Pick­ing the right chan­nel

China Daily (Canada) - - PEOPLE - By CHEN YINGQUN cheny­ingqun@chi­nadaily.com.cn

China’s eco­nomic growth may not be as rapid as it was, but the good news is that cen­tral and west­ern parts of the na­tion are con­tribut­ing more mo­men­tum with their de­vel­op­ment paths, ac­cord­ing to se­nior in­ter­na­tional con­sul­tant Dereck Ji.

In the first half of this year, GDP growth in th­ese re­gions has ex­ceeded ex­pec­ta­tions on av­er­age, while fig­ures for the east, which is un­der­go­ing re­struc­tur­ing, have been lower than fore­cast, said Ji, se­nior part­ner of Roland Berger Strat­egy Con­sul­tants.

“The rise of the cen­tral and west­ern re­gions is due to pol­icy in­cen­tives to de­velop them, as well as the trans­fer of in­dus­tries from the east due to the na­tion’s on­go­ing eco­nomic re­struc­tur­ing,” he said.

“More­over, as th­ese re­gions’ econ­omy was rel­a­tively weak in the past, now, as they meet new de­vel­op­ment op­por­tu­ni­ties, the rapid growth stands out.”

Data show that in the first half, cen­tral and west­ern prov­inces have made great strides in eco­nomic growth.

For ex­am­ple, Chongqing, the Ti­bet au­ton­o­mous re­gion and Guizhou prov­ince have all seen year-on-year rises in GDP of more than 10 per­cent, while the na­tional rate was 6.7 per­cent.

Ji said the cities of Guiyang, Chengdu, Zhengzhou and Wuhan have seen par­tic­u­larly strong growth.

“The main rea­son is that lo­cal gov­ern­ments have spec­i­fied their own ad­van­tages and op­por­tu­ni­ties, and have de­signed sci­en­tific and tai­lored de­vel­op­ment strate­gies,” he ex­plained.

Zhengzhou, cap­i­tal of He­nan prov­ince, for ex­am­ple, has un­veiled a de­vel­op­ment strat­egy that aims to build the city into an in­ter­na­tional lo­gis­tics cen­ter by 2049.

“They have de­cided to … build two chan­nels,” Ji said.

“One is air lo­gis­tics, cre­at­ing links to other cities around the world, and an­other is con­ti­nen­tal rail­way and high­way chan­nels such as the Zhengzhou-Europe rail line.”

This, he said, is a sign that au­thor­i­ties have rec­og­nized the po­ten­tial of de­vel­op­ing a “chan­nel econ­omy”.

A chan­nel econ­omy is the Chi­nese term for when a govern­ment looks to de­velop the lo­cal econ­omy by im­prov­ing trans­porta­tion links such as air routes, rail­ways and high­ways.

The goal is to in­crease ex­changes of peo­ple be­tween re­gions and the world, thereby boost­ing trade, tourism and other in­dus­tries.

Ji said cre­at­ing a chan­nel econ­omy would al­low cities in China’s cen­tral and west­ern re­gions to trans­form from iso­lated in­land ar­eas to open lo­gis­tics hubs.

When lo­gis­tics are de­vel­oped, in­ter­na­tional trade is de­vel­oped, he added.

Zhengzhou is also try­ing to fos­ter emerg­ing in­dus­tries, in­clud­ing smart­phone man­u­fac­tur­ing, new en­ergy

se­nior part­ner of Roland Berger Strat­egy Con­sul­tants

ve­hi­cles and cross-bor­der e-com­merce, and aims to have such in­dus­tries mak­ing up about 70 per­cent of its in­dus­trial sec­tor by 2020.

Ji said a chan­nel econ­omy could be a so­lu­tion for many cities, es­pe­cially in light of China’s Belt and Road Ini­tia­tive, which com­prises the Silk Road Eco­nomic Belt and 21st Cen­tury Mar­itime Silk Road and is de­signed to im­prove con­nec­tiv­ity be­tween Asia and the rest of the world.

“In 10 years, or even longer, the Belt and Road Ini­tia­tive will in­flu­ence the en­tire global eco­nomic land­scape,” he said.

“With the Belt and Road be­ing built, there will be a new trade chan­nel com­pli­men­tary to the ex­ist­ing marine trade route, and coun­tries along the routes will deepen ex­changes in econ­omy and cul­ture. Plus, cities on the routes, such as Zhengzhou, will be very im­por­tant.”

A chan­nel econ­omy would also fit with the de­vel­op­ment goals in North­east China, which used to be an in­dus­trial cen­ter three decades ago but is now al­most bot­tom of the pile in terms of GDP growth.

“The Belt and Road will have an ef­fect on the north­east, as there are chan­nels from there to Moscow and onto Europe. If th­ese chan­nels are built, then prod­ucts from north­ern China can be sent through here, and Harbin (the cap­i­tal of Hei­longjiang prov­ince) will be­come a port city. So the first step is to build chan­nels.”

For in­land cities un­able to in­stantly de­velop a chan­nel econ­omy, Ji sug­gested they nur­ture spe­cial­ized in­dus­tries to re­al­ize eco­nomic growth and then build chan­nels for its prod­ucts.

For ex­am­ple, Guizhou in the south­west is be­ing de­vel­oped as a big data cen­ter, in line with the In­ter­net Plus strat­egy, which aims to in­te­grate the mo­bile in­ter­net, cloud com­put­ing and big data into mod­ern man­u­fac­tur­ing.

More­over, he said, cen­tral and west­ern cities look­ing to trans­fer in­dus­tries from the east should be care­ful to opt for in­dus­tries that do not pol­lute too much or con­sume too much en­ergy.

“Chongqing has done quite well, as it’s taken over the com­puter in­dus­try from Kun­shan city in the east­ern prov­ince of Jiangsu.” The west­ern city is now the world’s largest PC man­u­fac­tur­ing cen­ter.

Ji rec­om­mended cities study best prac­tice from around the world, but make plans based on lo­cal con­di­tions.


Dereck Ji says a chan­nel econ­omy can be a so­lu­tion for many cities.

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