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Home >> Business
UPDATED: 09:13, June 08, 2006
Calls for united efforts to further develop region
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Businessmen having frequent trips among the cities of the Yangtze River Delta (YRD) cut their mobile phone bills in half, after a China Unicom card was launched earlier this year. Calls are charged at 0.4 yuan (5 US cents) a minute, rather than paying the usual additional long distance and roaming fees.

The new service was created because of growing integration between cities in the YRD region, coupled with other benefits for businessmen focusing on the area. If they want to get more benefits, however, such integration should deepen. And co-operation among 16 cities in the region is the key.

"When competition is acute, teamwork is critical. This can be applied to the YRD, which wants to keep its leading position in the country in regards to sustainable development," said Xu Changle, deputy director of the Yangtze River Delta Development Research Institute of East China Normal University.

Competition for the strongest economic position in China is largely between the YRD, the hinterland that surrounds Shanghai, China's largest city and the Pearl River Delta that surrounds Hong Kong.

Since 2003, the YRD region has outpaced the Pearl River Delta in economic growth. While in just two years, growth has become somewhat weak.

A report on China's regional development published by the Chinese Academy of Social Sciences earlier this year said economic growth in the YRD experienced a small decline in 2004, and the downward trend was also evident in 2005.

The delta is facing strategic conversion in economic development as manufacturing production and efficiency is in a bottleneck state, with foreign capital showing a marked decline and the growth rate of fixed asset investment slowing down, according to the report.

Data showed that in 2005 the growth rate of Shanghai's GDP fell 2.5 percentage points on the previous year, Suzhou's rate was down 2.7 percentage points, and Hangzhou's rate dropped 2.5 percentage points.

Despite growth picking up in the first half of this year, the downturn has sounded alarm bells and pushed people in the region to rethink their development mode, said Xu.

The relocation of Taiwan's industrial base to the YRD was the catalyst for the region's surge. Taiwan's electronics industry relocated en masse to industrial parks around Suzhou and Kunshan in the YRD. Japanese firms followed to compete against Taiwanese companies in the global electronics trade. European and American multinationals followed to access the region's cost structure. The YRD is emerging as the biggest production base for electronics products in the world.

The Pearl River Delta opened itself up to the world 10 years ahead of the YRD. Hong Kong's light manufacturing businesses moved over completely, causing a price revolution in light manufacturing products. Large box retailers in the United States took advantage of the trend and introduced a more efficient distribution system that, combined with low-cost production in the PRD, began a revolution in how American consumers shopped and how much they paid. The large box-retailing model has now spread to Europe, Japan and even China, continuing the virtuous cycle that the region has seen.

But both regions have failed to co-ordinate internally over key areas such as infrastructure development and attracting foreign investment. Competition within each region, as well as with each other, has hampered development. Both regions are now beginning to see signs of overheating and energy shortages are a growing concern.

"The real competition is just beginning. The region, which can integrate successfully, will take the lead," said Xu.

In 2004, the Shanghai-based YRD Economic Co-ordination Council Office was established as a self-standing body and the most authoritative institution for economic co-operation and co-ordination in the region. Since that year, the Council has been holding annual meetings to discuss regional economic affairs.

It is a good point to start with as the administration needs to play a larger role in the integration, said Yu Hongsheng, director of the urbanization research centre of the Shanghai Academy of Social Sciences.

Businesses have a strong desire to integrate, while governments do not fit in well sometimes, he added.

Sharing common natural resources and the same economic base over a long period of time, cities in the Delta concentrated on the development of similar manufacturing industries. According to Yu, this common emphasis could eventually weaken the economies of sub-regions and result in inefficient and overlapping activities.

However, deeper co-operation between governments needs strong direction from an outside source, in this case, it is the central government, Yu said.

The central government has been busy putting the final touches to a national plan to improve co-ordination in the delta.

The plan will state clearly the delta's overall position, its development objectives and priorities and relevant policies to promote its development. More importantly, the plan will put forward a framework for solving problems that a single city could not handle.

Shen Xujian, deputy regional development director under the National Development and Reform Commission, said national co-ordination efforts in the region will be focused on transportation, energy, land use, environmental protection, urban and industrial planning, human resources development and international co-operation.

"The region's development needs united efforts," said Shen.

Currently, the region is facing problems such as repetitive construction, huge environmental pressures and a lack of unified planning for regional infrastructure.

According to the report issued by the Chinese Academy of Social Sciences, pollution is threatening the healthy development of the urban area and the economy. Shanghai's emission of industrial waste gas and sulphur dioxide grew by 72.7 per cent and 17.4 per cent from 1999 to 2004. In Jiangsu Province, industrial waste water grew by 31 per cent and industrial emissions increased by 46.9 per cent in the same period. All of these environmental problems need joint cross-city efforts to be addressed.

Source: China Daily


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