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West faces challenges, opportunities
2000-03-06
Xinhua
Economic restructuring is the core of the country's ongoing remake-the-west campaign.
"The west, as a whole, shall complete the course of industrialization to raise itself from an underdeveloped regional economy to a developed one," noted Chen Dongsheng, director of the Western Areas Research Centre under the Chinese Academy of Social Sciences.
The vast west, covering 5.4 million square kilometres, takes up about 56 per cent of the country's total land area and accommodates 23 per cent of the nation's population.
During the first three decades after the founding of the People's Republic of China in 1949, the economic growth rate in the west had even surpassed that in the east by a small margin.
By 1978, the per capita income gap between the east and the west had been narrowed to only about 200 yuan (US$24).
However, since China adopted reform and opening-up policy two decades ago, the east had witnessed a remarkable economic take-off. By 1998, per capita income in the east had reached 3,600 yuan (US$433.70), tripling that in the west.
Industrial growth was much faster in the coastal areas than in the landlocked west.
According to the Third National Survey on Industrial Enterprises, in 1995, 66 per cent of the country's industrial output came from the east but a mere 10.2 per cent from the west.
And six of the seven regions which registered more than 5 per cent of the country's total industrial output were located in the east; five of the seven regions with the smallest industrial output were found in the west.
As to industrial structure, processing industry played a more important role in the east while basic industry contributed to more than one-third of industrial output in the west.
The increasing imbalance of economic development in the east and west has pressed the central government to start the unprecedented revive-the-west campaign.
"But the west faces more difficulties in industrial reshuffling than the east did when its economic take-off began in the early 1980s," pointed out Chen.
As a buyer's market has taken shape in recent years, most traditional products were in oversupply in the domestic market.
Excess capacity was so serious a problem in industries like steel, coal and textiles that the State had to take some strong actions to limit the total production and propel industrial restructuring.
But opportunities always exist hand in hand with challenges.
To lay a foundation for the development of the western provinces, the State is set to earmark an astronomical amount of funds to build roads, railways and other infrastructure facilities and improve the environment.
Such massive infrastructure construction in the west will largely raise demand for products like steel and building materials. Local industrial enterprises must seize this opportunity to extricate themselves from their predicaments, Chen said.
Besides, the east can assist the western provinces in their efforts to develop a labour and resource intensive industry by offering them capital and technology, said Ma Xiaohe, director of the Institute of Industrial Development under the State Development Planning Committee.
A fundamental change in Chinese residents' consumption structure has taken place since the mid 1990s. Urban residents and farmers in the east are spending more and more on tourism, their health and high-quality foods.
The change helps create a favourable market underpinning industrial restructuring in the west which has great potential for the development of tourism and agriculture, added Ma.
Considering the challenges and opportunities, experts agreed that the campaign should proceed from local conditions.
From the long-term perspective, the agricultural structure reform should facilitate the development of industries related to agriculture, Chen said.
Currently, farming products in the west which account for one-third of China's total output, are mostly sold unprocessed. This has resulted in snail-pace growth of farmers' income and stagnant development of local light industry.
"The western areas should direct more efforts at fostering a processing industry for agricultural products," Ma said.
In the developed countries, the output value of a processing industry for agricultural products is five times higher than their agriculture output.
But in China, the former is at most 1.5 times higher than the latter, and the ratio is lower in western provinces.
In the future, intensive processing of all kinds of livestock, farm products and herbs should be given priority.
The State had set up many national defence-related enterprises in the west, but the majority of which are now caught in the red.
"The western provinces should ride the wave of the government's campaign of reorganizing its State assets and renovate technology to retool those enterprises," Chen urged.
Vice-Director of the State Economic and Trade Commission Li Rongrong pointed out that the commission this year will concentrate its restructuring efforts on enterprises.
Among 600 recommended enterprises nationwide for debt-to-equity swap, 62 per cent are from the west.
The nation's plan to use more domestically made equipment in large projects such as Three Gorges and Xiaolangdi Dam poses a golden opportunity for enterprises in the west, whose production potential has not been fully tapped.
Efficient water irrigation facilities and recycling sewage treatment equipment are in huge demand in the west.
"As a natural power house of the country, the west should reshape itself as a processing base of primary material resources rather than only being a supply base of raw materials," said Chen.
It is estimated that in the 21st century, some 60 per cent of the raw materials and 50 per cent of the energy needed by the east will come from the west.
This suggests that the reserve strength for China's economic growth depends much on the exploration of the resources in the western regions.
A planned 4,000-kilometre-long gas pipeline which runs through the main gas fields in the western provinces to the coastal areas will give a boost to the development of gas chemical industry.
While intensifying its campaign to reshuffle the industry and agriculture structure, the western region should not dilute its efforts to develop its tourism.
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