BEIJING - Tianjin
Development Zone thrives on foreign investment,
but when it recently rejected a large foreign
paper-processing project, there was little
concern.
The plant was one of more than
100 enterprises rejected by this zone in the
largest northern China port city in less than one
year because of its heavy energy consumption and
pollution.
"This is in line with the
central government's efforts to boost the
economy while saving energy
and protecting the environment," says Li Yong,
chairman of the zone's administrative committee.
Likewise, Wuxi City in eastern China has refused a
US$1.8 billion
papermaking project. Shanghai
Songjiang Industrial Zone turned down a US$253.14
million polluting project. And Jiangsu Kunshan
Industrial Zone spent 500 million yuan to move
polluting enterprises away in the past three
years.
The government's strategy and
tactics of absorbing foreign funds have altered
from "swapping the market for technology" in the
late 1970s, when China started its economic reform
and opening to the outside world, to "locally
attract foreign funds" to boost regional economic
development in the 1990s, and the use of
low-pollution or high-end projects now, says
Professor Xu Fu of Nankai University in Tianjin.
Industry officials state that the new
focus is not on raw growth, but on the cost it
incurs, as the country pursues sustainable
development.
Since 1990, China's economy
has been expanding rapidly, averaging an annual
growth rate of almost 10%. At the end of 2005,
China overtook the United Kingdom to become the
fourth largest economy in the world by nominal
gross domestic product (GDP), after the United
States, Japan and Germany. Over the past five
years, China has contributed a yearly average of
around 13% to the world's economic growth.
However, China has paid a price for its
pursuit of GDP - its high energy consumption,
accompanied by high pollution, has threatened its
sustainable development and prompted criticism
from around the world.
One of the
side-effects of China's rapid rise has been the
sacrifice of the environment. Huge, burgeoning
coal plants are being constructed around the
country to feed the increased demand for energy.
Industry officials comment that the
deplorable record in energy efficiency is one of
the motives behind the government's changes,
listing efficiency at the top of the economic
agenda.
Ma Kai, minister in charge of the
National Development and Reform Commission (NDRC),
has pledged, "We will continue to change the
country's pattern of growth this year, by further
reducing energy consumption and pollution."
China's economy remains highly
investment-reliant. The first half of this year
saw a 25.9% growth in fixed assets investment to
5.41 trillion yuan, despite a slowdown from 29.8%
in the same period last year.
The
investment hike is attributed to excessive
liquidity and surging investment in new projects,
said Li Xiaochao, spokesman with the National
Bureau of Statistics. Official figures show the
January-June investment in new projects grew 6.4%,
compared with 6.1% in the first five months of
this year.
"Low investment and resources
costs also spurred enterprises to accelerate
investment in some sectors," says Li. Investors
were also lured to sectors with large profit
margins such as iron and steel.
Ma Kai
warned that the basis for economic development is
not solid enough, the rate of GDP growth is still
too fast, and the sacrifices involved are too
high. As a result, the government will continue to
rein in fixed-asset investment. Balancing
international payments has become another of the
Chinese government's top priorities.
Chinese leaders have pledged to redouble
efforts in expanding imports and outbound
investment, while maintaining rational export
growth and encouraging foreign investment.
According to Customs figures, China's
aggregate surplus of foreign trade soared to
US$136.81 billion in the first seven months of
this year, an increase of 81% over the same period
last year. Having attracted more foreign
investment than any other developing country for
15 consecutive years, China is estimated to hold
some US$1.33 trillion dollars in foreign exchange
reserves.
This growing surplus has led to
frequent trade friction, while the large
international payments surplus has added pressure
for appreciation of the yuan.
Experts say
too much foreign exchange has forced the central
bank to issue more yuan, causing excessive
fluidity in the domestic financial market.
Instead, they propose, the government should focus
on bringing in advanced technologies, management
and foreign expertise.
According to
officials, the government will continue its
strategy of "going global", by encouraging
domestic companies to invest abroad. Outbound
investment by Chinese enterprises is still in the
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