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By Tiger Tong, Contributor
China, the world’s second-largest exporter of
goods and the fourth-largest economy, is growing at the fastest pace
among all major economies. But there is a vast difference in the
regional economic development in China among the 31 mainland Chinese
provinces. The big disparity makes China appear as a macrocosm of
the world, instead of showing the country as a homogenous one that
it really is.
Grouped by geographic location, the 31 mainland
Chinese provinces are divided into four regions: coastal (10
provinces), northeastern (3 provinces), central (6 provinces), and
western (12 provinces). With foreign investment and foreign trade
being the most important catalysts to China’s growth in the past
30 years, the coastal region has moved far ahead of other regions.
Last year, 7 coastal provinces were among the 10 biggest economies.
One of these provinces, Guangdong, remained at the top spot, with
its Gross Domestic Product (GDP) — or the total value of goods and
services produced in a country in a year — hitting more than
US$400 billion. It was the first to be opened to the world. Henan,
the most populous province in China and located in the central
region, ranked 5th, the highest among all non-coastal regions.
Calculating the contribution of coastal regions
to China’s economy is not easy as it appears. It has been long
that much of the data released by the National Statistics Bureau do
not tally with data from those of provincial-level statistical
bureaus. For example, while the National Statistics Bureau’s
preliminary data showed that China’s GDP grew 11.4% in 2007 (now
revised to 11.9%), the weighted average GDP growth rate based on
individual provincial data was 14.2%.
Undoubtedly, local officials tend to inflate the
GDP figures for their own best interests. It is also plausible for
the National Statistics Bureau to keep the figures low to avoid a
potentially overheating economy. Probably, the true figures lie
between those reported by the local officials and those stated by
the National Statistics Bureau.
Thus, the individual provincial GDP figures were
used to calculate the share of the different regions in China’s
economy. In 2007, the 10 provinces in the coastal region accounted
for more than 55 percent of China’s economy despite their
occupying only 9.5 percent of the country’s total land area. The
GDP share of these provinces in 2007 was slightly lower than that in
2006, but still 1.2 percentage points higher than that in 2003.
Indeed, the coastal region takes much bigger
shares in terms of foreign trade and foreign direct investment (FDI).
In 2007, it accounted for about 89.0 percent of China’s foreign
trade and 70.9 percent of utilized FDI. Again, it is noted that
provincial FDI figures are normally “inflated” and at a
much-bigger scale than the GDP figures. In contrast, foreign-trade
figures are one of the few accurate ones in China, and provincial
data tally well with national figures.
In terms of foreign trade and foreign
investment, the two deltas in the coastal region — namely the
Yangtze River Delta, comprising Shanghai, Jiangsu, and Zhejiang, and
the Pearl River Delta (Guangdong), the backbone of China’s
export-driven economy — remain dominant in China. In 2007, they
accounted for 66.3 percent of China’s foreign trade and 45.0
percent of China’s utilized FDI.
Besides aggregate figures, at individual level,
there is also a bigger gap between coastal and inland China. For
example, Shanghai ranked first in GDP per capita (US$8,500) in 2007.
In contrast, GDP per capita in Guizhou, the poorest province in
China, was only US$900 in the same year, about 10.6 percent of
Shanghai’s.
In general, the vast regional disparity is
normally not a desirable factor for a country’s economic growth as
it will trigger serious social problems. It indicates, though, that
there is still plenty of room to grow in China. After 30 years’
development, the operating cost, including labor and land in the
coastal region, has been soaring rapidly, which erodes the
ascendance of China as the world’s factory.
But as its vast hinterland still lags behind,
besides shifting production line to Vietnam or Cambodia, some are
seeing those undeveloped regions in China as another option. Faced
with increasing gap between the coastal and interior regions, China
is striving to build more expressways and railways to solve the
single biggest hindrance to inland development logistics. Perhaps,
the past 30 years were just the first wave of China’s development.
In the near future, we will see an accelerated micro globalization
within the robust economy. Simply, Shanghai is more like today’s
United States while Guizhou is more like China decades ago.
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Tiger Tong is an analyst with China
Knowledge, a premier provider of trade and investment information on
China. Opinions expressed are his own.
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