Plan to 'leapfrog' into the future pays off as economy catches up

PUBLISHED : Sunday, 29 June, 2008, 12:00am
UPDATED : Sunday, 29 June, 2008, 12:00am

Six years ago, when the Ningxia government decided to build 10-lane highways rather than the six-lane ones originally planned, it set off a storm of criticism from people on the ground and analysts outside the autonomous region.

The critics accused the regional authorities of indulging in political point-scoring through white- elephant infrastructure projects that would boost local economic output at the expense of severe financial strain on future generations.

All this brought great pressure on Chen Jianguo , then the newly appointed party secretary of the Ningxia Hui Autonomous Region and a strong proponent of the project. Before taking up his post in Ningxia, Mr Chen was vice-president of burgeoning coastal Shandong province .

His appointment to Ningxia was widely viewed as an effort by Beijing to transplant the enterprising and creative spirit of coastal areas to landlocked Ningxia, where more than one-third of the population is Hui.

Mr Chen stuck to the original decision and it paid off for the local economy.

Today, traffic flows smoothly along the highways, transporting not only specialities from Ningxia such as medlars - fruit that look like small brown pomegranates - potatoes, grapes and aquatic products, but also sophisticated equipment and machinery desperately needed to accelerate the region's industrialisation.

'As an underdeveloped inland province, Ningxia must break through assumptions to create runways for its economic takeoff,' said Zhao Zhihong , dean of Ningxia University's Economics and Management School.

'We have to set our sights 10 or 20 years ahead in designing that infrastructure. Otherwise we will have to revamp them three or five years later and pay an even higher cost when they become bottlenecked again.'

The buzzword among senior Ningxia officials is 'leapfrogging'.

'We must always leapfrog in terms of growth to carry out the 'scientific development theory',' Ningxia Governor Wang Zhengwei said.

The theory, advanced by President Hu Jintao , stresses a balance among environmental protection, public welfare and growth in gross domestic product.

'We set out on the road later than our counterparts in coastal China, but the farther we are behind the more urgently we are trying to catch up,' Mr Wang said.

The push is being spearheaded by a massive amount of investment. Last year, investment in the coal industry was up 79.2 per cent, chemicals 72.9 per cent, pharmaceuticals 42.9 per cent, textiles 72.4 per cent and non-ferrous-metals processing 89.9 per cent. The money pumped into metallurgy soared 290 per cent.

Over the same period, the average investment-growth rates for all of China in those sectors were between 20 and about 50 per cent.

As a result of all the investing, output from processing and manufacturing in Ningxia was 42.03 billion yuan (HK$47.86 billion), up 15.8 per cent on the previous year and more than half of the region's GDP.

Ningxia is also quietly approaching the per capita economic strength of central provinces such as Jiangxi and Henan , even though it still ranks third from the bottom in the provincial GDP table.

Authorities have even higher hopes for the region. To date, the autonomous region has invested about 50 billion yuan in the Taiyangshan energy and chemical base in Wuzhong , a project that will involve eight coal mines, nine power plants and a projected annual industrial output of 20 billion yuan.

The region is also striving to become the biggest centre for non- ferrous-metals processing in western China by exploiting its ample reserves of aluminium, magnesium, silicon and beryllium.

Development of these non- ferrous metals is expected to coalesce in a new-materials industry in Ningxia with an annual output of 10 billion yuan. Authorities hope that output from energy, chemicals, new materials, equipment manufacturing and agricultural processing will make up 80 per cent of the autonomous region's industrial total by 2012.

The regional government is also reshaping itself for the leapfrog by cutting through red tape, the most frequent investor complaint.

'All procedural examinations and approvals must be withdrawn, if other provinces do not have them,' Mr Wang said. 'And all administrative procedures must be changed if people complain that they just lead to inconvenience.'