Shanxi, Shaanxi poised for growth
> Govts of both provinces look forward to fostering economic ties with Malaysia and other countries
TAIYUAN/XI’AN: Shanxi and Shaanxi may sound the same, but these are two distinct, adjacent provinces in China that have seen rapid development having evolved 40 years on following the Chinese economic reform.
With China’s Belt and Road Initiative that focuses on improving connectivity and cooperation among multiple countries to boost economic activity, Malaysian entrepreneurs and companies eyeing the Chinese market can consider Shanxi or Shaanxi as bases for their business expansion.
Taiyuan, Shanxi
Taiyuan is the capital and largest city of Shanxi province. It is one of the main manufacturing bases of China. In 2017, Taiyuan’s gross domestic product (GDP) was 3.38 trillion renminbi. Taiyuan’s GDP per capita was 78,472 renminbi in 2017, about 15% higher than Malaysia’s GDP per capita last year.
Taiyuan is abundant in natural resources such as coal, iron, marble, silica, bauxite, limestone. Chinese coal output makes up 40% of the world coal output, and Shanxi produces a quarter of China’s coal.
Coal has driven the economy of Taiyuan and Shanxi province for decades, but it is one major source of pollution. Taiyuan had suffered from severe air pollution because of coal mining, especially in the 1990s and was even listed among one of 10 most air polluted cities in the world.
Following a serious crackdown on illegal mining activities, the province went through an industrial restructuring to shift from polluting industries to those with high value add. It also implemented coal tax reforms, introducing substitute industries and initiating environmental protection projects, helping Taiyuan achieve a balanced economy and further diversify its industrial categories.
Taiyuan tightened regulations to promote ecological construction and environment protection, with the municipal government encouraging state-owned and private enterprises to participate in the construction of forest parks, all of which are built on industrial wasteland.
The 13 sq km Yuquan Mountain Suburb Forest Park, once devastated by illegal coal mining, took 10 years for Shanxi Jinfeng Heating Co Ltd to restore it into an eco mountain park for Taiyuan residents, where over one million people visiting it every year.
“The seven large garbage dumps and ruins left by 200 mining operations was the most challenging part in the cleaning-up of the hill. About 1.1 billion renminbi was invested to restore the forest park. We planted 5.3 million trees, built 105km of roads and the installed 420km of sprinkling irrigation system,” said Yuquan Mountain Suburb Forest Park general manager Zhang Jun Ping to Malaysian media during a media familiarisation trip there recently.
Today, about 30% of the forest park is still undergoing restoration.
Taiyuan’s economic circle has witnessed growth in its manufacturing sector with notable large manufacturers such as Taiyuan Heavy Industry Co Ltd (TYHI), the first listed company in China’s heavy-duty machinery industry.
TYHI has an annual sales volume of 10 billion renminbi. Its products are widely used in metallurgy, mining, energy, transportation, aeronautics, chemistry, rail, shipbuilding and environmental protection industries, which are exported to over 50 countries, including Malaysia. One of TYHI’s businesses is the manufacturing of wheels, axles and wheelsets used for vehicles on railways, metros, light rail and urban railways.
Taiyuan Heavy Industry Railway Transit Equipment Co Ltd regional manager Chen Qinglei said the company, which has supplied to Keretapi Tanah Melayu Bhd (KTM), hopes to participate in tenders by the national rail operator or Malaysian railway projects in the future. He claimed that 80% of KTM’s train wheels are TYHI’s products.
“We see that KTM and the Malaysian railway industry are on a growth trajectory with almost a 50% jump in KTM’s demand for train wheels, as they now require about 30,000 units of wheels for five years compared with 2010 when they called for tender of 10,000 units for a three-year use,” said Chen.
“We think that Malaysia is one of the important markets in Southeast Asia, given the rapid growth in the Malaysian railway industry, as well as Kuala Lumpur being the host for rail summits in the region. When Malaysia’ railway development strengthens further in the future, we hope to establish Malaysia as a base, along with our current Indonesian base to supply to Southeast Asia,” he added.
TYHI is also in talks with Penang Port to set up additional facilities, which includes providing rubber tyred gantry crane to the port operator.
TYHI is the only enterprise in China specialising in the manufacturing of large, medium and small mining shovels; it is also the largest excavator manufacturing enterprise in China. In addition, TYHI is China’s largest development and fabrication base of heavy duty cranes; China’s largest general contractor of steel engineering construction; China’s largest base of design and manufacturing of spiral welded pipe equipment. It is the only enterprise in China that produces wheels, axles and wheel sets at the same time; and the largest manufacturing base of tower launcher for space flight in China.
Xi’an, Shaanxi
Xi’an is the capital of Shaanxi province and is an important base for China’s scientific research, higher education and hi-tech industries.
In 2017, Xi’an’s GDP was 748.52 billion renminbi while its GDP per capita was 71,853 renminbi, about 9% higher than Malaysia’s GDP per capita.
As one of China’s four ancient capitals, Xi’an’s many cultural sites include the Terracotta Army and the City Wall of Xi’an, which have attracted over 100 million domestic and foreign tourists each year.
It was also the first city in China to embrace Islam and has a large Muslim community. Xi’an Muslim Quarter, a large Muslim enclave inside the city wall of Xi’an, is home to the Great Mosque, the largest mosque in China.
Xi’an’s five main industries are hi-tech, equipment manufacturing, cultural and tourism industry, modern services and modern agriculture, as well as modern services and cultural industry.
One of the major industrial zones in Xi’an is the Xi’an Hi-Tech Industries Development Zone. In 2017, Xi’an HighTech Zone realised a GDP of 122.49 billion renminbi. Last year, it recorded 50,000 registered enterprises, 205 Fortune 500 and well known multinational enterprises, as well as 139 listed companies.
The zone focuses on four key industries including electronic information, advanced manufacturing, bio-medicine and modern service industry, as well as promotes strategic emerging industries including energy saving and environmental protection, new generation of information technology, biology, high-end equipment manufacturing, new energy, new material and new energy vehicles.
“We welcome Malaysian companies to Xi’an,” said Xi’an Municipal People’s Government information office head Sun Gao Ming, adding that Xi’an has preferential policies for investors.
Meanwhile, the Xi’an International Trade & Logistics Park plans to develop its port into the largest international inland port in China targeting both the domestic and international markets. It aims to be the most important logistics hub in the upper and middle reaches of the Yellow River, as well as a modern city driven by the service industry.