Go, Go, Guizhou

By LAN XINZHEN

Go, Go, Guizhou

By LAN XINZHEN

Guizhou Province seeks to narrow the gap with the prosperous east

Guizhou Province, a mountainous and multi-ethnic province in southwest China, is gaining popularity with domestic and overseas investors as it accelerates the pace of its economic expansion.

From August 18 to 20, the 2011 China (Guizhou) International Alcoholic Beverages Expo and China Guiyang Fair for Investment and Trade was held in Guiyang, capital of Guizhou Province. A total of 148 investment deals were signed worth 118.8 billion yuan ($18.4 billion).

“This event is the province’s first largescale international fair, which indicates Guizhou is sparing no effort to catch up with its east coastal counterparts,” said Zhao Kezhi, Governor of Guizhou Province. “Our province will create a favorable investment environment to implement projects signed at the fair.”

The investment and trade fair is expected to provide a powerful catalyst for the province’s economic boom. The total 148 deals included 90 processing and manufacturing projects worth 76.7 billion yuan ($11.9 billion), 22 agriculture-related deals valued at 6.9 billion yuan ($1.1 billion), and 36 liquor deals with investments of 34.6 billion yuan ($5.4 billion).

Now, Guizhou, whose per-capita GDP in 2010 was the lowest among China’s provincial-level economies, has an ambitious goal: to double its GDP over the next five years and build a moderately prosperous society by 2015.

Long journey

In 2010, Guizhou’s Human Development Index (HDI) just exceeded the southern African state of Namibia, while Shanghai’s index was comparable to Portugal. Now, Guizhou has set its sights on narrowing the massive divide with China’s developed coastal provinces. The HDI, issued by the United Nations Development Program, is a comparative measure of life expectancy, literacy, education and standards of living for countries worldwide.

Guizhou may not score well on indexes, but it does have its advantages, namely, the liquor industry. The province has more than 2,000 liquor producers, among them big names like Moutai, widely considered China’s “national spirit.” In 2010, the output value of Guizhou’s liquor industry totaled 20 billion yuan ($3.1 billion), accounting for around 4.3 percent of the province’s GDP. Centering the recent expo around alcoholic beverages seemed an obvious and wise choice to bring investors’ attention to Guizhou’s fne spirits.

Guizhou also glitters with rich mineral resources, such as coal. The province is one of southwest China’s most important production bases for energy and raw materials, but the mineral sector is largely engaged in initial processing. In 2009, the industrialization level of the province was only equivalent to the national average in the mid-1990s. In other words, Guizhou is still 15 years behind the rest of China in terms of industrialization.

In a bid to stimulate the local economy, the provincial government is focusing on its characteristic industries and pressing ahead with structural adjustments. The goal is to rebalance the economy to rely more on industrial productivity and efficiency, transform industries from raw processing to intensive processing, and strengthen industrial enterprises.

Aluminum Corp. of China (Chinalco), the country’s largest aluminum producer, is one of the largest investors in Guizhou. Over the next fve years, Chinalco plans to invest 34.5 billion yuan ($5.3 billion) in the province to expand mine construction and energy development, said Xiong Weiping, President of Chinalco.

“The capital will also be used to enhance alumina capacities and eventually build a complete recycling industrial chain covering mines, energies, alumina, electrolytic aluminum and aluminum processing,” he said.

Xiong also pledged that the company will push forward research and development and technology applications to provide technological support to the aluminum industry in Guizhou. “Efforts will also be made to contribute to the economic rebalancing of the province,” he added.

Governor Zhao said Guizhou needs investment from large enterprises like Chinalco since the province faces the dual task of transforming its development model and accelerating economic growth.

Meanwhile, many coastal manufacturers are moving westward where lower land and labor costs ensure profits. Guizhou hopes to benefit from that relocation and receive the transferred industries, said Li Zhanshu, Secretary of Guizhou Provincial Committee of the Communist Party of China.

Moreover, Guizhou will offer favorable policies to investors, protect their interests and help address their problems, he said.

“We believe Guizhou will gain momentum from the movement of industry and embrace a signifcant economic boom,” said Sun Guoqiang, Vice Governor of Guizhou Province.

LI JINFENG

Experts’ advice

Researchers and economists were also present at the investment and trade fair to provide suggestions on the province’s social and economic development.

Li Wei, President of the Development Research Center of the State Council, said it is necessary to allow markets to play a larger role in receiving industries that are moving from the east coastal region.

“GDP is not everything, and the province should avoid redundant construction and low-end industries,” he said.

XINHUA

Guizhou’s ecological environment has been well protected, with green vegetation covering most of the province. Li said Guizhou must attach greater importance to environmental protection, embark on a more sustainable path of development and forge ahead with recycling efforts.

“Otherwise, Guizhou and the entire nation will face severe resource shortages, which will become an acute bottleneck choking the country’s economic development,” he added.

Qian Meng, Deputy General Manager of State Development and Investment Corp., pointed out that Guizhou should strengthen its industries in the following three ways.

First, it must consolidate fragmented industries to achieve scale effect and tackle the problem of outdated technologies and equipment, low productivity and low comprehensive utilization.

Second, it must extend the mineral industrial chain, make a push into deep processing and produce goods with high added value.

Third, it must ensure the sustainability of resource development and avoid the excessive exploitation of mineral resources.

“Guizhou can learn from the experiences of Sichuan Province and Inner Mongolia Autonomous Region and build an industrial transfer demonstration zone,” said Qian. “It is necessary to tighten efforts to improve local infrastructure and lay a solid foundation for the development of the demonstration zone.”

While invigorating the economy, Guizhou must also promote education and poverty relief to improve people’s livelihoods, he said.

“In recent years, Guizhou has made remarkable progress in education and poverty reduction,” said Qian. “But pressures remain heavy for the province during the 12th Five-Year Plan (2011-15).”

It is imperative for the province to invest heavily in infrastructure construction, such as transportation networks and drinking water facilities, as well as education to translate its human resource advantages to economic benefts, said Qian.

Wei Houkai, Director of the Institute for Urban and Environmental Studies under the Chinese Academy of Social Sciences, said the key for Guizhou is to achieve leapfrog development of a green economy.

“The province should not follow the development model of some coastal regions—pollution first, treatment later,” said Wei.“Instead, it must integrate economic development and ecological environment protection.”

With a favorable climate and a stunning visual environment, Guizhou can easily become an international tourist destination and a major manufacturer of clean energy, chemicals, advanced equipment and pharmaceuticals, he said.

Facts About Guizhou (2010)

Area: 176,167 square km, 92.5 percent of which consists of mountains and hills Population: 34.75 million

Per-capita GDP: 11,640 yuan ($1,805), the lowest among China’s provinciallevel economies

Per-capita net income of farmers: 3,400 yuan ($527), the second lowest in China

Per-capita disposable income of urban residents: 14,180 yuan ($2,198), the fifth lowest in China

(Source:Statistical Communiqué of Guizhou Province on the 2010 Regional Economic and Social Development)