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Print Edition> Business
UPDATED: April 12, 2010 NO. 15 APRIL 15, 2010
Geography of Competition
As China regains its pre-crisis momentum, the country's regional economic prowess is beginning to emerge


CHINA'S BOOMTOWN: Zhanjiang in Guangdong Province is a prominent export hub (XINHUA) 

The Chinese Academy of Social Sciences (CASS) has recently released its Annual Report on the Overall Competitiveness of China's Provincial Economies (2008-09), providing a fresh look at the latest economic map of the country.

For the fourth consecutive year, Shanghai claimed the title of China's most competitive economy, followed by Beijing, Jiangsu, Guangdong, Zhejiang and Tianjin. The biggest improvement was made by northeast China's Jilin Province, which moved up four spots to No. 15 by the end of 2008.

The report, compiled by the China Economic Competitiveness Research Center (CECRC), analyzed 31 provincial-level regions on the mainland and assessed nine factors in each, including GDP, sustainability, knowledge-based economy, overall government involvement, business coordination, industries, financial vitality, investment environment and efficiency.

The report for the first time made a comparison between China's top 10 competitive regions and G20 countries in terms of GDP, trade and household consumption, etc.

"Some of the provincial economies have approached developed nations in size, but still have a long way to go in terms of resources efficiency and value creations," said Li Minrong, Director of the Development Research Center of Fujian Provincial Government and one of the editors of the report.

There is a remarkable upward trend in economic momentum all over the country and the competition between regional economies is "getting intense," said Li Jianping, a researcher of the CECRC and one of the compilers of the report.

One of the more promising regions is west China. The report showed the average score of western regions increased from the previous year and narrowed the divide with eastern provinces. The Inner Mongolia Autonomous Region, in particular, has stayed in the top 10 for two straight years, a strong signal that west China is swiftly catching up to provinces in the east coastal area.

As China modernizes and expands economically, the main beneficiaries have typically been the east coastal provinces that basked in the glow of an export boom while the vast and mostly underdeveloped western regions stood on wobbly legs.

But a lack of exposure to global markets helped the west sidestep the worst of the financial crisis. Meanwhile, government efforts to distribute assistance more evenly are already underway. Fixed-asset investments in the west grew a robust 35 percent in 2009, 12 percentage points higher than in the east. This indicated that businesses are moving westward to capitalize on the lower costs and tap a cheaper labor market.

The west is on track to reshape the industrial architecture of the country on the back of consolidating infrastructure and rich resources, said Huang Qunhui, Deputy Director of the Bureau of Scientific Research Management under the CASS.

For the first time, Jiangsu Province overtook Guangdong Province to clinch the third place on the list, stoking a heated debate over protracted competition between the two economic powers.

In many indicators like GDP and fiscal revenues, Guangdong still races far ahead of other regions despite a decrease in its growth engine. As a result of the financial crisis, the export-dependent economy is obviously facing some strong headwinds.

But this year's ranking has put more emphasis on industrial efficiency and potential over sheer economic scale, said Li Jianping.

The biggest advantage of Jiangsu lies in a deep-rooted commitment to putting the economy on a more sustainable footing, he said.

Jiangsu was not spared the ripple effects of the financial crisis, but the woes healed quickly as the province diversified into a series of more promising industries like wind power and software services. The growth prospect was so buoyant that investors' cash poured in to finance the new ventures. Its accrued foreign direct investment amounted to $24 billion in 2009, more than any other province and accounting for 30 percent of the country's total.

The government stimulus has tilted toward advanced industries, putting the labor-intensive businesses of Guangdong at a disadvantage, said Lin Jiang, Deputy Director of the Center for Studies of Hong Kong, Macao and the Pearl River Delta at Sun Yat-sen University.

But still, the ranking sounded an alarm for Guangdong to wean off its dependence on exports and stimulate domestic demands, Lin said.

The rebalancing may require a compromise on growth rates, but given its help for the greater health of the economy, it is well worth the effort, Lin said.


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