By Hou Lei (chinadaily.com.cn)
Updated: 2007-12-19 11:27

Wang Dehe (R), party secretary of Xinyu talks with Internet media reporters in Xinyu, East China's Jiangxi Province, December 18, 2007. [chinadaily.com.cn]

Encouraging self-innovation in industry is the key to the economic success of Xinyu, known as the "steel city"in East China's Jiangxi Province.

In 2006, the gross output value of Xinyu was 21.4 billion yuan (US$2.9 billion), an increase of 2.75 times of 2001. Urban residents now have a per capital disposable income of 9,832 yuan, up 15 percent year-on-year.

As a highly industrialized city, iron and steel are the traditional industries in Xinyu. In 2003, the iron and steel sector contributed 48 percent of local government's fiscal income. Any macro-control policy adjustment to the steel industry will greatly impact the city's economy.

As a result, innovation was encouraged to develop other businesses.

LDK Solar Co Ltd was founded in 2005 with support from the local government. It is a manufacturer of multi-crystalline solar wafers, which are the main materials used to produce solar cells.

After two years development, LDK Solar has become the largest company of its kind in Asia and it was publicly listed on the New York Stock Exchange (NYSE) in June this year. LDK Solar raised as much as US$469 million, making it the largest US initial public offering (IPO) by a Chinese company.

There are estimates that the total sales volume of LDK Solar will exceed 4 billion yuan (about US$540 million) by the end of 2007. As a high-tech company with less than three years' history, the fast development of LDK Solar has decreased the city's reliance on iron and steel and further enhanced Xinyu's industrial base.

Not only the boom in high-tech enterprises contributes to Xinyu's economic development, but also traditional industries are improving their competitiveness through technical upgrading.

Xinhua Metal Products Co Ltd is a leading manufacturer of steel products including pre-stressed steel strands, aluminum clad steel wires and aluminum alloy conductors. Through constantly upgrading its technology, Xinhua Metal has become one of the largest producers nationwide in pre-stressed steel strands.

"We develop two to three new products each year,"said Xiao Jiangwei, administrative director of Xinhua Metal. "In 2007, our products were exported to Southeast Asian countries, Canada and the United States,"Xiao told chinadaily.com.cn.

The improvement in products has also led to an increase in export from Xinyu.

"In the past, the goods we exported were mainly primary products such as agricultural products,"explains Wang Dehe, party secretary of Xinyu during a press conference on Tuesday. "Now we export more and more processed products, and the total export volume will exceed US$600 million this year.”

These developments are due to a series of favorable policies launched by the local government to encourage innovation. Key technical innovation projects can lead to interest subsidies and financial support from the government. In 2007, 2 million yuan was allocated into a technical innovation fund to help enterprises set up technological research centers. The government aims to increase the proportion of local enterprises' innovative products in its purchasing.

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