A tiny, newly founded Chinese municipality in the South China Sea, which is also claimed by Vietnam, could become an offshore haven for Chinese companies, its mayor and Communist Party Secretary said in an interview this week.

“We think we should develop some virtual economic activity. We already have 11 companies that have registered in Sansha, paying tax in Sansha,” Xiao Jie told the Southern Metropolis Daily in an interview published on Friday.

Xiao Jie

Xiao Jie, the first mayor of Sansha city. Pic: AP.

Xiao is a member of China’s national rubber-stamp parliament, the National People’s Congress. He gave the interview in Beijing on occasion of the convention of the 12th congress, which concludes the once in a decade leadership transition in China and Xi Jinping’s ascendency to the Chinese presidency.

The world’s second largest economy created the municipality in July last year in an attempt to bolster its disputed claim over most of the South China Sea. Sansha administers the Paracel Islands, which are claimed by Vietnam and the Spratlys, claimed in total or in part by Vietnam, Malaysia, the Philippines and Brunei.

Xiao Jie, who serves both as Communist party secretary and mayor for the miniature city, with an estimated population of 1,000, is assisted by three deputy mayors and formally elected into the mayorship by a People’s Congress with 45 delegates. It even has a court of justice and a clinic. A kindergarten and a school are being planned, the mayor said.

Every week, a supply ship delivers 200 tons of fresh water and abundant food supplies to Yongxing, the island that hosts his office, the mayor revealed. He says he regularly travels between Yongxing, the provincial capital Haikou, a 20-hour journey by ship, and the capital Beijing.

The government seat of Sansha City on Yongxing Island. Pic: AP.

The two million square kilometres of sea, an equivalent to almost a fourth of China’s land territory, under his administration harbour vast reserves of oil and gas and is among the most important trade routes in the world. Almost a third of global crude oil passes through the South China Sea, according to the U.S. Energy Information Administration.

Sansha is still inaccessible to the public, but will soon open for tourists, Party Secretary Xiao said. “This year the Hainan provincial government has given this much attention and done a lot of preparatory work,” he said, including the selection of tourist routes and sightseeing spots.

The newest of China’s some 280 cities was created in a haste, Xiao revealed. “I heard the news on July 17 last year during a meeting of the Hainan provincial Party Standing Committee,” he said. “On the 19th, I was elected as a national lawmaker for the Sansha constituency. On the 21st, I boarded a ship to assume my office, I arrived on Yongxing Island on the 22nd. On the 23rd, the Sansha People’s Congress held its first meeting, on the 24th the city was formally established.”

Xiao said he didn’t bring any useful prior work experience to the job. The 52 year-old law graduate’s last job was heading Hainan’s provincial agricultural department. “There is no arable land in Sansha, and my foremost task is not to develope the fishing industry. The main objective is to protect our nation’s maritime sovereignty.”