Guangdong, China's biggest province in terms of economic size, will be able to achieve a growth rate between 8 and 10 per cent annually for at least another decade with the support of major new projects and industrial upgrading, the southern province's top economic planning chief said.
"It'll take about three years for industrial upgrading to usher in mass production. That'll be the turning point for growth quality to rise to a new stage," said Li Chunhong, the director of the Guangdong branch of the National Development and Reform Commission. "I'm confident about Guangdong's sustainable development," he said.
Li's optimism comes after the province, an export hub, was dealt a hard blow from a protracted global economic downturn. Last year, the province's gross domestic product grew 8.2 per cent, above the nation's average of 7.8 per cent but below the rate achieved by rival provinces such as Jiangsu in the east, where GDP soared 10.1 per cent.
In an effort to restructure the local economy, Guangdong has been introducing high-end manufacturing and services operations to the affluent Pearl River Delta region to cope with rising land and wage costs, while shifting labour-intensive businesses to poorer areas in the province.
So far, the Delta region has moved out about 20,000 old operations and introduced about 7,000 more modern companies after labour costs almost doubled over the past few years, Li said.
"Average investment on each new project is more than 20 times the money spent on each project replaced," said Li.
The province plans to invest up to 2.4 trillion yuan (HK$3 trillion) this year on infrastructure, with a focus on building roads in the underdeveloped eastern, western, and northern regions, highways that link them to other provinces, and more subways in the Pearl River Delta region, Li said.
The investment means a rise of up to 25 per cent in fixed-asset investment over last year.
Among the major projects approved in recent years, the controversial Zhanjiang Steel project, with a majority stake held by Baosteel Group, will start construction by June, with steel production beginning by 2015, Li said.
Wang Zhongbing, mayor of Zhanjiang city in southern Guangdong, made headlines last year when he kissed a document issued by the NDRC in a newspaper photo to cheer the long-awaited approval of the steel project.
The NDRC had delayed approval in 2009, on the grounds of overcapacity in the industry.
The project, with a targeted capacity of 10 million tonnes, needs 70 billion yuan in investment and has prompted 10,000 villagers to relocate.
Li defended the plan, saying the steel mill will make high-end products including flat steel for cars, home electric appliances, and oil tankers, most of which still rely heavily on imports.
Among other major projects, carmaker FAW's joint venture with Volkswagen will start producing cars in September at a plant in Foshan with an annual capacity of 300,000 cars, while the city of Huizhou has secured a refinery project with a capacity of 10 million tonnes and a one million tonne capacity ethylene plant, Li said.