Hebei struggles for role amid pressure from neighbouring cities

Province often seen as lesser sibling of Beijing and Tianjin, but allowing market forces to play bigger part in economy could level playing field

PUBLISHED : Friday, 28 March, 2014, 3:49am
UPDATED : Friday, 28 March, 2014, 3:49am

Despite its large size and population, Hebei can get the short end of the policy stick when going up against neighbouring Beijing and Tianjin.

The three areas are often regarded as a single region known as "Jing-Jin-Ji" - their one-character names in Putonghua. For decades, there have been repeated calls for their joint development, but synergy has been limited.

"The administrative and political systems have created an artificial division in the region, where none existed in our economies or flow of people," said Wang Jinying, dean of the economics school at Hebei University. In the political sense, the province was inferior to the two municipalities, even though it has a population of 72 million, or roughly twice their combined number. "Thus, in the course of regional development, Hebei often must make sacrifices for the sake of its two neighbours," Wang said.

The top officials, or party chiefs, of Beijing and Tianjin are usually members of the Communist Party's powerful 25-member Politburo. But the head of Hebei has more junior political status - a seat on the party's roughly 350-member Central Committee.

To improve air quality, Beijing has ordered many of its big polluters out of the capital, which often means they go to the surrounding province. In the coming three years, another 1,200 large polluters are expected to be kicked out of Beijing.

Hebei, which, at 188,400 square kilometres, is more than 11 times the size of Beijing, might absorb some of these companies, as they create jobs and revenue for the government. But officials must also grapple with the environmental cost.

The province is already struggling to cut emission levels. Whenever the central government orders a reduction in smog, Hebei temporarily closes polluting enterprises. But these plants and factories resume operation when the pressure eases.

Plagued by pollution, traffic jams and population pressure, Beijing is pushing labour-intensive businesses out of the capital, including a large wholesale garment market near the Beijing Zoo in the Xicheng district. The market, the largest of its kind in northern China, is home to 30,000 vendors who serve more 100,000 customers a day.

Hebei has welcomed the move. Baoding, a city 160 kilometres from Beijing, has promised to provide space for the new market and waive rents for five years for vendors.

But not all exchanges have gone smoothly.

Hebei officials complain they have not been properly compensated for their regional contributions. The province diverts a significant amount of water to ease chronic shortages in Beijing and Tianjin, and many farmers have also been ordered to plant more trees to reduce smog levels and buffer sand storms heading to Beijing.

"Local protectionism has become an apparent hindrance to regional integration," said Zhang Gui, a professor who studies regional development at Hebei University of Technology. "Economically underdeveloped Hebei is glad to take the relocated enterprises they prefer, but turn down those they don't like."

An intervention by President Xi Jinping has raised hopes for a renewed push for regional integration. Sources say Xi has ordered the central finance leading group to take charge of the initiative and that the National Development and Reform Commission is drafting policies expected to be published by June.

"Only greater co-ordination from the central government can solve the more complicated problems," Zhang said. "Smog, which has become a top concern for local officials, also calls for joint efforts across the region."

Zhang Zhixin, an associate professor at Capital University of Economics and Business, says a standing department led by a vice-premier should be set up to guide development.

"Policies might set a direction, but there will still be many disagreements requiring the steady intervention of the central government," Zhang said.

Others say market forces can play a greater role in regional integration.

"Few people want to leave Beijing," said Wang Lixian, a senior IT engineer who worked previously with steel producer Beijing Shougang Steel, which was the city's largest polluter. "There are many advantages to living in Beijing that people value more than money or compensation."

Beijing Shougang was relocated to Caofeidian, a district of Tangshan in Hebei province. The relocation cost 50 billion yuan and took six years to complete. In the process, it lost many of skilled workers.

Beijing is also planning to move more educational and medical facilities out of the city in a bid to ease population pressure.

"People can simply just move to other industries if their companies or organisations relocate," Wang said. "The Beijing government might not be able to meet its original target, which is to cap its population, if they don't follow market principles."