China s Western Development Drive: from the Perspective of Inclusive Growth
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1 China s Western Development Drive: from the Perspective of Inclusive Growth WEI Houkai Prof. and Deputy Director Institute for Urban and Environmental Studies Chinese Academy of Social Sciences IUE, CASS 1
2 Contents Key policies of the western development drive in China The main achievements of China s Western Development Drive The outstanding problems in China s western development drive Conclusions IUE, CASS 2
3 Ⅰ. Key policies of the western development drive in China IUE, CASS 3
4 Since 1978, Chinese government had carried out the imbalanced development strategy supported the coast region as a priority to develop IUE, CASS 4
5 Gr owt h r at e( %) This strongly stimulated a rapid economic growth and export expansion for the coast region, but the disparity between the eastern and western region had been rapidly expanded GRP GDP Growth rate of GDP (GRP) in China IUE, CASS 5
6 High Growth with Inequality IUE, CASS 6
7 The four regions in China West region (12) Northeast region (3) Central region (6) 70% of land area East region (10) IUE, CASS 7
8 To put forward the western development drive strategy in 1999 To put forward regenerating Northeast region strategy in 2003 To put forward promoting central region s rise strategy in China s overall regional development strategy IUE, CASS 8
9 Goal of the western development drive At the beginning, Chinese Government put forward steadily promoting this strategy 50 years or so, and striving to build a new modern western region. In July 2010, Chinese government put forward that the western economic and social development should move forward upon three major steps by the year The comprehensive economic strength of the western region should be enhanced to a much higher level; The people's living standards of the western region should be improved to a higher level and the gap of the basic public service capacity should be significantly narrowed compared with the eastern region; The western ecological protection should be promoted to a much higher level and the ecological deterioration should be curbed IUE, CASS 9
10 Key policies of western development drive Chinese government carried out a series of planning and policies approving Chongqing city and Chengdu city as the national urban-rural comprehensive reform pilots; formulated strategies to promote the economic and social development for Xinjiang, Tibet, Ningxia, Qinghai, Gansu, Chongqing, and Guangxi, etc; Carried out a series of comprehensive policy measures IUE, CASS 10
11 The comprehensive policy measures Fiscal policy From 2000 to 2009, transfer payments from the central government to the western region totaled more than 4,000 billion Yuan, accounting for 43.7% of the total transfer payments from the central government to the local Tax policy A series of tax preferential measures Investment policy From 2000 to 2010, 143 new major projects have been launched and the total investment amount reached 2.9 trillion Yuan IUE, CASS 11
12 The comprehensive policy measures Financial policy Give financial support Industrial policy Encourage to develop competitive specialty industries Promote coast industries to the western region Ecological environment policy Carry out ecological projects and 57.1% of national ecological investment is in western region Opening up policy Promote FDI to western region The Opening up of border area IUE, CASS 12
13 The comprehensive policy measures Social policy To provide great support to technology, education, culture, health and medical community, broadcasting and social security in the western region Poverty alleviation policy To provide more investment and greater efforts in the poverty alleviation in the western region 63.3% of central poverty funds was allocated to western region between 2001 and IUE, CASS 13
14 Ⅱ. The main achievements of China s Western Development Drive IUE, CASS 14
15 1. The investment in fixed assets grew faster in the western region From 2000 to 2008, the average growth rate per annum of the total fixed assets investment in the western region reached up to 23.4%, 1.9 percent points higher than the national average level, 4.4 percentage points higher than the growth rate of the eastern region IUE, CASS 15
16 The growth rate of total fixed assets investment of various regions In IUE, CASS 16
17 2. The western regional economy grew fast The western region's GDP growth rate grew rapidly year after year, from 7.3% in 1999 to 14.5% in In , the annual average GDP growth rate of the western region was 11.7%, which once reached 13.3% during 2005 to 2008, being the fastest among the China's four regions IUE, CASS 17
18 IUE, CASS 18
19 GDP growth rate of China in 2009 Growth rate (%) National Primary Secondary Tertiary Primary Growth source(%) Secondary Tertiary Eastern Northeast Central Western Total IUE, CASS 19
20 3. Western regional industrialization advanced rapidly From 1999 to 2008, the proportion of the western region's industrial added value in GDP increased from 32.9% to 41.1% with an increase of 8.2 percentage points, while the same proportions of the eastern, northeast and central regions over the same period were only 4.5, 4.5 and 6.4 percentage points respectively Industry value-added as a percentage of GDP in 2008(%) IUE, CASS 20
21 4. The people s living standards was improved significantly in the western region From 1999 to 2009, the per capita GDP in the western region was quickly increased from 4283 Yuan to 18,286 Yuan, and its relative level (suppose the regional average level being 100) was increased from 60.7% to 65.9% Annual Per Capita Net Income of Rural Households Annual Per Capita Disposable Income of Urban Households IUE, CASS 21
22 Rel at i ve l evel s of t he per - capi t a GRP 75 Relative levels of the per-capita GRP in western China is going up IUE, CASS 22
23 5. The development gap between the eastern and western region tended to be narrowed Since 2003, the relative gap has shown to be narrowed. In 2003, the per capita GDP in western region was 63.0% lower than that in the eastern region, and this number fell to 60.7% in 2005, 58.9% in 2007, further dropped to 55.2% in 2009, and the gap level was 5.0 percentage points lower than that in1999. Up Down IUE, CASS 23
24 6. Promote significantly the western region opening up to the outside world In , the average annual growth of exports was increased by 26.4% in western region, the highest among China s four regions, 1.6 percentage points higher than the national average level. The share of actually used FDI in the national total also increased rapidly in the western region, from 2.6% in 2004 to 4.9% in 2007, and further increased to 7.2% in IUE, CASS 24
25 Ⅲ. The main problems in China s western development drive IUE, CASS 25
26 1. The industrial structure has been adjusted in a reversed (low-level) direction The industrial structure reverse adjustment was obvious and this trend has been further strengthened in partial western areas. For example, from 2001 to 2008, in the total industrial output above designated size enterprises in current prices, the share of resource-based industries increased from 60.9% to 70.2% in Inner Mongolia, with an increase of 9.3 percentage points IUE, CASS 26
27 2. The urbanization gap between regions tends to be enlarged From 2000 to 2007, the urbanization rate gap between the eastern and western regions was increased from 16.6 to 18.0 percentage points IUE, CASS 27
28 3. The employment opportunities grow slowly From 2000 to 2008, 64.5% of the GDP growth was driven by investment, the employment opportunities relatively increased slowly in the western region. The source of GDP growth between 2001and IUE, CASS 28
29 4. The public services capacity is lower In 2008, the per capita local fiscal revenue in the western region is only equivalent to 64.5% of the national average level, 40.5% of the eastern level and 11.3% of Shanghai s IUE, CASS 29
30 5. The poverty problem in rural areas is still serious According to the new rural poverty standard (1,196 Yuan), China's rural population in poverty totaled million at the end of 2009, of which 66% was located in the western region. The western poverty rate was 2.2 times of the national average level IUE, CASS 30
31 6. Cost of logistics and taxes has been high Logistics costs are relatively high, seriously blocking the private capital entering and enterprise development Current industrial average tax burden in the western region is much higher than the average level in the eastern region the foreign investment and exports were highly concentrated in the eastern region, the high tax industries have taken a major share the local tax was levied strictly in the western region IUE, CASS 31
32 Ⅳ. Conclusions China s Western Development Drive Strategy has great significance of promoting the regional balanced development and building a harmonious and sharing development pattern with inclusive growth. Central regional policy should play more dress on the fair, and give more support to the backward areas; It should be adopt a multi-tool combination of finance, tax and investment policies, and maximize their effects; It will be a long-term arduous task, even decades hard work, for a large developing country, to form a new and coordinated regional development pattern with the characteristics of wide inclusion and sharing IUE, CASS 32
33 Thank You! IUE, CASS 33
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