Central China ought to change its thinking and adjust their focal point in work. Only by doing so can it catch up with eastern coastal areas and realize the rise, says Lu Zhiqiang, Vice Director of the Development and Research Center of the State Council at the symposium of "Strategy for vitalizing city via industry".

According to Lu, early in 1980s, the D & R center published an article to warn the "collapse" of central China. But no one expects the "collapse" has come to be a reality. The per capita GDP of Central China equaled to 88 percent of China's average in 1980. The number dropped to 83 percent in 1990; and by 2003, the per capita GDP of central China is only 75 percent of the country's average level. However, what is worrying is that there see no possible sign to reverse the decline.

According to Lu, the following four factors are the causes for these changes.

1. The change of outside environment. China has seized the opportunity brought about by the globalization since reform. But we need to realize that the opportunity is not equal in different regions. The challenge of globalization is not the same in these regions either. By using foreign investment, and by processing trade the coastal areas have entered the global production system. The regions have already become a segment in the global value chain. The industrialization in these areas is boosted through the rising of value of the chain and subsequently the wealth is accumulated. But the central China lacks certain conditions to do this. This is why Central China made little progress in this regard even though similar work has been done.

2. Institution innovation. Continuous innovation is a key factor for China's rapid economic growth since the reform. Through innovation, China is able to break up the bind of old institutions, liberate productive forces and finally transform from planned economy to market economy. The eastern coastal areas take the lead in the reform because the influxes of a great number of foreign enterprises and investment have brought new experience, new models and new objects of reference. The economic competition between different regions will therefore evolve into competition of institutions and innovations. Compared with eastern China, Central China sees much fewer opportunities. So they are in a dilemma: A favorable investment environment and market environment is the precondition for attracting foreign investment, but such environment demands bigger steps in reform. How to step out of the vicious circle is a matter, which central China needs to take into serious consideration.

3. Input of productive elements. Capital and human resource are the two crucial factors for economic growth, especially at its initial stage. Central China has fallen behind in the competition for capitals. In 1990s eastern China has net capital inflow of more than 200 bln yuan; while Central China saw pure capital outflow in the meantime. If this is not turned round, Central China will be short of basic productive element.

4. Urbanization. The rapid development of the metropolis circle in eastern China has become a dominant strength for the regional economy. The FDI and FII to the Yangtze River Delta rose from 23.01 percent in 1997 to 31.91 percent in 2001. The circle becomes main force of the "made in China" products and center for technological innovation. They greatly enhance China's competitive strength and even impose paramount influence upon economy of Asia-Pacific or the world. But Central China lacks metropolis like Beijing, Hong Kong and Guangzhou. So a few outstanding big enterprises have to fight alone for advancement.

In late 1990s, regional economic integration has become a highlight in China. Trans-regional economic cooperation within greater space is an inherent requirement when the economy grows to certain extent. As a brand new phenomenon, the regional economic integration greatly enhances China's competitive strength in the world. But the central and western China is at a disadvantageous position in the process of regional economic integration, because there is no strong economic center that is able to herald the growth.

By People's Daily Online