Capital 'a European city surrounded by African countryside' Government think-tanks have warned that the capital's galloping economy has created a 'political and social stability-threatening' poverty belt around Beijing and Tianjin, according to the Blue Book on China's Regional Development, released yesterday. About 2.7 million people live in poverty in 32 poor counties around the two cities, according to the book, a joint product of social sciences academies from the respective regions. 'The poverty belt around Beijing and Tianjin is as poor as the poorest areas of western China,' and by some measures even poorer, says the report, co-authored by Yang Lianyun and Li Hongmin , researchers from the Hebei Academy of Social Sciences. According to standards adjusted by the central government in 2004, poverty is defined as a net annual income of less than 668 yuan a head. The poverty belt in Hebei province has seen its situation worsen as the development of neighbouring Beijing and Tianjin has drained its already limited resources. Four-fifths of Beijing's water and 93 per cent of Tianjin's are diverted from the surrounding areas of Hebei, regions with fragile environments and frequent natural disasters. To maintain an adequate clean water supply, profitable enterprises in the belt area have had to close. In Chengde, more than 200 industrial projects have been cancelled, the report says. 'There is sharp conflict between the demands of the central government, Beijing and Tianjin for a [good] ecology, and the local governments and farmers who want to become rich,' it says. Due to their proximity to the two cities, many of the poorer counties have long been listed as 'military restricted zones', where national policy forbids development. The book describes the capital as comparable to 'a European city' surrounded by 'African countryside'. Due to the huge income gap, low-skilled labourers inevitably thronged into the city and could form slums of urban poor, it warns. 'It affects not only [Beijing's] image as an international city, but also threatens the social and political security of the capital,' Professor Yang said. Beijing not only failed to benefit the surrounding areas, it had a negative effect on local development. For instance, tourism in Hebei province was overshadowed by Beijing, whereas Shanghai, for example, boosted tourist development of neighbouring cities and towns, the report says. In contrast with the laggard Beijing-Tianjin-Hebei Economic Belt, the Yangtze River Delta and Pearl River Delta remain the two most powerful engines of growth in the mainland economy. Although cities in the Yangtze delta, including Shanghai, Jiangsu and Zhejiang , have all seen slower growth since 2004, economists regard this as a good sign.