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What leads to the "slow" growth in east China?
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16:12, August 12, 2009

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China's coastal regions become new poles of economic growth

In the first half of this year, there were 13 provinces (autonomous regions and municipalities) that maintained double-digit growth. However, Shanghai, which has been the leading region, only achieved 5.6 percent growth, for the first time behind the 7.1 percent national average. And in Zhejiang, the average growth rate in the first half reached 6.3 percent year-on-year. Shanghai and Zhejiang are important representatives of east China's economy, and their GDP growth slowdown arouses public concern.

East China's economy represented by Shanghai and Zhejiang is highly global-market-oriented, thus was affected more than other regions. Some cities have entered the post-industrial stage, and development bottlenecks have appeared. However, despite the declining growth rate, this region's independent innovation, restructuring and industrial upgrading has been accelerating.

Post-industrial economy era

With the sudden attack of the international financial crisis, exports severely shrunk, and this is the main reason for the poor economic performance of the eastern region in the first half. Shanghai exports fell 23.3% year-on-year and Zhejiang exports fell 19.6 percent in the first half.

"The current pace of development in Shanghai reflects the features of GDP growth model of the post-industrial era." Dr. Tang Yunyi at Institute of Economics, Shanghai Academy of Social Sciences said.

The typical characteristic of the post-industrial economy era is that the proportion of secondary industry is much higher than the service industry, and their economy is very close to the international market. Generally the central and western regions are at the early or medium stage of industrialization. When facing world economic recession, the eastern region was more seriously affected than the central and western regions.

Experts in Zhejiang Province hold a similar view: GDP per capita in Zhejiang Province is moving towards 8000 to 10,000 USD. At present, in accordance with international experience, the economic growth rate will moderately slow down.

There are many small and medium-sized enterprises as well as a textile processing industry in Zhejiang Province that benefit much less from the expansion in infrastructure investment policy than central and western provinces.

Restructuring and industrial upgrading accelerates

The growth rate slows down, but the transformation and upgrading of economic development is being carried out in full swing in east China.

The future economic development of Shanghai will be innovation-driven rather than investment-driven, and high-tech industry will be given priority to establish a complete industrial chain. Coastal areas in Jiangsu can make full use of land and labor to undertake the transformation of manufacturing industry in Shanghai. In addition, this year the State Council has given more explicit targeting guidance on the development of the Yangtze River Delta region.

In the Pearl River Delta, Guangzhou and Foshan have a clearer view of their function and urban planning. This makes the aims of cities in eastern region more clear and reasonable.

Since the economic crisis, some labor-intensive and high energy-consuming industries in this region have gradually been transferred or eliminated, and businesses pay more attention to technology and management innovation. At the same time, enterprises try harder to explore the domestic market, and gradually reduce dependence on external economies.

Zhejiang Province also seizes the opportunity to develop new large-scale industries. In the field of traditional industry, their independent innovation ability has also significantly improved.

Some experts at Shanghai Academy of Social Sciences believe that; "Footwear, apparel and other industries in Zhejiang and other coastal areas have transferred to Jiangxi, Sichuan and other places since last year. This means the 'slow' growth in east China is a contribution to the coordinated development of regional economies."

People's livelihood more important than GDP

"If we say that job creation is the core pursuit of the macro-economic policy, then no doubt that Shanghai is a success." Tang Yunyi thinks. The performance of the government in employment and the livelihood of the people are not fully reflected in short-term GDP statistics.

In the first half of 2009, Shanghai created 322,600 new jobs, and the number of job vacancies in the human resources market has been restored to the level before October last year.

Statistics show that in terms of environmental protection, Zhejiang Province also made outstanding achievements. In the first half of 2009, enterprises with annual sales over five million yuan in Zhejiang Province are expected to decrease energy intense industries by 7.1 percent year-on-year. At the same time, Shanghai energy consumption per unit of GDP decrease is expected to reach 8 percent this year.

By People's Daily Online

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