Integration of Beijing, Tianjin and Hebei set to be signature project of Xi Jinping's administration

In the style of his predecessors, the integration of Beijing, Tianjin and Hebei is set to be the signature project of president’s administration

PUBLISHED : Wednesday, 25 June, 2014, 4:41am
UPDATED : Wednesday, 25 June, 2014, 3:46pm

Every administration since Deng Xiaoping's has taken on an ambitious economic project that defines its legacy.

For President Xi Jinping, that project is to link 130 million people across Beijing, Tianjin and Hebei province into a single megalopolis, the so-called Jing-Jin-Ji region.

Xi has held out the model as a template for China's urbanisation in the future. For the project to work, he will need to align policy and interests that are often in conflict - ones that touch on urban planning, industry, state and private enterprises, and environmental protection.

It's a potent challenge, but analysts say Xi's recent move to consolidate his power could give him enough leverage to rein in the competing interests, and see the vision realised.

Xi's plan calls for the three northern areas to be united into one economic sphere. The Bohai Bay area would become a key growth plank, similar to the Yangtze River Delta and Pearl River Delta.

The northern cluster lags the deltas in development of private enterprise, lacks their cohesive industrial base, and is less open to the outside world. In 2012, exports accounted for 15 per cent of its gross domestic product (GDP), compared to 60 per cent in the Yangtze River Delta and 63 per cent in the Pearl River Delta.

Vice-Minister of Finance Wang Baoan has said the new metropolis would require an investment of 42 trillion yuan (HK$52.7 trillion) over the years.

"The thinking behind the policy is probably to turn a vast region with a lot of potential for economic development into a third pole of growth" rivalling the other two deltas, said Hongyi Lai, an associate professor of political economy at the University of Nottingham's School of Contemporary Chinese Studies.

The industrial base in the Pearl River Delta took shape in the 1980s after Deng's move to turn Shenzhen and Zhuhai into special economic zones. A decade later, the administration of Jiang Zemin and Zhu Rongji pushed forward the industrialisation of the Yangtze River Delta by designating Shanghai's Pudong area the financial hub of the nation.

The fourth generation of leaders, Hu Jintao and Wen Jiabao , turned their focus to underdeveloped areas of the mainland, and sought to address income disparity with their "Go West" and "Develop Central China" campaigns.

Analysts said the establishment of the special economic zones opened China's market to foreign manufacturers, which turned the delta into the "world's factory". The experiments in Pudong helped prepare China's entry into the World Trade Organisation.

The Hu-Wen administration accelerated development in inland regions but failed to address the structural problems in the economy to make growth sustainable.

Yang Long , a professor of political economy at Nankai University in Tianjin, said the current administration faced similar challenges. "The new leadership has to tackle these deep-seated structural problems with the experiments to be tried in the Jing-Jin-Ji region."

In a series of recent speeches, Xi, head of the leading group for overall reform, called for integrated and coordinated development among the three regions.

"[The three governments] must complement one another, strengthen trilateral cooperation, deliver tangible results and speed up the search for an integrated and coordinated method of sustainable development," Xi told a symposium attended by leaders from three regions in March. seen as spearheading the effort.

Beijing-based political economist Laurence Brahm said Xi had personally taken reform into his own hands, to a degree not seen since Deng's time.

Brahm, who has advised the Ministry of Environmental Protection, said Xi met each minister in the State Council weekly for a briefing on their progress.

"It's not surprising that the Beijing-Tianjin-Hebei megalopolis has become a personal priority project for him in a way that the SEZs were for Deng," he said.

But analysts cautioned that compared with reforms introduced in the other regions, the new plan would meet resistance.

The three regions enjoy special political status. As China's capital, Beijing houses the headquarters of all major national party, government and military bodies. It is also home to China's leading academic, cultural, sports and other social institutions, including the mainland's elite universities, hospitals and performance troupes.

Along with Shanghai and Chongqing , Beijing and Tianjin are classed as metropolises directly under the central government, each headed by a Politburo member, giving them a higher status than a province.

"The different status the three regions have suggested the need for coordination and strong leadership," said Yang.

Shen Jianguang , chief China economist with Mizuho Securities, said the project would test the leadership's determination to break down barriers of vested interests groups.

The region's gross domestic product was US$1 trillion last year, similar to South Korea's, and the 15th highest in the world. But wealth is spread unevenly: per-capita GDP of Beijing is US$15,000, while Tianjin's is US$11,500 and Hebei's only US$6,300.

Analysts said the integration plan aimed to use resources more equitably across the three areas. As the national capital, Beijing has enjoyed far greater access to education, health care, culture and administration than Tianjin and Hebei.

"It will also be a challenge for policymakers to implement the policy effectively. In our view, this is partly due to institutional barriers and the difficulty in redistributing resources," Shen said.

Lai said it appeared Xi might seek to use his consolidated power to push for quicker integration of the region.

Brahm said the success of the Jing-Jin-Ji project would not be decided by its budget but how the vision was implemented.