With the continuous increase of both local and foreign residents, Kulangsu began to face great pressure from infrastructure construction and maintenance as well as security management. On the other hand, the increasingly rising Japan had been seeking for more benefits from Kulangsu, while other powers hoped that there would be a reasonable mode to maintain the balance. In 1902, related Chinese and foreign stakeholders signed the Land Regulations for the Settlement of Kulangsu, Amoy. In 1903, the Kulangsu Municipal Council was established, and a public settlement management system was established to allow representatives of foreigners and Chinese people at the Kulangsu Island to participate in the management of the international settlement. Since then, Kulangsu had entered the second stage for modernization.
Chinese people at the Kulangsu Island to participate in the management of the public settlements. Since then, Kulangsu had entered the second stage of modernization. From 1903, when Kulangsu Municipal Council was established, to 1941, when the Pacific War broke out, Kulangsu experienced a period for in-depth collision, exchange and integration of diversified cultures, and had a peak development. The achievements made during their period composed the major part of the current heritage of settlement culture on the island.
During this period, the social life and urban construction of Kulangsu followed the trend for transformation from the mode with Westerners playing a leading role to the one with the returned overseas Chinese playing a leading role. For tens of years before that, a great number of people emigrated from the southern Fujian area to Southeast Asia via the South China Sea. The continuous large-scale immigration promoted the establishment of a composite network consisted of the immigrant network, the business network, the financial network and other networks, forming up a transnational and transboundary social space.
Xiamen, where Kulangsu is located, just served as port for such immigration, a consumption market and an investment target. Since Kulangsu then featured relatively stable and relaxed social environment, good settlement services and infrastructure as well as beautiful natural environment, it became the first choice of the returned overseas Chinese. Especially during the period from the 1820s to the 1830s, the social and economic development of Southeast Asia was greatly impacted by the global economic crisis. Then, many Chinese people who used to emigrate from southern Fujian to Southeast Asia returned to Kulangsu. This led to a golden period for the modernization of Kulangsu.
During the period of from the establishment of the Kulangsu Municipal Council to the outbreak of the Pacific War, the number of Kulangsu’s Chinese greatly increased and far surpassed the number of foreigners. In 1911, the population of Kulangsu increased to "about 12,000, including about 300 foreign residents." In 1930, there were 567 foreign settlers (including 369 Japanese), compared with the 20,465 Chinese residents.
The return of the overseas Chinese greatly promoted the economic development of Kulangsu and even the Xiamen area. They provided financial support for urban construction and made investment in development of social and public programs as well as improvement of residential and living environment. These became substantial material measures for pursuing cultural advance and modernization of living conditions and promoted social reform. First, the returned overseas Chinese with strong economic strength became the leading force for construction of public facilities and industrial and business development.
Relying on increasing population and strong economic strength, the returned overseas Chinese participated in the management of the Municipal Council, with seats at the board of directors of the Municipal Council increased from one to five at most in 1929.The delegating system was turned into Chinese Society election system. In the meantime, social organizations organized by Chinese exerted great influence and effect in local place, including “Chinese Taxpayer Society” (1924), “Chinese Society” (1925), “Chinese Senado” (1928), Chinese religious groups, "Labor Union", "Maidservant Saving Team" and other social progress organizations. Under such circumstance, the settlement space of Kulangsu had been expanding and the social pattern was gradually improved.
During this period, the urban construction of Kulangsu was further promoted. The boundaries between the Chinese and foreigners’ settlements were abandoned. The Anhai Road, Quanzhou Road and Neicuo’ao districts had a fast development, while the Yanzaijiao and Lu’erjiao districts were renovated. In addition, the Kangtai Road Factory Zone was set up in the northwest of the island, and Longtou Road business district was developed in the central and eastern part of the island.
According to statistics, from 1920 to 1930, there were over 1,200 residences built by overseas Chinese on the island. During this period, integrated settlement and public management facilities were built and consulates of foreign countries and office of firms were established on the island. Religious and ritual architectures manifesting different cultural characteristics were built up. Of them, the telephone communication facilities (1924), electric lamps and other facilities (1928) and tap water facilities (1932) reached the most advanced level in the whole country at that time under the support and participation of overseas Chinese. Besides, Chinese and overseas Chinese were actively engaged in social and cultural construction, invested in establishing schools, founded hospitals, and developed Yanping Park, Yanping Theatre and other public cultural facilities.
Greening projects were carried out in mountainous areas and forest, while rocks and reefs as part of landscape were put under protection. Many architectures built with returned overseas Chinese played a leading role show unique architectural style based on the integration of the western and eastern cultural elements. The architectures with outstanding features of Amoy Deco style manifest the innovative achievements in modernization and localization made by the returned overseas Chinese in the process of constructing western-style buildings in Kulangsu. With great influence on the architectures in Kulangsu, the Amoy Deco style was also widely adopted in Xiamen, Zhangzhou, and Quanzhou.
The modern medical and health system and medical education system are important guarantees for the living standard in Kulangsu. For example, the expanded Hope Hospital of Reformed Church in America not only played a role of curing the sickness and saving patients, but also trained a large quantity of Chinese medical staff. Because of preaching demand of western missionaries earlier and subsequent new learning avocation of Chinese and overseas Chinese, Kulangsu formed a complete modern education system covering preschool education, primary school, secondary school to vocational education at that time. The number, scale, teaching systematicity, and teaching quality of Kulangsu’s schools were greatly increased and improved in the second half of the 19th century, with more Chinese taking part in the running of schools and teaching. The development of cultural and education programs in Kulangsu had great influence on the surrounding areas, as Kulangsu became the education center of the Southern Fujian region, with great influence on the whole country.
A group of talents who accepted modern education in Kulangsu showed new luster in every field of Chinese modern history. Ma Yuehan who was born and grown in Kulangsu became the founder of Chinese modern sports education; Xunyuan Middle School generated Lin Yutang (literary master of modern China), astronomers Dai Wensai and Yu Qingsong and horticulturalist Li Lairong; several Girls Schools generated famous gynaecologist Lin Qiaozhi and musician Zhou Shu’an; Ying Wa Middle School generated six academicians, including Wang Yinglai, Huang Zhenxiang, Gu Maoxiang, Zhuo Renxi, Hong Boqian and Zhang Qianer.
During this period, the characteristic buildings, public facilities and urban streets and districts, which were rarely seen at that time whether in terms of construction quality or service level, composed the framework of then modern settlement system. By the 1930s, then China’s most integrated settlement facilities had been set up on the island, while the most culturally diversified modern international settlements have been established here, making the island well-known for high-quality living environment.These settlement facilities and related tangible heritage are preserved well today, with high authenticity and integrity and as witness to then social life.
After the Second World War, Japanese troops occupied Jinmen Island, offshore of Xiamen in 1937 and Xiamen in 1938. Thousands of refugees surged into Kulangsu, bringing great challenge to the mature Kulangsu settlement. Broadest social mobilization was made from the Municipal Council to non-governmental organizations, and International Relief Society was established, motivating enormous energy in terms of collection, acceptance, material supply, environmental health, social security, infant care and refugee children education, and showing rapid organizing ability and patriotism of Kulangsu.
With the outbreak of the Pacific War in 1941, the Japanese invaders occupied Kulangsu and restructured the Municipal Council. The foreigners from other countries were expelled and Japanese language and education mode were promoted in the area. The single cultural pattern put an end to the long-term integrated development of diversified cultures in Kulangsu. Therefore, the history of Kulangsu as an international multicultural zone was cut off.