CHONGQING MUNICIPALITY S DEVELOPMENT STRATEGY: Main messages from the OECD paper

1. CHONGQING MUNICIPALITY�S DEVELOPMENT STRATEGY:Main messages from the OECD paper Beijing, 10 November 2007

2. PRESENTATION MAIN MESSAGES ISSUES NEXT STEPS 2

3. MAIN MESSAGES ASSETS Territorial: size, location, diversity Human: urban and rural population, labour force Technological: firms, universities, military R&D Natural: minerals, energy, water, landscape Entrepreneurial: state-owned enterprises, large domestic or foreign firms, small and medium enterprises Government: status (Centrally Administered Municipality) SUGGESTED IMPROVEMENTS Connectivity to the rest of China and the world (hard and soft infrastructures) Education, training, health care, social security, labour market regulation Local innovation systems, cooperation with other provinces for critical mass Environmental regulation and enforcement in urban and rural areas Ongoing national reform of SOE with local labour negotiations, business climate and foreign investment, clusters, supply chains Multilevel governance 3

4. MAIN MESSAGES The 11th Chongqing Five-Year Plan for National Economic and Social Development (FYP) includes a good diagnosis of the prevailing conditions and presents overall sensible policy strategies. Nonetheless, some comments can be made

5. It is absolutely right to have a territorial development approach as the FYP advocates 5

6. MAIN MESSAGES From the experience of OECD countries, for the goals of the FYP to be effectively reached, it would be convenient to further reflect on a list of issues Metropolitan region of Chongqing Productivity of/in Chongqing metropolitan region Urban-rural linkages Development in rural areas Gaps in access to quality public goods and public services Good governance Financial resources Human resources Evolution of tools for harnessing development Territorial development policies: continuing and collective learning 6

7. ISSUE #1 The FYP sees the large urban area of Chongqing as an engine of growth for the entire Municipality. Yet, it would be useful to think in terms of the metropolitan region of Chongqing. Functional area where urban productive strength is revealed Not necessarily corresponding to existing administrative-political boundaries OECD definitions and databases At present, data for Chinese metropolitan regions are hard to get What is the actual Chongqing Metropolitan area? The OECD paper presents some preliminary considerations and comparisons 7

8. Chongqing metropolitan region:Population 8

9. Chongqing metropolitan region:GDP 9

10. The productivity of Chongqing metropolitan region seems low compared to average conditions of China�s metropolitan regionsIt also compares unfavourably to OECD metropolitan regions, but this is only illustrativeWhat really matters is why productivity appears to be lower than expected considering average productive conditions in a large number of Chinese metropolitan regions 10

11. Chongqing metropolitan region: Productivity* relative to national average 11

12. Productivity in Chinese Metropolitan regions: Chongqing performing less well than expected? 12

13. Hypothesis regarding the low productivity of Chongqing metropolitan regionFOR DISCUSSION Problems related with state-owned enterprises Obsolete capital equipment Inadequate technology, inefficient operation External constraints on management Problems connected with labour Inadequate or insufficient education and training Rigid labour regulation Problems of efficiency in targeting markets Bias towards domestic markets Inadequate identification of products and comparative advantages Problems of insufficient infrastructure or inadequate spatial organization of activities Lack of entrepreneurship and of local innovation systems 13

14. ISSUE #3 What are these linkages? Commuting of people Flows of goods Provision of specialized public services (hospitals, higher education) Flows of information and communication Etc. However, the FYP seems to focus more on transportation infrastructure and planned migration 14

15. ISSUE #4 The development in rural areas could also be strengthened in some ways: economic diversification FYP correctly recognizes the challenges of low productivity in rural areas, particularly in agricultural activities It points out towards activities with higher productivity: large scale farming, aquaculture Yet these are still very close to agriculture and food production Mention of agro industries has to be acknowledged, but more analysis might be useful Complementary activities might be needed to create more jobs and accelerate growth in sustainable ways: other industries and services in rural areas OECD countries face similar challenges for the full utilization of existing assets in rural areas New orientation of agriculture: biofuels? Tourism geared around cultural heritage, landscape and rural amenities? Environmental services? 15

16. Growing urban-rural income gaps: need for improvements in rural development and urban-rural linkages 16

17. Intra-regional income disparities: need for improvements in rural development and urban-rural linkages 17

18. ISSUE #5 Dealing with regional disparities calls not only for policies to narrow income differentials, but also to close gaps in access to public goods and public services Income buys private goods, yet public goods are also important for wellbeing Clean and tidy environment, safety, protection against natural disasters, quality public administration Public services (education, healthcare, urban services like public transportation, waste management, clean water and water treatment, etc.) need also be more accessible to lagging areas Improvements in public utilities to increase coverage, quality and efficiency Better horizontal coordination might be needed Public finance for these purposes might also be improved (more efficient transfers, more equitable subsidies, use of performance indicators) 18

19. ISSUE #6 The effective coordination of all different actors of development for the Municipality has to work very well (good governance) Chongqing Municipality benefits from a special administrative status as a Centrally Administrated Municipality (with provincial level) Nonetheless, apparently significant coordination problems might arise as in many OECD countries among district-level governments and entities 9 central urban districts Remaining districts in the one-hour drive circle Districts in the Northeast and Southeast wings Additional coordination challenges could be met to articulate strategies with Chengdu and Sichuan (to create synergies and better exploit strategic resources: transport and energy infrastructure, higher education, science and technology research and development, etc.) 19

20. ISSUE #7 The financial resources that are needed are very large and have to be secured The planning documents revisited by OECD for the preparation of the paper on Chongqing Municipality�s development strategy do not provide much detail as to where the required financial resources are to come from Certainly a combination of public and private resources is needed, given the large investment requirements In the experience of OECD countries, getting the necessary financing for a development strategy is a complex task Adequate mechanisms, formulae or procedures are usually needed to optimize public funding coming from different levels of government Attracting more private investment (national or foreign) is a challenge: business and regulatory environment, consolidation of local comparative advantages, public-private partnerships (carefully analyzed) 20

21. ISSUE #8 The human resources that are needed from the administrative tasks also have to be prepared The FYP shows in several ways a predominant top-down approach towards decision making for territorial development In the experience of OECD countries, a combination of top-down with bottom-up approaches is more effective It articulates the relative advantages of the different levels of government National government: trade and investment policies, science and technology policies, transfer policies and important taxing/financing capacity, plus leverage on legislation by Congress Local government: more information on local needs and priorities, local political negotiating capacity, implementation capacity The human resources within the different levels of government in each of these approaches function differently In the experience of many OECD countries, building up the required skills and mind-settings in public servants is a challenge to foster adequate territorial development strategies China might encounter similar problems 21

22. ISSUE #9 Tools to harness the development process need to evolve with changing circumstances to be effective: planning, performance indicators OECD countries rely today on central planning much less than China and for different purposes Nonetheless, some countries have adopted planning as a tool for public management and social decision making at some stages of their development processes When these countries started to introduce economic reforms (opening to international trade, privatization of state-owned enterprises, decentralization of fiscal resources, deregulation of private activities, democracy, etc.), gradually they perceived the convenience to modernize and adapt their planning systems More flexible planning, less quantitative and more indicative Consideration of regional phenomena (cope with regional disparities) Other public management tools gradually increased in usefulness and importance Performance indicators It could be the case that China and her provinces meet similar circumstances in the future International experiences could provide some illustration 22

23. ISSUE #10 And finally, guiding the development process is partly a science and an art: as always, collective learning helps promote the process further: domestic and international experiences and best practices OECD countries actively seek to learn from one another, exchanges of best practices Even though no two countries are alike, intelligent comparisons and critical assessments provide ideas for own improvement Comparable meaningful statistics Shared analytical methodologies to approach territorial development challenges The Territorial Development Policy Committee (TDPC) of OECD is one of the most active and leading fora around the world in this respect Member countries have agreed to consider China as a potential observer 23

24. NEXT STEPS Write a final version of the OECD paper including viewpoints exchanged in this roundtable by local and international experts Identify key concrete topics for further technical elaboration Pursue practical ways to ensure future continuous learning about regional (urban, rural, integral) development: Local networking International networking 24

25. THANKS