Tianjin may be touting its Binhai New Area as the nation's next financial hub, but one of the country's top advisers on urban planning says it will not replicate the success of Shanghai's Pudong district. Binhai has been widely promoted by local authorities as the mainland's third economic engine since the State Council announced last year that the municipality would host experimental national financial and land reforms. For the local government, the idea is for the region to follow in the footsteps of Shenzhen, an important contributor to the rise of the Pearl River Delta in the 1980s, and Pudong, the development zone that powered the Yangtze River Delta's boom in the 1990s. But Lu Dadao , a geographical economist with the Chinese Academy of Sciences and leader of an expert team advising the country on planning programmes for the Beijing, Tianjin and Hebei zone and the Yangtze River Delta zone, said the expectations were flawed. 'It's impossible for Binhai to become comparable to Pudong in many important aspects. They are at two different levels,' Mr Lu said. Entrusted by the National Development and Reform Commission (NDRC), Mr Lu and his team have spent the past two years working on economic plans for the two zones and, after discussions with the NDRC, expect to wrap up the project in the next couple of months and send their recommendations to the State Council for approval. The NDRC's urban planning takes precedence over all others, including those compiled by other ministries and city governments. Mr Lu said his team's plan called for Tianjin to be positioned as a manufacturing and logistics centre, instead of a financial hub. Tianjin Mayor Dai Xianglong , a former central bank governor, is pushing for financial innovation in the Binhai zone and earlier this month expressed a desire to see the city compete with Pudong and Beijing's Financial Street area to attract finance companies, banks and brokerages. However, Mr Lu said Binhai would not receive as much central government financial and policy support as Pudong. 'Pudong's development was determined by the central government. Binhai's different, though it appears to be the same,' he said. Pudong received more than 40 billion yuan from the central government and in bank loans in the 1990s to fund its airport, subway and other infrastructure. In addition, the state allowed the area to keep a share of its fiscal revenue. A solid foundation was laid for the financial centre by moving national stock, futures, property rights and commodities exchanges into Pudong and establishing a diamond exchange. There have also been a string of preferential policies in corporate tax, land and other sectors, allowing it to pioneer financial and trade services. Tianjin's gains from the state are minor in comparison. Local officials have said they will not get money from the central government to develop the zone, but the municipality is allowed to increase the amount of land for industrial purposes at a faster speed than other cities and grant hi-tech companies a 15 per cent corporate income tax rate, the national average tax break for offshore enterprises. Mr Lu said this would not be enough to secure Tianjin a position as a national financial and commercial hub. 'To Shanghai, the hinterland [area it services] is the whole nation. To Tianjin, the market is mainly the Hebei cities in the zone. They differ a lot in market scale.' And then there was Tianjin's unavoidable competitor in the zone. The plan describes Beijing as the national political and culture centre and, although political considerations mean the capital was never referred to as a financial centre, it would continue to act as one. 'Beijing has attracted a cluster of domestic and overseas financial institutions. It's a favoured place for multinationals' headquarters. Its robust new and high-technology companies also create considerable demand for services. The role will not be replaced by Tianjin,' he said. In the 2005-2006 China Regional Economy report launched by the Chinese Academy of Social Sciences, the NDRC land development and regional economy research team expressed similar concerns over Binhai's development. The economic situation of smaller cities in the zone lags behind their counterparts in the eastern Yangtze River Delta. Industry synergy within the zone pales and the private sector is underdeveloped compared with the eastern zone. In 2001, Beijing, Tianjin and Hebei had 240,000 private companies. Shanghai, Jiangsu and Zhejiang had a combined 600,000, according to the report. Mr Lu acknowledges that there are financial experiments well under way in Binhai which will aid the region's development. The Bohai Bank, set up in 2005, was the first national bank approved since 1996 and the first mainland bank to have a foreign investor - Standard Chartered - as a founding partner. The State Council has also approved the establishment of a 20-billion-yuan Bohai industry development fund to encourage hi-tech industries in the area, even though the mainland has no legislation covering such funds. Mr Lu said these advances in Binhai were certain to bring more development opportunities to Tianjin and support an economy largely reliant on industries such as steel, petrochemicals and logistics. 'It's impossible for Binhai to become comparable to Pudong in many aspects' Lu Dadao Chinese Academy of Sciences economist POWERING AHEAD Binhai New Area in Tianjin's east, covers 2,270 sq km 2006 economic figures with year-on-year percentage changes GDP 196.05 billion yuan, up 20.2% Fiscal revenue 38 billion yuan, up 31.7% Exports US$22.62 billion, up 22.5% Contracted foreign investment US$6.18 billion, up 24% Pudong New District in Shanghai's east, covers 522.75 sq km 2005 economic figures with year-on-year percentage changes GDP 210.8 billion yuan, up 13.8% (2006 estimate: 236 billion yuan, up 11.9%) Fiscal revenue 49 billion yuan, up 23% Exports US$37.21 billion, up 14.9% Contracted foreign investment US$5.65 billion, up 75%
