Factory shake-up bid to close income gap

PUBLISHED : Monday, 27 March, 2006, 12:00am
UPDATED : Monday, 27 March, 2006, 12:00am

Chongqing is grouping and relocating its factories and universities to dozens of industrial parks and a university city, to help catch up with the east and narrow the urban-rural income gap.

Mayor Wang Hongju said the municipality - which has been administered directly by the central government since it was separated from Sichuan province - was trying to modernise its industries by grouping them into about 30 industrial parks. Chongqing is hoping its main industries, such as vehicle and equipment manufacturing and processing natural resources, will benefit from the economies of scale.

Mr Wang said it was also hoped the reduction of tariffs on imported equipment - a privilege granted to Chongqing for equipment used on the Three Gorges Dam project - would help the province to upgrade its industries.

The city is also eager to develop tourism by better packaging and promoting its hot springs and other attractions.

Beijing gave Chongqing the mandate to revitalise the economies of neighbouring inland provinces, but it must also face the considerable challenge of narrowing its income gap.

Mr Wang said the restructuring of state enterprises was painful. About 800,000 workers were laid off after the area became a municipality nine years ago. Unemployment remains a heavy burden. A survey found the unemployment rate was 8.98 per cent in 2003. Mr Wang said it dropped to 8.02 per cent in 2004 and 7.7 per cent last year.

'In general it is improving, but the problem is still a heavy burden on our hearts,' he said.

The municipality has set aside 20 per cent of its finances for universities and is building a large university city as part of its vision to raise the enrolment rate to 30 per cent.

But Mr Wang denied a large number of residents displaced by the Three Gorges project had returned to their old homes after they found it hard to settle in new areas assigned by the government.

Only 1,000 displaced residents had returned to the area, Mr Wang said, significantly lower than figures reported in the state media. Only 20 per cent had not found a job in the new areas, while the rest had either returned to visit parents or were looking for work after settling in to their new homes.

He said incomes of residents displaced by the dam were about 94 per cent of the average rural income of 2,800 yuan a year.