CHINA Ruby News
Ruby Zhu, Assistant Economist of the Hong Kong General Chamber of Commerce. Email: [email protected]
Vol II, No.1 January 2003
China’s New Growth Force: Bohai Economic Rim
T
he economic success of the Pearl River Delta
and that of its sister delta, the Yangtze, has
encouraged the Central Government to give the
green light to developing the Beijing-centered Bohai
Economic Rim into another regional powerhouse.
Compared with the Hong Kong-centered Pearl
River Delta (PRD) and the Shanghai-led Yangtze
River Delta (YRD), the Bohai Economic Rim is still
in its infancy. Nevertheless, it has the potential to
follow in its sisters' footsteps.
Bohai Economic Rim (BER), which on occasion is
called the Greater Beijing Economic Rim, covers
70,000 sq. km -- encompassing Beijing, Tianjin,
Tangshan,
Baoding,
Langfang,
Chengde,
Qinhuangdao and Shijiazhuang -- and has a
population of about 40 million.
Just as Hong Kong has driven the PRD's growth,
and Shanghai the YRD's, Beijing is expected to play
a similarly leading role in the BER given the
capital's phenomenal growth in recent years. The
latest Mainland government statistics show that
Beijing’s GDP for 2002 grew 10.2 per cent over the
previous year. The hosting of the 2008 Olympic
Games is expected to sustain -- if not add -- to this
incredible growth. However, unlike Hong Kong and
Shanghai, Beijing's growth has not run off to benefit
surrounding cities, which has diminished the overall
economic potency of the region. This could change
now that integration of the Bohai Economic Rim is
on the Central Government's agenda, but much of
its success hinges on businesses' understanding of
the investment environment there.
Beijing
In recent years, traditional manufacturing industries
in Beijing and Tianjin have been shifting their
operations to Hebei -- including Beijing’s Shougang
Group which is in the process of relocating 75 per
cent of its steel production to Hebei. Such industries
account for a sizable percentage of the capital's
GDP. In 2001, manufacturing industries accounted
for 36 per cent of Beijing’s GDP, and 49 per cent for
both Tianjin and Hebei, compared to 60 per cent, 47
per cent and 34 per cent, respectively, for the cities
services industries. In 2002, Beijing’s services
industries showed strong growth and contributed 66
per cent of its GDP.
Beijing residents are far more aware of political
policies than their cousins in coastal cities, and tend
to be more conservative. The city has also enforced
strict controls on migrants moving to the capital,
which has lessened the impact of outside influences
on the population.
With WTO membership, the hosting of the 2008
Olympic
Games,
the
development
of
Zhongguancun Science Park, a more educated
workforce and a more service-oriented economy,
Beijing increasingly looks to have all the economic
characteristics of a successful metropolis. However,
inefficiencies in the local government, market
mechanism has yet to be improved.
Tianjin
Tianjin, a major manufacturing base and home to
one of China's main deep-water ports, is currently a
two-hour journey by rail or car from Beijing. That
travelling time could well be reduced to 30 minutes
if a proposal to build an express rail link to connect
up Beijing, Tianjin and Tongshan is approved.
As China’s northern manufacturing centre, Tianjin's
export volume almost doubles that of Beijing, driven by
multi-national firms such as Motorola and Samsung,
which have set up operations in the city. Despite this,
Tianjin's urban infrastructure and services industries,
especially commercial and logistics services, are in
need of substantial improvements.
Hebei
Hebei has long been a strong base for traditional
manufacturing and agricultural industries. It is also
rich in tourism resources, and given its proximity to
Beijing and Tianjin, the city's food and tourism
industries offer great potential for investors in these
sectors. Official figures show there are 321 Hong
Kong businesses operating in Hebei, representing
one-third of total foreign investment in the city.
However, Hebei’s financial services, basic
infrastructure and living conditions lag far behind
other major Mainland cities.
Outbound Missions
The Bohai Economic Rim is expected to be a new
engine of growth for the Chinese economy over the
next decade. To explore its potential, HKGCC is
planning an outbound mission next month to visit
Beijing’s officials in charge of economic and trade
affairs. Another mission later in the year will explore
the latest investment trends within the Bohai
Economic Rim. We will keep members up to date
about these developments.
www.chamber.org.hk