Merger of cities in Shandong can benefit both if done right

THE STATE COUNCIL, China’s Cabinet, approved Shandong provincial government’s application to merge its smallest administrative area, the city of Laiwu, with the neighboring provincial capital Jinan last week. China Daily reporter Li Yang comments:

The move will increase Jinan’s area from 8,177 square kilometers to 10,244 sq km, its population from 7.4 million to 8.7 million, and its annual gross domestic product from about 809 billion yuan ($120 billion) to 913 billion yuan, according to last year’s data.

The merging of the two cities is not a surprise to many, as the Shandong provincial government started carrying out a regional integration development plan customized for the two cities in 2013, and a 117-km high-speed railway connecting the two cities has been under construction since late 2017.

Both cities will benefit from becoming one administrative area. Jinan will further consolidate its position as the second largest city economy in the province, second only to the coastal port city of Qingdao whose GDP is about 1.2 trillion yuan. And if Jinan’s current annual GDP growth rate of about 12 percent is maintained, its GDP will increase to more than 1 trillion yuan — which is the threshold for first echelon of cities in China of which there are about 13 at present.

For Laiwu’s part, although many people lament its disappearance as a city in name, the local people and economy will benefit from the move. The city — which was upgraded from a county of its western neighbor of Taian to a city in 1992 thanks to the booming of its steel industry that contributes to more than half of its economy today — is expected to receive more support from Jinan. And Laiwu will have more resources and room to diversify its economic structure.

Despite this, Jinan will have to help upgrade Laiwu’s industrial technology, and improve its urban management and public services, which Jinan has been doing for itself, so as to shorten the development gap between the two places. If this work is not done appropriately, one plus one will be less than two.