Guangdong can top Taiwan but at what cost: analysts

PUBLISHED : Saturday, 15 July, 2006, 12:00am
UPDATED : Saturday, 15 July, 2006, 12:00am

Guangdong Governor Huang Huahua's prediction that his province's economy will surpass that of Taiwan's in 2010 is achievable, but big questions hang over the impact of such growth on the deteriorating environment and whether the economy can increase incomes and narrow the wealth gap, analysts have said.

A bigger Guangdong economy would not diminish Taiwan's status, since its per capita gross domestic product was four times greater than Guangdong's US$3,000 and its ability to be innovative was much stronger, they said.

Economist Lin Chu-chia, of Taiwan's National Chengchi University, said: 'We don't mind if they are bigger or overtake Taiwan. We care more about per capita GDP. We are happy to hear they are developing fast but if their per capita GDP is only US$3,000, it will take them a long time to catch up.

'What we are concerned about is our own growth rate. We hope to return to a 5 per cent growth rate. If we do that and the mainland keeps growing at 10 per cent, catching up will take more time.'

David Zweig, director of the Centre on China's Transnational Relations at Hong Kong University of Science and Technology, questioned the quality of technology in Guangdong, the province's ability to be innovative and its standard of education.

'Guangzhou and Shenzhen are working to be innovative cities but Shenzhen still has a long way to go before catching up with Hsinchu [Taiwan's Silicon Valley],' he said.

Lingnan College economist Wu Yingxin said the Guangdong government was 'very optimistic' in its forecast.

'We have to look at opportunity costs and the impact on the environment. They only look at one factor - energy consumption per unit of GDP growth. They are considering this, but not environmental degradation,' Professor Wu said.

'They swim in the river to prove the water quality is good. It is better but not that good,' he said, referring to Wednesday's swim in the Pearl River.

'Taiwan's more aware of environmental protection because of their limited resources.'

In pursuing fast growth, Guangdong has also failed to stem corruption and address its income disparity, the analysts said.

Mr Huang said Guangdong's economy would make up the US$80 billion economic gap with Taiwan by expanding at US$20 billion more than Taiwan on average every year.

The governor was confident Guangdong would overtake Taiwan in 2010 because its average annual growth rate during the 10th five-year plan [2000-05] was in double digits, whereas Taiwan grew at rates of between 3 and 4 per cent.

By 2010, Guangdong aims to have an economy of more than 3.35 trillion yuan and a per capita GDP of 34,400 yuan, double that of 2000.



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