'Go West' crucial, says official
Western provinces need the Go West development campaign to be consistent and long-lasting if they are to take off economically, according to a senior western provincial official.
Gansu Vice-Governor Guo Kun said the campaign provided a major impetus for the development of western provinces.
'There were many things we wanted to do before but could never achieve without the Go West campaign,' Mr Guo said.
The campaign was launched to rein in the rapidly growing disparity between the east and west of the country.
Mr Guo said the most visible differences in the western provinces three years after the launch was the large number of infrastructure projects made possible by heavy investment by the state.
The state has earmarked a large portion of the proceeds raised through treasury bonds to finance such projects in the hinterland. As well as the three most important projects - a railway linking Tibet and Qinghai, a pipeline to transfer natural gas from Xinjiang to Shanghai and a project to divert water from the Yangtze River to the parched north - the state has been pouring money into the west to build roads, railways and electricity networks in rural areas.
The state allocated Gansu 15.6 billion yuan (HK$14.6 billion) from the bond proceeds in the three years to June.
Mr Guo says the province has built 1,000km of highway and renovated two airports in the past three years, while 4.57 billion yuan was spent on a network providing cheap electricity to most of the countryside.
Mr Guo's views are typical of officials in western provinces. He said many of the provinces had lobbied the central government for a sustained campaign.
'Many western provinces have voiced their views that the Go West campaign should be consistent and stable and the central government was positive about this,' he said.
He said the central government would continue to issue treasury bonds to finance the needs of the provinces. But many economists have criticised the spending spree.
'Although many economists said treasury bonds should play a less important role in the future, the state will continue to issue 50 billion yuan of treasury bonds for western provinces in the coming years,' Mr Guo said.
The state issued 150 billion yuan worth of treasury bonds last year, with one-third being allocated to the western provinces.
Mr Guo said he was confident of the sustainability of the campaign.
'I think the Go West campaign can last for 30 to 50 years. The state has been very supportive of the west,' he said.
But he said the focus for state investment in the west would gradually shift to the restructuring of state enterprises and boosting main industries instead of building infrastructure.
To capitalise on the opportunity, Gansu will focus on reviving its large industrial enterprises.
Mr Guo said the province was positioning itself as an industrial powerhouse and efforts were being made to rejuvenate and enlarge the production capacity of large state enterprises.
Many of these enterprises were massive projects built in the 1950s when the state deployed large contingents of engineers and construction workers to the backward hinterland. But many of them, such as the Jiuquan Iron and Steel Corp and Lanzhou Refining and Petrochemical Corp, now suffer from low efficiency and bureaucracy and are burdened with large numbers of redundancies and other social responsibilities.
Mr Guo says Gansu has been selected by the central government as one of three production bases for stainless steel. Because of the province's rich reserves of nickel, the state is considering turning Jiuquan Iron and Steel into a stainless steel plant with a capacity of 500,000 tonnes a year. Total investment is more than five billion yuan. The other two stainless steel bases are Shanghai and Taiyuan.
China now has no large stainless steel plants and imports 1.2 million tonnes of the material every year.
Mr Guo said Gansu would also make better use of the natural gas supplied by the pipeline from Xinjiang to Shanghai and enlarge its capacity for petrochemical processing. Lanzhou Refining and Petrochemical Corp plans to enlarge its processing capacity from 5.5 million tonnes to 10 million tonnes.
By kick-starting these large projects to revive state enterprises, Mr Guo said Gansu hoped to achieve an annual gross domestic product growth of nine per cent for the next five years, compared with the national average of seven per cent.
But state investment is crucial to these plans. 'Of course we should also enhance our ability to raise funds on our own. But that is very difficult. The most important factor is a stable Go West campaign,' he said.