SANYA, China - China''s leaders once tapped Hainan, this small sunny island off the southern coast of China, to be one of five experimental laboratories for capitalism. Hainan was supposed to compete to become a new Hong Kong, even a future Singapore.
 
But more than a decade later, even as China''s hot economy bubbles over with success in places like Shanghai and Shenzhen, Hainan is, well, still an experiment, like a lone laggard.
 
It seems as though this place, despite its postcard-perfect views and year-round summer sheen, might be called one of China''s earliest glitches on the road to capitalism, an isolated patch of somewhat undeveloped land that had once captured leadership attention, wads of cash and many talented Chinese wanting to strike it rich.
 
"The early 1990''s experiment in Hainan was a failure," said Li Renjun, a professor of economics at Hainan University in Haikou, on the north coast of the island. "It has taken Hainan almost 10 years to recover from that failure."
 
The vast sums of capital that flowed into Hainan never built factories or brought migrant workers to its shores, experts say. Instead, they mostly lured speculators, real estate developers and financiers - many of whom dashed away when things began to collapse in the mid-1990''s.
 
But now Hainan is hoping to be reborn as a different sort of place; optimists here like to call it the next Hawaii.
 
Rather than buck the speculators'' first instincts, officials here are trying to work with them.
 
After years of helter-skelter, boom-and-bust development, Hainan - a province of eight million people - is shedding its loftier ambitions of becoming an industrial center.
 
It is still betting on property developers, but it is lowering its sights and rebranding itself as a playground for China''s new rich. And in this reincarnation, it is finding some long-sought success.
 
This tropical island in the South China Sea, just 13 miles off the China coast, is now busily erecting resort towns, golf courses, some multistory condos and low-rise villas. Not to mention a handful of mega-shopping malls.
 
Sanya, a former fishing village on the island''s most scenic shores, has been transformed into a bustling tourist haven. Five-star hotels now cling to the beaches of this southern resort town, which each year plays host to the Miss World pageant.
 
And a spectacular international conference center in a resort town called Bo''ao is being promoted as China''s answer to Davos, Switzerland, where each January the annual World Economic Forum of business leaders, government officials, activists and intellectuals is held.
 
"We want Hainan to be a vacation spot for China and the world," declares Zhu Huayou, a government official in Hainan''s Foreign Affairs Office. "Bali has done something that fits the needs of its customers. We want to do something similar here."
 
Few visitors will mistake Hainan for Bali, with its rich and traditional customs as a backdrop to hundreds of resorts catering to visitors from all over the world. But millions of tourists, mostly from China and Russia, are now beginning to frequent this relatively inexpensive and less-developed island of magnificent beaches and lush mountain landscapes.
 
Last year, more than 3.7 million tourists stayed in hotels in Hainan, a 20 percent increase from 2003, according to local tourism officials.
 
Investors have taken notice. Li Ka-shing, the Hong Kong billionaire, is scouting development projects here. And Citic Pacific, a huge Hong Kong conglomerate, plans to spend hundreds of millions of dollars over the next few years to develop residential and commercial property in Bo''ao.
 
Western hotels are coming, too. Starwood Hotels and Resorts Worldwide - the operator of Sheraton, Westin and W hotels - has already opened one resort in Sanya and plans to open another in Haikou, the provincial capital.
 
Marriott International and Hilton Hotels are also newcomers. And so is Shangri-La Hotels and Resorts, which is planning a resort in Sanya, a village that three years ago did not have a single Western-operated hotel.
 
"Our target is to open up the expat and meetings market here," said Robert J. Lohrmann, general manager at the Sanya Marriott Resort and Spa. "We see Sanya as a serious competitor to Bali and Phuket in the next five years."
 
Few Americans come to Hainan for vacation, of course. (Most who come this far visit Beijing or Shanghai instead.) Direct flights from the United States to Sanya are not available. Travelers have to transit through Hong Kong or Guangzhou.
 
But Hainan officials say the number of wealthy Chinese is growing rapidly, with an estimated 236,000 millionaires (in American dollars), according to Merrill Lynch. That''s far more than in Russia and India combined, and a lot of that wealth has filtered down to hundreds of thousands of less affluent but increasingly comfortable Chinese.
 
They are purchasing luxury items, buying cars and spending more on vacations.
 
Hoping to tap into that wealth, investors and government officials here are once again trying to engineer a real estate boom.
 
Indeed, hundreds of buildings that sat uncompleted for a decade, relics of the 1990''s real estate bust, are finally coming to life in Haikou.
 
In the northwest part of town, construction is going on around the clock to build a crush of new high-rise developments with names like Sunshine Classics and Dragon Pearl New City.
 
Yet on some of the city''s busiest streets, one can still see stretches of uncompleted buildings that stand out as eerie reminders of the previous boom.
 
"A lot of the buildings on this street went dark in ''93," Hu Hui, deputy chief editor of The Securities Daily, a Haikou business newspaper, said as he drove down Guomao Road. "You should have seen what this area looked like three years ago."
 
Today, luxury apartments along the sea are selling briskly for $80,000, according to local real estate brokers.
 
For a brief time, in 1992, Hainan was China''s fastest-growing economic region. People came from all over the country to make their riches in this free-wheeling capitalist outpost. Prostitution and underground gambling flourished.
 
But after 1993, when the government began to rein in some of the excesses, real estate prices plummeted and investors realized Hainan''s economy was built on sand.
 
"The growth of the real estate business was too rapid during those years, and certainly there was a bubble in it," said Professor Renjun at Hainan University. "Officials hoped that Hainan would become a second Taiwan or Hong Kong, but that was just unrealistic."
 
Developers once sold apartments for as much as $1,500 a square meter, or about $150,000 for a comfortably sized apartment at a time when the average Chinese worker on Hainan made less than $250 a month.
 
Now, those same apartments sell for as little as $200 a square meter. And villas that were priced at $1 million are now listed at about $100,000.
 
The province''s new freedoms, tax breaks and duty-free provisions also often gave rise to illegal car smuggling, government corruption and, for a brief time, even the opening of an illegal stock exchange.
 
State-backed real estate ventures flopped. And a series of scandals in the 1990''s destroyed some of the province''s biggest financial institutions.
 
Today, Hainan is no longer considered a pioneering province. Instead, it is a laggard in a nation of growing economic might; an island of lost opportunities. While other export-driven coastal provinces, like Zhejiang, Guangdong and Fujian are soaring, Hainan is in recovery. Indeed, of 31 regions with provincial status, Hainan''s economic growth has ranked at or near the bottom in all but one of the last 10 years. Four times, it ranked dead last.
 
Now, after a series of leadership shake-ups, Hainan''s provincial government is looking to turn things around by pushing clean and sustainable growth.
 
"Because of 1988 and the special policies, Hainan got really hot," said Mr. Zhu, in Hainan''s foreign affairs office. "Now, we don''t think about it. We just want Hainan to have a good life quality and a good environment. Most important is protecting the environment."
 
But some residents here worry that tourism and real estate are not enough to sustain the local economy.
 
"Hainan doesn''t have anything of its own, everything comes from outside," said Tang Fengyu, an entrepreneur in Haikou. "People just wait for the central government to act. But they don''t want to pollute, so how can it have industry?"
 
Developers, however, are naturally more optimistic. They say foreigners, including Japanese, South Koreans and even some Americans, are now coming to Hainan to purchase vacation homes.
 
A growing number of wealthy Chinese are also looking for second homes.
 
Some evidence of that can be seen in Haikou, where Changxin, a Hong Kong developer, is building a huge apartment complex, 900 units surrounded by palm trees, miniature bridges, man-made lakes, waterfalls, lush tropical gardens and a Miami-style shopping street.
 
"This was all developed this year," said Ning Bo, a sales agent at Changxin. "And now we''re 60 percent sold out on the first phase of the development."
 
Sanya is also marketing aggressively, with flags in English, Chinese and Russian trying to lure buyers to purchase expensive apartments and villas.
 
Still, many people in Haikou worry that the latest real estate boom could also be a mirage.
 
Developers who acquire land in China, after all, are required by law to start building within two years of acquiring their property. And so whether there are buyers or not, buildings here in China go up, suggesting pent-up demand.
 
Wen Ling, co-chief executive of Xing Ji Guang Yuan, a real estate advisory company, points to one building here that began as a hotel, then was converted into a residential building. But after two weeks of disappointing apartment sales, it was converted again - this time into an office complex.
 
"In Haikou, real estate development is really bad," Ms. Wen said. "There''s more apartments than people need. How many people can buy an apartment for $70,000?"
 
Government officials and real estate specialists are quick to say that outsiders are willing to pay that much. And they say that with tighter credit and less speculation Hainan will avoid another bubble.
 
But tell that to Zhao Zhejun, a 36-year-old electrician who is dining at a makeshift restaurant that operates in the shell of an unfinished 14-story building in downtown Haikou.
 
"There''s a lot of work, but no money," he said. "They tell us, ''We''ll pay you after we sell the building,'' " Mr. Zhao said as he fingered some tools and sipped green tea. "This is all government money. They love to build buildings like this one that no one lives in. Only the developers see the money."