Feeling the pinch of economic slowdown, Chinese counties seek new growth drivers

By Chu Daye Source:Global Times Published: 2019/2/17 21:03:39

Local officials, central govt put resources into development

A worker checks an aluminum products processing line at a factory in Longkou, East China's Shandong Province. File photo: VCG

Chinese counties are at the forefront of the nation's drive to urbanize its vast rural areas. But as China's economic growth slows to its lowest level in more than 25 years, local economies are also feeling the pinch. 

A Chinese analyst said that as governments at both the top and lower levels prioritize rural-urban issues and throw massive resources into localities, they are becoming new growth points for the world's second-largest economy. 

The number of counties with economic output of more than 100 billion yuan ($14.78 billion) increased to 24 in 2018 from 21 in 2017, domestic news site eeo.com.cn reported in December, citing a report by the National Academy of Economic Strategy of the Chinese Academy of Social Sciences (CASS).

The CASS report, which sampled 400 counties out of the country's total of nearly 2,000, highlighted the strong presence of county-level economies in the coastal regions as well as a rising disparity between coastal and inland provinces. 

As the Chinese economy slowed to 6.6 percent GDP growth in 2018 amid rising downward pressure and a trade war with the US that dented market confidence, people living in more rural areas are also feeling the pinch. 

"For the first time in 2018, workers at Dad's firm are taking two-day weekends. Dad also cut the payroll by 40 percent. Family spending on Lunar New Year firecrackers fell from 4,000 yuan before to just over 1,000 yuan this year," Wang, whose family owns a small business in construction in Longkou, East China's Shandong Province, told the Global Times. 

Wang, who only gave his surname, especially lamented the spending cut on firecrackers, which are regarded as a ritual for the business community in the province, which is heavily reliant on tradition.

Wang's hometown Longkou actually did well in the CASS ranking: it was one of the 24 county-level localities that reported a 100 billion yuan GDP figure. 

Ma Xiaoteng, a native of Julu, a county in North China's Hebei Province, said much the same thing.

"The county's Spring Festival fair somewhat lost its charm as the number of visitors dwindled," Ma told the Global Times on Sunday. 

"Housing prices soared to about 6,000 yuan per square meter while the local monthly salary averaged about 2,000 yuan," Ma said. "We all felt in 2018 is that it take more work to earn money."

Local realities translate into pressure for local officials. Xiakedao, a WeChat account affiliated with the People's Daily, noted that the transformation of the Chinese economy is presenting new challenges to local governance. 

Government intervention in the new economy is not as effective as in the traditional economy that features industries such as textiles, energy and agriculture. 

But there are also sectors where governance can be improved, like enhanced efficiency in attracting valuable assets to aid the development of the local economy. 

To that end, Liu Jiayi, Party Chief of Shandong Province, urged local officials to take the initiative, and vowed to put in place a more effective incentive system. 

New driver

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said disparities in local development levels in China now feature the harmonious division of labor in successful places such as Zhejiang. 

In problematic areas, the siphon effect of big regional cities often leaves surrounding counties with nothing.

However, Dong said the Chinese government is well aware of the issues of the rural areas, and sees further urbanization as a key way to save the nation from falling into the so-called middle income trap. China's urbanization rate is about 60 percent, in contrast with developed countries' 80 percent, according to media reports. 

"In a small way, companies and talent have arrived in the vast rural market," Dong said. "Capital will promptly follow with the issuance of special-purpose bonds by local governments."

In the past two to three years, rural areas have also quickly caught up in terms of infrastructure and much-needed public services such as schools and sewage systems, Dong said. Such resources are one of the key differences that resulted in strong urban areas and weak rural areas. 

"With the government taking an 'all-in' attitude in those key sectors, the modernization of Chinese rural areas, with counties as the hub and the vanguard, will become a new engine of China's growth," Dong said.
Newspaper headline: Counties seek new growth drivers

Posted in: ECONOMY

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