Development Plan Focuses on West (But Binhai Gets Billions Too)

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Regional development issues have long been a topic of debate, as the government has tried to attract investment to China’s inland provinces, and to narrow the gap with the richer coastal areas. In a recent announcement, reported by the International Herald Tribune (via China Digital Times), there are plans to send US$21 billion on “major industrial, transport and social projects to accelerate growth in its less developed western region”. The report notes that, in the 5 years to 2005, the government already spent US$125 billion on 70 major projects in the region.

Notwithstanding the reported desire to develop the west, there is also a major plan for investment on a 150 kilometer stretch of coast around Tianjin – the Binhai New Area. The Economist reports that the development, which has already taken in US$15.9 billion in foreign investment since 1994, will attract a further US$20 billion, will have US$15 billion spent on infrastructure, and will be a “new engine of growth”.

As an indication of the project’s importance, it has been granted status of an “experimental zone for comprehensive reform” (Pudong New Area is the only other one), and was included in the latest 5-year plan. That Wen Jiabao is from Tianjin, and is a big supporter of the project, may have helped.

The plan includes the doubling of Binhai port’s capacity by 2010, tax breaks and, in a potentially important move, experimentation with “privatization of land” (which may allow farmers to sell land-use rights for profit – and therefore avoid the sort of public disorder that has been seen during forced land appropriations).

Regional politics play a part in these plans, and the resulting development in both areas will bring opportunities for major contracts, while improving infrastructure for business generally. It is also a reminder that government still plays big hand in business, and that policy needs to be watched carefully if opportunities are to be enjoyed (and riks mitigated).

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