From Overseas Press

Central region: China's new core rises

(chinadaily.com.cn)
Updated: 2010-08-11 14:46

China's modern industries are moving from the coastal region to inland now, proving that the "accelerated development of the center of the country is providing an important fillip at a time of uncertainty about China's ability to maintain high growth," said an article in the Financial Times on Aug 3.

According to the article, China can be divided roughly into three zones, which are "prosperous, industrialized coastal belt," "far west remains relatively poor but received heavy public investment" and the center provinces such as Anhui, Hunan and Jiangxi are "the new boost to the economy."

Central cities are "entering a phase of ‘industrial take-off'." Chinese companies are encouraged to join "a rush that started as a trickle a decade ago" thanks to "a combination of rising costs and wages on the coast, better rail and road infrastructure and stimulus spending."

Paul Cavey at Macquarie Securities says, "The possibility that central China can take on the baton of development from the maturing eastern provinces is clearly good news for national growth."

The development in the central area is not only attributed to "government planners who are opening up cities in the central zone" but also market forces. Many businesses have decided to move inland because of the questionable competitiveness of producing in the coastal region, according to the article.

The opportunities provided by the government and businesses helped the central area get investment. "If the flow of investment and returning migrants is sustained, it will transform other aspects of the local economy. Workers with reliable jobs will need homes, fueling investment in the property sector."

However, there are also dangers ahead for the central region. Those boom cities have vanity projects and they are hit by the property fever that "gripped many urban areas in the past year." More broadly, these cities' recent growth has been "too reliant on public investment, which will inevitably decrease as Beijing withdraws some of last year's stimulus."

Therefore, although rapidly flourishing, "the economies of cities remain fragile," the article concluded.