In­land re­gions’ growth slips to sin­gle dig­its

Eco­nomic ex­pan­sion ofWestern prov­inces out­paces coastal area

China Daily (Canada) - - BUSINESS - By ZHENG YANGPENG zhengyang­peng@chi­nadaily.com.cn

Eco­nomic growth in most parts of China slowed in the first quar­ter, with most in­land re­gions slip­ping into the sin­gle-digit range.

As of Thurs­day, 26 provin­cial-level gov­ern­ments had re­leased first-quar­ter GDP data, with 24 of those re­gions reporting a slow­down.

Growth in east­ern re­gions gen­er­ally slowed by 1 per­cent­age point year-on-year, while in cen­tral and western re­gions growth gen­er­ally dropped by more than 2 per­cent­age points. The western re­gions con­tin­ued to grow faster than their east­ern coun­ter­parts.

Hei­longjiang prov­ince in the north­east re­ported the largest de­cel­er­a­tion. Its growth rate plunged from 9 per­cent a year ear­lier to 2.9 per­cent this past quar­ter— its slow­est pace ever. The bleak sit­u­a­tion in the prov­ince’s petroleum, chemical and equip­ment man­u­fac­tur­ing in­dus­tries, which are its core sec­tors, hit the lo­cal econ­omy hard. In­dus­trial out­put ex­panded just 3.5 per­cent.

He­bei prov­ince’s growth was the se­con­dat 4.2 per­cent, com­pared

GDP GROWTH RATE BY PROV­INCE with 9.1 per­cent a year ear­lier. The drive to curb over­ca­pac­ity in the steel, ce­ment and glass in­dus­tries dealt a heavy blow to the econ­omy.

He­bei’s steel sec­tor pro­duces al­most as much as all of Europe, so any slow­down in the in­dus­try has strongly neg­a­tive im­pli­ca­tions for the provin­cial econ­omy.

In western China, Gansu prov­ince re­ported the largest slow­down in GDP as its in­vest­ment-led growth ebbed. Growth slowed to 7.9 per­cent, down 5 per­cent­age points from a year ear­lier.

Sim­i­lar con­di­tions pre­vailed in Yun­nan, Ningxia and Sichuan.

The only bright spot was the in­de­pen­dent mu­nic­i­pal­ity of Chongqing. With GDP growth of 10.9 per­cent, it led the na­tion. It was one of just three provin­cial-level gov­ern­ments to re­port dou­ble-digit growth (the other two were Guizhou prov­ince and the mu­nic­i­pal­ity of Tian­jin).

Chongqing’s growth was driven by ex­ports, mainly of ve­hi­cles and elec­tronic prod­ucts. Even as na­tional trade value dropped 3.7 per­cent in the first quar­ter, Chongqing’s com­bined im­ports and ex­ports posted an im­pres­sive 82.3 per­cent ex­pan­sion.

Ex­perts said the city is the largest ben­e­fi­ciary of the drive to re­lo­cate man­u­fac­tur­ing from coastal re­gions to es­cape ris­ing costs.

An­a­lysts warned that the growth in in­te­rior re­gion is still low-qual­ity, and the gen­eral slow­down in this part of the coun­try un­der­scored the ur­gency of eco­nomic re­struc­tur­ing.

Com­ment­ing on Hei­longjiang’s poor per­for­mance, Da Zhi­gang, an eco­nomic re­searcher with the prov­ince’s unit of the Chi­nese Academy of So­cial Sci­ences, said: “State-owned en­ter­prises con­cen­trate in the re­gion, re­sult­ing in a less vi­brant econ­omy. The eco­nomic slow­down re­flected the fact that its in­dus­trial struc­ture re­mained back­ward and the shift of its growth model lagged be­hind” other ar­eas.

Xiong Jianzhong, chief econ­o­mist of Sichuan’s sta­tis­tics bureau, said com­pared with the east­ern re­gions, the western re­gions have a smaller share of the ser­vice in­dus­tries and are much more re­liant on in­vest­ment.

Al­though growth in east­ern prov­inces also slowed in the first quar­ter, econ­o­mists are more op­ti­mistic about the out­look in those ar­eas, as their un­der­ly­ing eco­nomic struc­tures are sound.

“The coun­try in the fu­ture will at­tach more at­ten­tion to how the coastal re­gions trans­form and up­grade their economies. With­out the trans­for­ma­tion of the coastal re­gion’s econ­omy, there will be no trans­for­ma­tion in the na­tional econ­omy,” said Xu Lin, di­rec­tor of the De­vel­op­ment Plan­ning Of­fice un­der the Na­tional De­vel­op­ment and Re­form Com­mis­sion.

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