Developing the West: Investment Opportunities and Potential Resources

1. Developing the West 西部大開發

2. Where is the west? • 中国西部由西南五省区市（四川、云南、贵州、西藏、重庆）、西北五省区（陕西、甘肃、青海、新疆、宁夏）和内蒙古、广西以及湖南的湘西、湖北的恩施两个土家族苗族自治州组成。西部地区的这一最新定义，被称为“10+2+2”。 • 西部地区幅员面积约685万平方公里，约占全国总面积的71%。1999年末，西部地区总人口约3.65亿，约占全国总人口的29%。 • 西部地区与蒙古、俄罗斯、塔吉克斯坦、哈萨克斯坦、吉尔吉斯斯坦、巴基斯坦、阿富汗、不丹、锡金、尼泊尔、印度、缅甸、老挝、越南等14个国家接壤，陆地边境线长达1.8万余公里，约占全国陆地边境线的91%；与东南亚许多国家隔海相望，有大陆海岸线1595公里，约占全国海岸线的1/10。

3. Why invest in the West? Market Potential in the West

4. Abundant power resources • natural gas fields (Sichuan, Shaanxi, Xinjiang) • HEP (Liujiaxia of Gansu, Longyangxia of Qinghai) • coal/crude oil (Shaanxi, Xinjiang) • geothermal energy (Tibet) • wind power (Xinjiang)

5. Rich mineral resources • manganese, zinc, lead • exploiting local resources can save transport cost

6. Rich agricultural resources • cotton, wool, fungi, fruits, vegetables • they are transported to coastal areas • except perishable goods

7. Rich Chinese medicine resources • Yunnan, Xinjiang, Tibet

8. Tourism resources • unique historic heritage • natural scenery • e.g. ancient Silk Road

9. Large domestic markets • growth of middle class • greater demand for food/consumer products

10. China’s “go west” strategies • power resources  electricity for industries in the East • “west-to-east natural gas transmission”/“west-to-east electricity transmission” • encourage foreign investment • to supply capital, technology and management skills • provide a favourable environment for tapping the resources in the West

11. Role of government in industrial decentralization • Economic objectives • Social objectives • Political objectives • Strategic objective

12. Economic objectives • To ensure better utilization of resources and factors of production in less prosperous regions • To ensure regional economic balance • To avoid diseconomies of agglomeration in prosperous regions

13. Social objectives • To avoid regional inequalities which may result in social instability due to - Regional unemployment - Contrasting income levels - Massive migration from less prosperous to more prosperous regions • To avoid social problems: - Environmental pollution - Competitive social and economic structures - High crime rates - Mental illness

14. Political objective • Wide regional disparities may reduce national cohesion • High regional unemployment rates may threaten the chances of re-election of the ruling parties

15. Strategic objective • The government wants to decentralize industries so that industrial agglomerations are less vulnerable to attack, esp. during war time.

16. Role of HK • investment • help to sell products to the world market • help to attract foreign investment

17. What can be done to develop the West? • improve transport • infrastructure • improve economy  jobs • develop technology • develop industries • provide funds to attract ind. • irrigation for farming • develop tourism • encourage foreign investment

18. Obstacles to developing the west • Industrialists may be reluctant to be the pioneer movers to less prosperous regions • Because of psychological barriers

19. Behavioural factors for industrial dispersal • The general preferences for industrial location may not be modified solely by financial incentives • The government objectives are usually different from those of individual industrialists • Strong initiatives are needed to overcome industrial inertia, • There is home town effect and industrialists tend to resist to make spatial/location changes • Movement to new production environments often involves risks and uncertainties • Industrialists have imperfect knowledge about the destination regions • Relocation may also break down personal ties and existing linkages with the original industrial network.

20. Reference • http://www.ewline.com.cn/index.htm • http://www.developwest.gov.cn/ • http://www.china.org.cn/ch-xibu/1aNew/indexban.html