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

NewsChina - - COVER STORY - By Wang Quan­bao

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.

Yield­ing Re­sults

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.

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