Foshan district's 'negative list' a positive step for Pearl River Delta economy

Local Foshan project guides growth by outlining what it doesn't want

PUBLISHED : Saturday, 14 December, 2013, 5:22am
UPDATED : Saturday, 14 December, 2013, 5:22am

While a free-trade zone may not be in the cards for the Pearl River Delta next year, Guangdong continues to experiment with economic policies that could lay the ground for one.

The local government in Foshan's Nanhai district rolled out a list of 355 investment projects this week deemed off limits for private and foreign investors. Some are on the list because they don't mesh with the district's development strategy; others are considered inappropriate because of their potential environmental impact.

Shanghai drafted a similar "negative list" while preparing its free-trade zone. Nanhai appears to be following the eastern metropolis' lead in an attempt to advance reform.

The district went a step further by publishing a "positive list" that detailed 710 administrative approvals the district would grant and a "watch list" for the types of business it would supervise, such as internet cafes and restaurants.

The lists - the first of their kind for a local government - have been seen by some analysts as another attempt by Guangdong to retain its central role in the country's "reform and opening up" process.

While it has been at the forefront of the country's economic boom since the late 1970s, the southern economic powerhouse has gradually lost influence as industry moves inland and its export-oriented economy suffers through the global slowdown.

Guangdong got a nod of support from Xi Jinping last year, when he urged the province to continue its leading role in "deepening the reform" during his first inspection tour after becoming Communist Party chief.

But the economic climate has left Guangdong party chief Hu Chunhua with little room to experiment and he is still searching for a way to follow up on his predecessor's creation of the special economic zones in Hengqin, Qianhai and Nansha.

Hu has so far stuck to the tried-and-true formula of investment, infrastructure and massive industrial projects to close regional wealth gaps and maintain the province's position as the country's largest economy, with a gross domestic product of 5.7 trillion yuan (HK$7.3 trillion) last year.

As Guangdong Academy of Social Sciences economist Ding Li put it, Guangdong needs to come up with its own innovations that will impress Beijing, making the most of its reputation for openness, rather than seeking preferential policies from central authorities.

The leadership will likely be receptive, having pledged after the conclusion of the Central Committee's third plenum last month to reduce government intervention and let the market "play a decisive role" in the economy.

Although Nanhai's negative list is far less significant than the one Shanghai prepared for its free-trade zone, the experiment could still represent a good start for Guangdong.

He Yigang, the director of the Nanhai district administrative service centre, said besides drawing a clear boundary between the government and the market, the three lists aimed to guide future industrial development by specifying projects that could or cold not be pursued locally.

They divide the district into three parts, each with their industrial preferences. For instance, the production of inefficient incandescent lighting is on the negative list, but the manufacture of efficient LED lighting would receive government support.

With its negative list, Nanhai will also close the door to heavily polluting industries such as electroplating and textile printing and dyeing, as well as other businesses that produce large amounts of water pollutants, He said.

The move might also improve government transparency in its administrative-approval process, officials said.

"The three lists are actually a list of government power," Nanhai district party chief Deng Wengen told the Nanfang Daily. "All cans and cannots have already been made clear to the general public. This will force us to be more transparent on the decision-making process, which will help to rejuvenate the market economy."