BEIJING -
China's dynamic Yangtze river delta, with Shanghai as its hub, has
lost some momentum due to the bursting of the
property bubble, but authorities expect its
economic expansion - though slower - to become
more efficient and sustainable.
The
combined economic output of 16 cities in the
region, including Nanjing, Hangzhou and Suzhou,
grew at an average pace of 14.1% in the first
three quarters of 2005, down 1.9 percentage points
year-on-year and one fifth of a percentage point
from the first six months, official figures show.
This was blamed on the roller-coaster real estate
market, as the value-added from
Shanghai's real estate sector
in the first half of the year grew only by 4.5%,
plummeting an annual 15.5 percentage points,
whereas in the delta provinces of Zhejiang and Jiangsu, the decreases
even reached 20-30 percentage points.
But
some economists disagree, arguing that the
property sluggishness is the normal outcome of
China's macro-control measures, a term referring
to efforts made by the central government to cool
down a number of overheated sectors in the economy
over the past years.
To exaggerate the
negative impact of the property slowdown is just
like the inverse of the hysteria for its
"underpinning" role in economic growth some years
ago, they maintain. The delta's downsliding,
though somewhat attributed to poor property
performance, is primarily the "outburst of
structural problems", analysts say.
Unlike
most developed economies, which depend greatly on
consumer spending, the Chinese economy - already
Asia's second biggest after more than two decades
of reform and opening-up - is driven largely by
the growth of investment, especially spending on
fixed assets such as property, roads and other
infrastructure, as well as factory equipment. This
has resulted in energy supply bottlenecks,
especially of oil, which threatens the economy's
sustainable development.
Total fixed
assets investment in the Yangtze river delta, with
macro-controls taking effect, added 1.16 trillion
yuan (US$143.4 billion) in the first three
quarters of 2005, up 19.5% year-on-year. The
increase fell by 8.7 percentage points from 2004
and was for the first time lower than the nation's
average growth, by 6.6 percentage points. The
region also posted a drastic slowdown in real
estate investment growth - from 35.3% for the same
period in 2004 to 20.8%, again, 1.4 percentage
points lower than the national average.
A
research fellow with the Shanghai Municipal
Economic Committee told Xinhua that he believes
the delta should undergo a "revolution in the
pattern of economic growth". The current real
estate "cooling" and the downslide of economic
growth can also be interpreted as "lending the
Yangtze river delta an opportunity to restructure
its economy," he said. "A temporary slowdown may
not be a bad thing, if the region really seizes
the chance to make its economic growth more
efficient, improve local firms' innovative
capabilities and sharpen the competitive edge of
its industries."
Spokesman Zheng Jingping
for the National Bureau of Statistics echoed his
remarks, predicting earlier that the Chinese
economy, which grew at a stunning 9.4% annual rate
in the first six months of 2005, would slow to a
pace of around 9% for the whole year. "A modest
slowdown, if conducive to long-term, stable
development, is very good."
In a recently
mapped-out blueprint for China's development over
the next five years, the Chinese Communist Party
demanded domestic enterprises step up their
"independent innovation", as the nation is
liberalizing its market under World Trade
Organization requirements.
The Yangtze
river delta includes Shanghai and another 15 fast
growing cities in neighboring Jiangsu and Zhejiang
provinces, all of which are located at the mouth
of this longest river in China. The region
accounts for one fifth of China's total gross
domestic product.
Yangtze allure for
Taiwanese The Yangtze Delta has replaced
the Pearl River Delta as the region that attracts
the most investment from Taiwanese entrepreneurs,
China's media said in December.
Jiangsu
province and Shanghai attracted 55% of Taiwanese
investment in the mainland in 2004, up from 26% in
1993, while the corresponding figure for Guangdong province in
south China and Fujian province in east
China, both in the Pearl River Delta, decreased to
28% from 48%, according to the Taiwan Federation of
Industries.
The Taiwanese investment in
Jiangsu, Zhejiang and Shanghai in 2004 alone
accounted for one third of the total Taiwanese
investment in the mainland, estimated the
investment commission of Taiwan's economic affairs
authorities. The per-capita GDP of the Yangtze
River Delta exceeded the US$4,000 level in 2004,
roughly the same as that for a middle-income
nation.
"The Yangtze River Delta has
proved its status as the economic powerhouse of
China, and it is highly possible it will become
one of the powerhouses of the Asian and world
economy in the next 20 years," said Shen Qingjing,
a Taiwanese businessman who decided to "do big
business in the mainland" 14 years ago. Shen
studied other cities in the Delta after settling
down in Shanghai, just the same as other Taiwanese
entrepreneurs. He began investing in real estate
in Yangzhou, a city in Jiangsu province, earlier
in 2005.
The delta has overall superiority
in attracting Taiwan investment, as it has
advantages in the electronics and information
industries, as well as in location,
infrastructure, economic scale and human resources
crucial for trade and investment promotion. "There
is still considerable room in the delta for
Taiwanese to invest," said Lu Xiaoyan, vice
secretary general of the Shanghai Taiwan
Institute.
In the delta, Shanghai acts as
a bellwether for its outstanding status and
influence. Shanghai signals trends in finance, the
modern service industry and high-tech
manufacturing for Taiwanese investment in the
coming years.
Last year, the service
sector in Shanghai realized 356.5 billion yuan
(US$43.9 billion) in value added output. Different
from Shanghai, which endeavors to develop a modern
service industry, Jiangsu attracts Taiwanese
investment by its mature industrial sector.
"Kunshan was attractive because it is near
Shanghai, now the mature [industrial sector is]
the key factor," said Qi Daofu, chairman of the
Taiwanese businessmen's association in Kunshan, a
city in Jiangsu. The electronic information and
precision instrument industries are new areas for
Taiwanese investment in Zhejiang, and the scale of
investment is growing.
The Pearl and
Yangtze river deltas have become two powerful
engines for economic growth, accounting for
one-third of China's total gross domestic product
and 60% of the country's foreign trade, according
to a recent Economic Daily report.
