Investment leads to regional difference in GDP growth
Fan Jianping, chief economist of the State Information Center, a top government think-tank, said that the difference in GDP growth between the eastern regions and the central and western regions was mainly a result of investment.
Compared to the eastern regions where infrastructure is generally advanced, the development of the central and western regions is lagging behind. These years, the central and western regions have been focusing on infrastructure construction, which has gained economic traction and impetus.
Analysts also pointed out that provinces such as Inner Mongolia, Guizhou, and Shaanxi have abundant natural resources, which can be depended upon to boost economic growth.
Wang Jian, secretary general of the National Development and Reform Commission's China Society of Macro-economics, said that western China outpaced eastern regions in the GDP growth in the first half of this year because of the adjustment of China's regional economic structure. As the prices of energy and raw materials keep rising, the upstream industries obtain rapid development, but the downstream industries mainly located in the east slow the pace of development. This, to some extent, changed the distribution of the regional economy.
Major provinces seeking economic transformation
According to a report in the People's Daily, Beijing ranked at the bottom region and Shanghai second to last in H1 GDP growth – 8% and 8.4%, respectively.
Su Hui, director of Beijing's statistics bureau, explained that Beijing has changed its past policy of solely pursuing high growth. He said, "In order to reduce the speed of growth, we adopted three major macro-control measures. They included limiting car purchases, tightening home buying terms, and delisting Shougang, China's largest state-owned steel group. These measures eroded our GDP by 1.8 percentage points."
Zhou Zhenhua, director of the Shanghai Municipal Government Development and Research Center, said that the old pattern of using investment to promote high growth was not suitable for Shanghai anymore, which had been adopted for over two decades. He thought it is high time that Shanghai made some changes for a long-term better future.
In fact, the slowdown of these provinces and cities is related to those regions' targets for the 12th Five-Year Period (2011-2015). China's economically more developed eastern regions, including Beijing and Shanghai, are now focused more on structural adjustment than GDP growth as the country moves to change its growth model.
Beijing has set its annual GDP growth target at 8% for the next five years, the lowest rate among the country's 31 provinces and regions, said Zhang Gong, director of the Beijing Municipal Commission of Development and Reform.
"The low ranking does not mean Beijing's competiveness is declining. The city now has a per capita GDP of over $10,000 and is gradually forming a growth pattern led by the service sector and driven by consumption," said a spokesperson from the Beijing Municipal Bureau of Statistics.
Shi Jinchuan, director of social sciences at Zhejiang University, listed the following factors for the province's poor economic performance: a shortage of resources, the credit crunch, higher labor costs, and industrial transformation.
Analysts noted that although the H1 local economic data indicated signs of the transformation of economic development patterns and structural adjustment, the data also showed the investment-led growth model has not changed much and the tertiary sector still contributes very little to economic expansion. However, the faster growth rates in central and western regions show that the economic gap among different regions is narrowing and less developed regions are making full use of their respective strengths, which is a positive sign.
