Diverse development
A journey from Beijing's Zhonguancun high-tech district or Shanghai's Pudong
New Area, to the impoverished uplands of Guizhou, HIV-affected villages in Henan
or the undeveloped west of China (Xinjiang or indeed Tibet) highlights the fact
that China is made up of several economies at different stages of development.
While Shanghai's GDP per capita is likely to approach US$5,000 in 2004, that
of the average resident of Yunnan (which borders Vietnam and Myanmar and is
noted for its diverse ethnic minority population) is likely to languish below
US$800.
As such, China simultaneously has consumers with purchasing power comparable
to those in new EU countries and in mid-income African states.
A changing economic geography
China broadly comprises of four regional economies. While GDP growth in each is likely to be closely correlated, the sources of growth and the emerging industrial bases are quite different.
The Pearl River Delta centres on the province of Guangdong, with its population of 80 million. Home to the original export-oriented ferment born in the 1980s, it still accounts for one-third of China's exports.
However, the region is moving towards dependence on domestic demand for growth, while its economic mainstay of low-cost assembly for export is being eclipsed by the Yangtze Delta provinces.
This second high-growth zone encompasses almost 400 million people and is rapidly building an integrated transport and distribution network that will bind it even more firmly to powerful regional economies such as Japan. In turn, capital-intensive and sophisticated industry continues to base itself in the Yangtze Delta.
This contrasts with the northeast, already heavily industrialised during the last century on command economy lines, and undergoing simultaneous adjustment and rapid growth; and the west, where human development indicators remain low and public spending is the key growth driver in areas such as infrastructure.
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Energy deficit
Energy deficit
A further relevant way to monitor the manifold changes at work in the Chinese economy is its changing energy requirements. China has been a net importer of energy since the late 1980s, but demand is suddenly straining supply: as of mid-2004, manufacturers in Zhejiang province in the Yangtze Delta and Guangdong province were being forced to operate three or four-day weeks or to introduce night production shifts, as provision of electricity and back-up fuel deliveries failed to keep pace with demand. Electricity was also being imported from Russia and Hong Kong. Energy intensity (energy use per unit of GDP) is likely to climb further unless the central government can rein in sectors such as steel, aluminium, cement and auto manufacture. However, even if this happens, oil imports already exceed Japan’s and exports of coking coal will virtually cease in a few years.
Source:
Credit Control
Journal
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