Western China set for economic development: report
Report finds mainland's west has demand for overseas investment in agriculture, education and financial services sector in coming years
Western China, where the economy is expected to grow faster than in the developed eastern areas, is likely to attract more overseas investors to its agriculture, education and financial service sectors in the next few years, economists said.
Singaporean companies investing on the mainland are set to tilt towards the western provinces so as to benefit from the bigger development potential, says a report released yesterday by the Sichuan Academy of Social Sciences and the National University of Singapore.
The service sector, including financial services, education and elderly care, is also suitable for Hong Kong investors, as their expertise would be valuable to the western areas, where services lag far behind economic growth, Mao Yushi, an independent economist, said at the launch of the report "New Opportunities in Western China".
The combined growth in the gross domestic product of the 12 western provinces and regions has exceeded 10 per cent for eight consecutive years since 2004 and surpassed that of their eastern peers in the past four years.
"The central government's western China development project, started in 2000, did not make big progress," said Mao, a co-founder of the Beijing-based think tank Unirule Institute of Economics. "The rapid development in recent years was the result of market choice, as companies moved out of the east owing to rising land and labour costs."
For the first 11 months of this year, fixed asset investment in the western region grew 24.2 per cent from a year earlier, outpacing the 18 per cent increase in the eastern areas, official data showed.
Multinational companies' investment on the mainland has been tilting westwards since 2008, with companies from Dell, Intel and Foxconn to BASF and Lan Kwai Fong having made a presence there. Singaporean firms are keenly looking into the promising market after setting up the Singapore-Sichuan Hi-tech Innovation Park (HTIP) earlier this year, according to the report.
Apart from hi-tech industry, potential markets in the west would include agriculture, financial services, health care and education from kindergarten to high-end adult English training schools, Mao said.
Professor Liu Shiqing of the academy's West Development Research Centre said western cities should be keen to improve city management in public transportation, drain system construction and elderly care, areas in which Singapore and Hong Kong have expertise.
There are, however, risks to investing in the western region.
Zheng Yongnian, a professor at the university's East Asia Institute, said: "The market mechanism in the west is still underdeveloped, so the role of local governments is very important. Will they intervene in the market or foster it? It's hard to say for now."