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Yangtze river delta loses luster
(Xinhua)
Updated: 2005-11-09 10:57
The dynamic Yangtze river delta, where the economic hub of Shanghai perches, has lost some of its 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 of14.1 percent in the first three quarters, down 1.9 percentage points year-on-year and one fifth of a percentage point from the first six months, the latest official figures show.
This is blamed on a real estate roller-coaster, as the first-half added value from Shanghai's real estate sector grew only by 4.5 percent, plummeting an annual 15.5 percentage points, while in Zhejiang and Jiangsu provinces, 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, 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 property slowdown is just like the hysteria for its "underpinning" role in economic growth years ago, they say.
The delta's downsliding, though somewhat attributed to poor property performance, is primarily the "outburst of structural problems", analysts say.
Unlike most developed economies that 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 the straining energy supplies, including oil, which threatens the economy's sustainable development.
Total fixed assets investment in the Yangtze river delta, with macro-control taking effect, added 1.16 trillion yuan (143.4 billion US dollars) in the first three quarters, up 19.5 percent year-on-year.
The increase fell by 8.7 percentage points from a year ago 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 of real estate investment growth -- from 35.3 percent for the same period of lastyear to 20.8 percent, again, 1.4 percentage points lower than the national average.
Amid an outcry over rising labor costs and a reduction in the provision of land for industrial use, Taiwan investors -- who havebeen investing heavily in the Yangtze river delta, typically Kunshan city in Jiangsu -- are moving some of their factories out of the region.
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 deltaan 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, growing a stunning 9.4 percent in the first half year, would slow down to a pace of around 9 percent in 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 in the next five years, the Communist Party in power demands domestic enterprises step up "independent innovation", as the nation is liberalizing the market as a World Trade Organization member.
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.
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