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SCMP Reporter

MAJOR improvements to highways and infrastructure in the Yangtze River Delta by 2000 will give businesses access to a domestic market of about 465 million people, a new study says.

  The Yangtze River Delta, which includes Shanghai, Zhejiang, Jiangsu and Anhui, is the largest regional consumer base in China, with a population of 193 million.

  The delta's economy is the size of Indonesia's, larger than Thailand's, and equal to about 40 per cent of South Korea's.

  Chreod, a consulting firm, forecast that modern highways would link the delta to Henan and Shandong in the north and Hubei and Sichuan, down the Yangtze River, greatly expanding the potential consumer market.

  'The road construction in the ninth five-year plan [1996-2000] is mind-boggling,' Chreod president Edward Leman said yesterday at an American Chamber of Commerce lunch meeting.

   He said 4,000 kilometres of new roads were planned for the region by 2000.

  Although the buying power of people in the region varied greatly, about 40 per cent of the population lived in urban areas because of growth of township and village enterprises, he said.

  The industrial heart to power the delta's growth would be the emerging megalopolis along the eastern seaboard, extending from Nanjing to Shanghai to Hangzhou and Ningbo, he said.

  'Once a corridor develops, it will become denser and will be continually upgraded.'   According to the study, Shanghai would become a centre for research and development, high-technology and high value-added industries, while labour-intensive enterprises would relocate to cut costs.

  Highways from Shanghai to Nanjing, Shanghai to Hangzhou, Hangzhou to Ningbo, and the Jiangyin bridge across the Yangtze River will emerge as the 'spine' of this megalopolis.

  The main danger was that economic growth would outpace infrastructural development and bottlenecks would limit further development, Mr Leman said.

  Mr Leman ruled out low growth for the region because Japan and other countries would continue to locate manufacturing operations to the Yangtze delta, which boasts a low-cost labour force and a good distribution system.

  Demand for exports from the delta would also rise once China is admitted into the World Trade Organisation, and the completion of major inter-provincial highways would substantially improve access to northern and inland regions, according to Mr Leman.

  The study said China's central government was serious about equalising growth between Guangdong, the Yangtze delta and inland areas.

  Chreod's study predicted the government would take steps to isolate the Yangtze delta from severe macroeconomic controls like those in other areas.

   The delta's population is expected to grow from 193 million in 1993 to 209 million by 2000 and 231 million by 2005.

  Mr Leman dismissed perceptions that the Pearl River Delta in southern China was the nation's economic powerhouse.

   He said the Yangtze delta's population was 295 per cent larger than Guangdong's and its gross domestic product was 215 per cent larger.

  The Pearl River Delta had prospered as an export-processing base because 80 per cent of Hong Kong's manufacturing had been relocated there, but the Yangtze delta would primarily serve the domestic market.



Huge growth seen for Yangtze delta