Isolated Town in China Awakens to Big Dream of Becoming Port City : Development: But the $30-billion, 20-year proposal faces immense political and practical obstacles. Its more visionary aspects may well prove unrealistic.

A middle-aged woman, possibly a low-level official, erupted when she saw an American photographing chili peppers drying on a mat. “Coming from a foreign country, you can’t take pictures of something like that!” she scolded, apparently upset because the mat with the peppers--used in this region’s Korean cuisine--lay on an unpaved sidewalk.

Suspicion of outsiders was the rule for many decades in this isolated town, located in a strip of land that squeezes between Russia and North Korea, along the Tumen River, to within tantalizing sight of the Sea of Japan. Now, in a roar of construction and international flurry of diplomatic activity, Hunchun’s slumber is ending.

Encouraged by a plan floated by the U.N. Development Program, officials talk of building an international city incorporating part of Hunchun, plus port towns in Russia and North Korea.

The hope is to create a jointly managed second Rotterdam or second Hong Kong that would serve as the key Pacific port for much of northeast China, Mongolia and Siberia.

“It’s the world’s most exciting project,” said John J. Whalen, a former Bechtel executive who now is manager of the Tumen River Area Development Program. “The Russians have tremendous resources in the Far East. The North Koreans have high-skill labor that is severely underutilized, with a strong work ethic and no place to work. The Chinese need to get to the sea. . . . The technology exists to turn this area into a Hong Kong within a decade if we can attract the investment capital.”

The U.N. plan calls for $30 billion of investment in this three-country triangle over 20 years, much coming from private banks and corporations in Japan and South Korea.

To attract this capital, Whalen said, the United Nations proposes a Chinese-Russian-North Korean management board have power to run the new free-port metropolis strictly on commercial, technological and financial considerations.

This tri-national core, referred to as the Tumen River Economic Zone, would anchor the region much as Hong Kong does South China. Satellite cities--comparable to China’s special economic zone of Shenzhen or the Guangdong province capital of Canton--would remain under full sovereignty of each of the three nations.

One glance at a world map shows how a modern port city here would have the potential for greatness. But the proposal--due to be drawn in more detail over the next year, then submitted to participating governments--faces immense political and practical obstacles. Its more visionary aspects may well prove unrealistic.

“In the whole world, there is no theoretical work or actual experience of three countries with such different political and economic situations joining in this kind of project,” said Alexander P. Latkin, head of the International Institute of Economic Coordination and Forecasting in Vladivostok.

While Whalen says no project like this has been undertaken before, the U.N. efforts are reinforcing developments that have strong momentum of their own.

For more than half a century, this area was one of the most remote, tightly closed and militarily sensitive places on Earth. It now has suddenly become an emerging crossroad of Northeast Asia. This trend is likely to continue even if the U.N. plan for a great multinational city goes nowhere.

A year ago, it was virtually impossible for foreigners, other than North Koreans, to visit the Russian side of this border. Then last October, Vladivostok, the long-closed home of the Soviet Pacific Fleet, was thrown open.

Now, anyone can travel south along Russia’s Japan Sea coast to underdeveloped port towns like Posyet and Khasan, which lie close to Chinese and North Korean territory. This long-forbidden journey takes a visitor through pristine lands so nearly untouched that Siberian tigers still roam, while rare birds flock to local marshes.

Largely because decades of isolation have preserved this land’s natural beauty and wildlife, ecological issues are a key obstacle to the U.N. plan. The Khasan town government is said to lean toward making money not from huge port facilities but from seafood cultivation and Japanese tourists.

North Korea, taking cautious steps toward a more open economy, declared its Tumen River region a special economic zone in December. This spring, it allowed an unprecedented visit to the area by 145 foreign business executives, journalists and scholars.

For decades after China’s 1949 Communist revolution, Hunchun was a sensitive military district closed to all outsiders, even Chinese. The city opened to foreigners only last November. In March, Beijing made it an economic development zone with special policies, primarily tax benefits, aimed at attracting domestic and foreign investment.

With 85,000 urban residents plus 90,000 peasants who live in its rural areas, Hunchun is now a frontier boom town. Horse carts pass construction sites where 20-story buildings will soon stand.

In a holdover from the days of Chairman Mao Tse-tung, outdoor loudspeakers rouse the city at 6:30 a.m. by blaring out news and propaganda in Chinese and Korean. The programming, however, no longer speaks of class struggle or vigilance against foreign enemies. Instead, there are endless recitations of development deals and exhortations to accelerate economic construction.

City spokesman Qu Changhai said that, since this spring, Hunchun has formally received 3,300 domestic or foreign delegations investigating business opportunities. The city now registers an average of six new companies daily, most set up by Chinese enterprises that want a branch here to take advantage of trade and low-tax opportunities.

The current boom also reflects the ending of a long era in which political restrictions, war and military tension stunted development of this region. This period is routinely dated from 1938, when Japanese occupation forces, locked in conflict with Russia, shut the Tumen River to passage by Chinese ships, effectively turning Hunchun into the back side of nowhere.

In many ways, enforced isolation really began much earlier: One might date it to 1644, when Manchu armies swept out of what now is northeast China to defeat Ming Dynasty troops and set up the Qing Dynasty in Beijing.

The Manchus, who had their own language, sought to preserve the northeastern part of the empire as their ethnic homeland. In an attempt to achieve this, the Qing Dynasty, which lasted until 1911, banned immigration of ethnic Chinese from the main part of China to this resource-rich but underpopulated land. As Qing power ebbed in the 19th Century, the effectiveness of this ban faded. By this time, the Manchus themselves had adopted the Chinese language and largely lost their separate identity.

Buffeted by European imperialism and domestic upheavals, the Qing ceded to Czarist Russia the land east of the Ussuri River, including present-day Vladivostok, in the 1860 Treaty of Beijing. This left China’s far northeastern regions landlocked, with Hunchun cut off from the sea by just six miles of Russian territory.

Around the turn of the century, growing numbers of Koreans, fleeing poverty and Japanese occupation of their homeland, slipped across the Tumen River to settle in the Hunchun area.

The results of these events are visible today in the ethnic makeup of Hunchun: 48% Korean, 41% ethnic Chinese and 10% Manchu, distinguishable from ethnic Chinese only through ancestral records. The large number of Koreans here is now seen as an asset in developing ties not only with North Korea but also with the much richer south.

Resentment over “unequal treaties” still lingers. But for the most part, people look to the future.

Hunchun officials, exuding an air of confidence, already call this three-nation juncture “the golden triangle.” They clearly are using the U.N. proposal to drum up investor interest in more immediate development.

An over-simplified message that huge foreign sums are due to pour in here is spreading rapidly among a new breed of get-rich-quick hustlers in China’s northeastern provinces, including many at prosperous enterprises. Real opportunities offered by special tax breaks should sustain the interest of at least some potential investors. And while a great, new multinational port city may be just a dream, cross-border Sino-Russian ties grow stronger every day.