Moving Inland

In the newly issued guideline in mid-September on further promoting the economic and social development of the Yangtze River Delta, the State Council also makes it explicit that the delta should work more closely with the middle and western regions to propel their growth.

Motivated by the opportunities ahead, inland provinces including Anhui, Jiangxi and Hunan, as well as cities in northern Jiangsu province which used to be decoupled from the economic prosperity of the central Yangtze River Delta, are all striving to attract businesses during the eastern coastal cities' current industrial transfer.

In adjacent Anhui province, for example, over 55 percent of its inbound investment has been coming from the Yangtze River Delta, according to a report from the NDRC.

Central China's Hubei and Hunan provinces, too, are looking to the Yangtze River Delta for the transferring of businesses in a bid to build up their processing and manufacturing industries.

At the Hubei and Shanghai (Yangtze River Delta) Economic and Trade Fair late August, Hubei pocketed a series of investment deals worth over 60 billion yuan.

With its advanced infrastructure and strategic position in south-central China, Hunan attracted a total investment volume of over $40 billion at the 2008 Hunan (Shanghai) Investment Conference held in mid-June this year, with more than 800 key investment projects covering infrastructure, energy, logistics, financial service, tourism, cultural and creative industry.

For the city of Xuzhou, located at the northern tip of Jiangsu province where the economy is much less developed, cooperation with Suzhou and Shaoxing, both from the central Yangtze River Delta, has brought in 36 investment projects totaling 17 billion yuan last July.

With the opening of the Suzhou-Nantong Yangtze River Bridge and the construction of Chongming-Qidong Bridge, both connecting the economic hubs in the delta with the less developed cities in the region, experts say there would be much speedier integration of the south and north of Jiangsu province.

Meanwhile, foreign capital for processing trade will also move westward to less developed regions to continue enjoying the competitiveness brought about by the low labor costs.

An annual survey from the American Chamber of Commerce in Shanghai earlier this year shows about 5.5 percent of the companies are already investing in inland provinces like Hunan, and over 36 percent say they would set up operations in second- and third-tier cities and interior areas in China.

With a fast developing infrastructure network, abundant resources in land and labor, as well as people's rising living standards, cities in inland China are well positioned to become the next destination for investment after the highly saturated eastern regions, experts say.

They agree, however, that the relocation of businesses should not be achieved at the cost of the environment.

"The moving of labor-intensive manufacturing industries into economically underdeveloped but resource-rich areas would be a key point not only for ensuring a balanced and sustainable development of the region's economy, but also for creating new chances of growth in less developed areas, given that they should take environmental protection as a prerequisite for the relocation." Wang says.

(China Daily October 13, 2008)