of its old-fashioned cadres are not equipped to drag Ningxia into the 21st century.

Somewhat belatedly, China's central government is now concerned at the huge wealth gap between the coastal and inland regions, the legacy of geographical inequalities plus 15 years of policies which favoured already fast-growing regions. The recently agreed Ninth Five Year Plan (1996- 2000) is designed to redress the imbalance, but the details are still scarce.

Yuan Erzhuo, of Ningxia's provincial Economy Committee, admits the average annual income of Ningxia's state enterprise workers is less than 3,000 yuan (pounds 240) compared with more than 8,000 yuan in Shanghai. Mr Yuan says the new Five Year Plan specifies that 6bn yuan (nearly pounds 500m) will be spent on modernising the best of Ningxia's state-owned enterprises. The only problem is that 60 per cent of this is supposed to be borrowed from the credit-squeezed banks.

Yet in Mr Liu's restaurant, which caters for Ningxia's Hui Muslims by serving lamb instead of pork, the tables are full of (mostly male) locals for whom life is improving, even if they are not in the same world as Shenzhen. Poverty is relative in China. Yinchuan now boastsreasonably stocked department stores and dozens of bustling private restaurants to compete with Mr Liu's. "Since 1990, private business has got off the ground in Ningxia," he said.

Are his three children following in their father's footsteps? Far from it. Two are in government office jobs, and the third has just finished three years in the army: "My children are not as open-minded as me."

There is more to it than that: "I have experienced a lot since 1958, and who knows what the future will be?" he said. "The government jobs are safe and reliable, though the salary is low. In the future, if there are problems, I will have to shoulder those problems alone."