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SCMP Reporter

Province seeks to reduce its reliance on agriculture with outside investment

About a century ago, Hu Bingheng  left his home in the sleepy Anhui village of Longchuan to establish a thriving arm of the family tea business in Taizhou , a city in the neighbouring province of Jiangsu .

The move from Anhui paid dividends. Today, his grandson is the country's president,  while the descendents of his former neighbours still struggle to earn a living in the farming community.

The grandparents of former president Jiang Zemin  made a similar journey from a county neighbouring the ancestral home of Hu Jintao .

Wedged against two of the nation's richest provinces, Anhui and its 65 million people may appear to be ideally positioned for prosperity.

But the province has a long-impoverished past. Agriculture is the backbone of Anhui's economy - at least half  its  residents are farmers and its per capita GDP was just US$1,050 last year, 40 per cent below the national average.

Authorities are hoping to replicate some of the economic success of neighbouring Zhejiang  and Jiangsu  by attracting outside investment in its industrial and service sectors.

'We realise that relying on our own is not enough. We must go out and join hands with every possible force to realise sustainable development,' said Anhui Governor Wang Jinshan .

The province is keen to shed its image as an agricultural backwater and highlights its potential by drawing attention to two of its major success stories - Maanshan Iron and Steel and Anhui Conch Cement, which are both listed on the Hong Kong stock exchange.

Anhui is also home to  China's No 1 car exporter.

Officials also hope to hook investors by touting the province's  location, cheap workforce, and abundant power and coal supplies.

Anhui came into being three centuries ago when Qing dynasty administrators separated it from what today is known as Jiangsu. Both provinces straddle the Yangtze River, but have taken divergent routes over the past two decades of  opening up and reform.

Jiangsu capitalised on its proximity to Shanghai and tax incentives to encourage local businesspeople to establish a strong processing economy, while just over the border, Anhui retained its reliance on agriculture.

Since 2004, Anhui has been included in central government plans to promote 'the rise of the central region', the last part of the country to be covered by an overall development strategy.

Officials see Anhui's proximity to the Yangtze River Delta and its lower production costs as key to future economic success.

Hefei  Mayor Wu Cunrong  said: 'The province is close to a centre of consumption so it has a logistical cost advantage.'

He  said the province's lower labour and land costs made it an ideal destination for  firms forced out of the Pearl River Delta by provincial economic restructuring, labour shortages and high  costs.

In the three development zones in the province, the monthly salary for workers is around 500 yuan, while executive staff command about 1,500 yuan a month.

Anhui exports 2 million kWh of electricity every year, and coal mines with a combined annual output of about 100 million tonnes are being established in the city of Huainan .

But Mr Wang said officials would still have to raise their game by streamlining the process for approving projects and cutting administrative costs for investors.

If Anhui succeeds in  switching from dependence on agriculture, it may finally shed its image as an economic weakling, and reverse the historical tide of people moving away from the province.



Anhui attempts to lift itself out of the doldrums