Every Mu Counts
As China attempts to usher in ‘high-quality growth,’ Zhejiang Province is piloting an industry evaluation system to push its economy toward steadier and sustainable development
The words buzzing on everyone's lips during this year's two sessions, China's legislative meetings, were “high-quality growth.” The strategy will replace “fast growth” as the country's fundamental economic development target.
The report to the 19th National Congress of the Communist Party of China (CPC) in October 2017 declared that China's economy has been transitioning from a phase of rapid growth to one of “high-quality growth.”
How to shift the economy has become the major focus of governments at all levels.
An innovative industry evaluation system called “per mu yield” launched by East China's Zhejiang Province has gained a lot of attention.
A mu is a Chinese unit of land measurement, roughly equivalent to 0.165 acres. The term “per mu yield” is often used in agriculture to refer to the average crop production for a mu of land. Now, Zhejiang has appropriated the concept and used it in local industry to evaluate whether a company is using resources efficiently, and whether it is growing in a green and sustainable way.
The evaluation model examines the key indicators of an industrial firm in the amount of mu it covers, such as tax payments per mu, sales revenue per mu, industrial added value, energy saving and sewage disposal.
The “per mu yield” evaluation method began in Haining, a county-level city in the north of Zhejiang and under the jurisdiction of Jiaxing.
In 2012, Haining was suffering from a serious shortage of land, water and energy, which deterred rapid economic growth. To solve the problem, the local government put forward a strategy called “Vacate Low, Invite High” to make better use of land and resources.
The strategy vacates low-end, resourceconsuming, energy-intensive and polluting industries and companies (which tend to take up a great deal of space), and invites in highend, efficient, advanced manufacturing and modern service industry.
The “per mu yield” evaluation system was an innovative response to the strategy. By the end of 2012, Haining authorities had painstakingly evaluated the performance of nearly 2,000 local companies, each covering an area of three mu (approximately 0.49 acres) or above.
This land-oriented evaluation was constructed from a variety of indicators: half was graded on the company's tax payment per mu, 12 percent on sales revenue, 10 percent on industrial added value, 10 percent on energy saving added value, 10 percent on pollution discharge reduction and 8 percent on overall labor productivity.
The firms were classified into three categories: Level A, Level B and Level C. Four-fifths ranked Level A, which were promising, and the top 10 percent were A+ firms that could gain propriety support from the government; 15 percent were Level B, and needed an overhaul for better development; the final five percent were Level C outdated firms to be eliminated.
The municipal government carried out a differentiated resource allocation policy to reward or punish companies of different levels.
Level A+ enterprises were entitled to a land tax cut as high as 80 percent, Level A 50 percent to 60 percent, Level B 20 percent, while Level C companies were given no tax reduction; Level A and Level B companies paid normal rates for electricity but Level C companies were forced to pay an extra 0.1 yuan per kilowatt-hour (US$/KWH 1.58), and charged a higher overuse fee; meanwhile, for Level C companies, higher industrial production, such as energy, water consumption and sewage disposal, incurred higher costs.
Eighty-three enterprises were listed as Level C, of which 13 were wound up, seven merged and reorganized, and eight were “reconstructed.” Fifty-seven parcels of underused land 1,418 mu (233.5 acres) in total – were vacated for future planning.