Bohai Sea Coast Emerging as Economic Engine of China

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Last updated at: (Beijing Time) Wednesday, July 02, 2003

Bohai Sea Coast Emerging as Economic Engine of China

The Bohai Sea has always been an important strategic area in the defense of the Chinese capital, Beijing, but now the coastline is becoming increasingly important economically.

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The Bohai Sea has always been an important strategic area in the defense of the Chinese capital, Beijing, but now the coastline is becoming increasingly important economically.

Experts believe that if its potential is fully tapped,the Bohai rim area could become a major economic engine of the country and an economic center in northeast Asia by 2010.

"The Bohai rim area plays an important role in China's participation in global economic cooperation and promoting coordinated development between the north and south of the country," said Yang Kaizhong, director of the China Regional Economic Research Center under Beijing University.

The area is also a central part of the increasingly active economic region in northeast Asia and the political and cultural center of China as well as a center for international exchanges.

"After China joined the World Trade Organization, its power as a traditional industrial base of China was brought into greater play," said Zhou Liqun, an expert from Nankai University based in Tianjin Municipality.

Bohai opens to the Pacific Ocean in the east, facing Japan and Korea, and is surrounded by Liaoning, Hebei and Shandong Provincesas well as Tianjin Municipality which is an hour's drive from Beijing in the west.

But economically, it covers a much larger area, including Shanxi Province and Inner Mongolia Autonomous Region, accounting for 12 percent of the country's territory and 20 percent of the nation's 1.3 billion population, which forms a huge potential market.

As a traditional industrial base, the area has the country's biggest steel and oil industries, and over the past 20 years, it has become a major manufacturing center after the Zhujiang River Delta in the south and the Yangtze River Delta in the east.

High-tech industries such as electronics, information processing, biological pharmaceuticals and new materials are also developing rapidly in the area.

The strategic location and promising business opportunity have attracted a great number of foreign investors, and now, the area has become the most heavily invested area by foreign businesses innorth China and more investment is pouring in.

To date, more than 40 percent of the research centers set up by over 80 multinational companies in China are based in Beijing. Tianjin is home to more than 10,000 foreign-funded businesses, while Liaoning's port city of Dalian has nearly 8,000 such enterprises.

Foreign businesses have had a major impact on local industries,especially in improving management, technology and sales. They also helped upgrade traditional old industries and create new industries.

The Olympic Games to be held in Beijing in 2008 is expected to give additional impetus to economic growth in the region, as in Beijing alone, some 200 billion yuan (24 billion US dollars) will be spent on urban infrastructure to prepare for the games.

It is estimated that the preparations for the games could spur the growth of the country's GDP by 0.3 percent annually.

The high economic growth of the Bohai rim area will also benefit the economies of Japan and the Republic of Korea (ROK), which are geographically close and economically complementary to the area.

The Bohai area is rich in natural resources, especially in energy and mineral resources, and it also has abundant cheap laborand skilled workers. But Japan and Korea have comparative disadvantages in these regards.

Japan has listed its western coast as a focus in its development strategy for the 21st Century, while the ROK regards China as its second market and will also give priority to developing its western coastal region.

"The area is densely populated and highly urbanized which formshuge potential market, therefore, it provides an ideal market for international cooperation," said Zhou.

Official statistics confirmed that investment in the area from Japan and the ROK was on constant rise.

In Tianjin alone, nearly 1,400 Japanese enterprises had gained a foothold in the port city by the end of March, involving 2.87 billion US dollars in contracted investment. Last year, trade volume between Tianjin and Japan reached 4.5 billion dollars, ranking Japan the second biggest business partner of Tianjin.

Meanwhile, businesses from the ROK also increased their investment in the city. In the first five months, ROK businesses ranked top in terms of the number of enterprises set up in Tianjinby foreign investors.

However, the Bohai area still faces obstacles in its development, including too much governmental interference in economic life because of high percentage of state-owned enterprises in the area and a strong concept of planned economy, said Li Shantong, an economist with the Development Research Center under the State Council.

Meanwhile, an overall plan of developing the region is yet to be mapped out.

To promote regional economic development, market forces insteadof government should play a leading role, said Wang Yiming, deputydirector of the Macro-Economic Research Institute under the State Development and Reform Commission.

"Currently, the government should loose its control while cultivating market mechanism and market concept in the area," he noted.

Ji Renjun, a professor with Nankai University, said that cooperation in the area could start from among the 60 ports in theregion, of which four can handle over 100 million tons of cargo annually.

Wu Liangyong, a professor with the Beijing-based Qinghua University, proposed that Beijing and Tianjin play a leading role in developing the region, because the two cities enjoy political, cultural, technological and financial advantages.

Such a strategy, if successful, could have a significant positive impact on economic development throughout the region and beyond, he said.

"Investment is moving northward because of the lowering of investment returns in south China," said Chen Yao, a research fellow with the Chinese Academy of Social Sciences.

From the perspective of potential competitiveness, the Bohai rim area is greater than the Zhujiang Delta, therefore, it had broader space for development.

"I expect that the area will overtake the Zhujiang and the Yangtze deltas in the next ten years," he added.

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