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Trade trend -> China's economy section VI

China's economy section VI
Date:23.May.2005

 

Section VI: China¡¯s Industrial Policies and

 Regional Economic Development

I. China¡¯s Industrial Policies

China has divided its economic activities into three industries and each industry involves several trades: the primary industry is agriculture ( including forestry, animal husbandry and fishery ). The secondary industry is industry ( including excavating industry, manufacturing industry, power supply, water supply and heat supply ) and architectural industry. The tertiary industry includes various trades other than those in the primary and secondary industries, such as service industry, as well as includes government institutions.

The goal for the readjustment of the industrial structure during the tenth five-year plan period of the national economy is: to consolidate and strengthen the basic footing of the agriculture, to quicken the industrial restructuring and the upgrading of structural optimization, to go all out to develop service industry, to accelerate national economy and social informationization, to continually strengthen the construction of infrastructure. By 2005, the added value of the primary the secondary and the tertiary industries will account for 13%, 51% and 36% respectively of the GDP. Number of the practitioners will account for 44%, 23% and 33% respectively of the practitioners from all walks of life.

At present, the Chinese government uses 5 categories of industrial policies to promote and realize the goal for structural readjustment.

The first category is called inclinable industrial policies, or otherwise called supportive industrial policies. The subjects supported by these policies are those specialized industries, specialized enterprises and specialized products that play an important role in improving national competitive power and in industrial upgrading. Thus, the state will support the development of these trades and enterprises by means of injecting capital funds, conducting financial discount, issuing bonds and changing debts into stock.

The second category is called encouraging industrial policies, or otherwise called supportive industrial policies. In terms of the traditional industrial restructuring encouraged by the state, as well as the growing strategic industries and the growing strategic products, within given time, the state will exercise tax exemption measures, so as to encourage the upgrading and replacement of the traditional industries. Such practice will not only favor investment encouragement and the mobilization of the internal initiatives, but also favor the absorption of investments from various sides.

The third category is called competitive industrial policies, or otherwise called functional industrial policies. Other than trades concerning national security, naturally-monopolized trades, trades providing important public products and services, as well as pillar industries and key enterprises in high-tech industries, most trades, most enterprises and most products belong in the scope of competitive industries. For the competitive industries, the state will create a fair, just and transparent policy environment in terms of fair investment and taxation policies, rigorous technical quality standards, standardized anti-monopoly laws and regulations and quick market information service, so as to realize the survival of the fittest.

 The fourth category is called restrictive industrial policies. Restrictive industrial policies will be carried out against the products causing environmental pollution, with backward technical level and with supply seriously exceeding demand, so as to resolutely eliminate them.

 The fifth category is called protective industrial policies. Aiming at agriculture and service industry with comparatively weak competitive power, especially aiming at some young industries, protective industrial policies will be carried out  without violating laws and regulations laid down by WTO, but will properly protect the industries and help accelerate the development of the young industries and agriculture and service industry.

 In 2003, the investments in fixed asset from all walks of life amounted to 5511.79 billion yuan, rising 26.7% over last year and, in terms of the capital construction, investment in the primary industry reached 105.97 billion yuan, rising 1.6% over last year; investment in the secondary industry amounted to 778.42 billion yuan, rising 38.1% over last year; investment in the tertiary industry amounted to 1388.51 billion yuan, rising 26.4% over last year. In 2003 GDP, the primary industry accounted for 14.6%, the secondary industry for 52.3% and the tertiary industry for 33.1%.

 

II .     Regional economic development

China¡¯s eastern region covers 12 provinces (municipalities and autonomous region), that is,Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Shandong, Zhejiang, Fujian, Guangdong, Guangxi and Hainan. The region accounts for about 14% of China¡¯s land mass and 40% of its population. It has easy access to transportation, a dense population and started up at an early date in economic development. It is also rich in high-quality labor resources.

For a considerably long period of time since China initiated reforms and opening up in 1978, the focus of the state investment has been gradually shifted to the eastern coastal areas. Furthermore, most of the reform measures formulated since 1978 were tried out first in the eastern region. As the measures help spur economic growth, they have all the more promoted faster economic development in the region. Since the region was opened to the outside world at an early date and has all the special economic zones and most open cities in China, more than 85% of direct foreign investment has been made there, thus all the more propelling the region¡¯s development. Therefore, since the initiation of reforms and opening up, the region has been the most developed area in China. It made up 69.75% of China¡¯s GDP in 2003.

China¡¯s western regions involve 10 provinces, regions and cities such as Gansu, Guizhou, Ningxia, Qinghai, Shanxi, Sichuan, Tibet, Xinjiang, Yunnan and Chongqing, owning 64% of the country¡¯s land area and 22.8% of the total population. China¡¯s western regions are rich in mineral resources and advantageous in energy ( including water energy ), tourism and land resources. It can be seen from an overall view that the east at the lower reaches of the rivers owns 14000 kilometers of coastal areas; while the west at the upper reaches of the rivers adjoins more than 10 countries, owning 3500 kilometers of land frontiers and are regarded as the second golden area for China¡¯s opening up to the outside world.

 Since 1996 when China began to implement the ninth five-year plan, the Chinese government has intensified efforts to make investment in the western regions. Given the same conditions, priority has been given to the arrangement of resources development and the basic construction projects in western regions and, unless otherwise demanded, loans from foreign governments and the multilateral and bilateral recipient projects have basically been arranged in western regions.

In recent years, ¡° revitalizing the old industrial bases in northeast China ¡±is beginning to step into the development strategies of the state and the three provinces in northeast China ( Heilongjiang, Jilin and Liaoning ) are becoming the new hotspot regions for economic development. The northeast China is China¡¯s industrial base and had ever made great contributions to the establishment of independently-owned industrial system and the national economy system in China. The first 100 projects for the revitalization of the old industrial bases in northeast China have now been started, with a total investment of 61 billion yuan. These projects are mainly scattered in equipment manufacturing industry, raw material industry and farm products processing industry. In terms of fund-raising, other than the diversified channels such as bank loans, corporate fund-raising and absorption of foreign investments, the state will also grant loans on discount basis to the project construction.

 

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