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 2010-12-10 IUE, CASS 1
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 2010-12-10 IUE, CASS 2
Ⅰ. Key policies of the western development drive in China 2010-12-10 IUE, CASS 3
Since 1978, Chinese government had carried out the imbalanced development strategy supported the coast region as a priority to develop 2010-12-10 IUE, CASS 4
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 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. 18 16 14 12 10 8 6 4 2 0 GRP 13.4 13.7 14.2 10.1 12.7 GDP 14.2 11.7 11.6 9.6 9.1 Growth rate of GDP (GRP) in China 2010-12-10 IUE, CASS 5
High Growth with Inequality 2010-12-10 IUE, CASS 6
The four regions in China West region (12) Northeast region (3) Central region (6) 70% of land area East region (10) 2010-12-10 IUE, CASS 7
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 2004 2010-12-10 China s overall regional development strategy IUE, CASS 8
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 2020. 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. 2010-12-10 IUE, CASS 9
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. 2010-12-10 IUE, CASS 10
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. 2010-12-10 IUE, CASS 11
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 2010-12-10 IUE, CASS 12
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 2009 2010-12-10 IUE, CASS 13
Ⅱ. The main achievements of China s Western Development Drive 2010-12-10 IUE, CASS 14
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. 2010-12-10 IUE, CASS 15
The growth rate of total fixed assets investment of various regions In 2009 2010-12-10 IUE, CASS 16
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 2007. In 2000-2008, 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. 2010-12-10 IUE, CASS 17
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GDP growth rate of China in 2009 Growth rate (%) National Primary Secondary Tertiary Primary Growth source(%) Secondary Tertiary Eastern 10.7 4.1 10.6 11.9 2.7 49.1 48.2 Northeast 12.6 3.7 15.2 11.7 3.8 59.6 36.6 Central 11.7 4.7 13.7 11.1 6.1 59.2 34.7 Western 13.5 4.6 16.5 12.9 5.1 57.4 37.5 Total 11.6 4.4 12.6 11.9 4.0 53.7 42.3 2010-12-10 IUE, CASS 19
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(%) 2010-12-10 IUE, CASS 20
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 2010-12-10 IUE, CASS 21
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 71.7 70 65 63.8 60 59.2 55 50 2010-12-10 IUE, CASS 22
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 2010-12-10 IUE, CASS 23
6. Promote significantly the western region opening up to the outside world In 2000-2008, 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 2008 2010-12-10 IUE, CASS 24
Ⅲ. The main problems in China s western development drive 2010-12-10 IUE, CASS 25
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 2010-12-10 IUE, CASS 26
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 2010-12-10 IUE, CASS 27
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 2008 2010-12-10 IUE, CASS 28
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. 2010-12-10 IUE, CASS 29
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 35.97 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. 2010-12-10 IUE, CASS 30
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 2010-12-10 IUE, CASS 31
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. 2010-12-10 IUE, CASS 32
Thank You! 2010-12-10 IUE, CASS 33