Ding Ningning

Research Report No 079, 2004

A study on the geographic layout of regional economies should first of all know the overall geographic features of the Chinese economy and the relationship between different regions. Then it is imperative to identify the period of economic development that China is now in. Third point is to find the relationship between economic development and the geographic advantages of various regional economies so as to respect the objective laws and prevent the behaviors in pursuit of short-term interests leading to a long-term imbalance in the country’s overall development. To achieve that goal, relying only on the efforts of regional governments is far from being enough. The central government must assume the responsibility of planning, coordination and implementation organization.

I. China’s Overall Geo-economic Features

China has a territory equivalent to that of the United States or Europe. But its arable land is only half of theirs. The reason is that China has the Qingzang Plateau （Qinghai-Tibet Plateau）, or the "third pole" of the world. This has resulted in a topography that goes down from west to east, or "a spring river flows from west to east" as the Chinese usually say. This topography limits the East Asia monsoon to China’s eastern region, which in turn brings too much rain in summer to the region and reduces the annual rainfall progressively from the southeast to the northwest. North of the plateau is a belt where west winds blow all the year round, making rainfall grossly lower than evaporation in the northwestern region. As a result, the ecological environment is extremely fragile. The loess plateau was formed in the east due to the same reason. Industrialization has brought more and more advanced technical tools to humanity, but it cannot change such a fact that the quantity of fresh water resources remains a decisive factor for a region’s size of population and scale of industrial development.

China’s ancient agricultural civilization originated from the Yellow River basin. But along with the continuing growth of population, the country’s economic center has gradually shifted to the south. The fundamental reason is that the rainfall in the north has limited the agricultural output in the region and in turn limited the size of population in northern China. The hash natural environment in the Qingzang Plateau and the western region has limited the region’s ethnic population to an extremely low level. After the Ming and Qing dynasties, the introduction of high-yield American crops (maize and potato) led to a rapid growth of population in east China. But the population growth soon went beyond the tolerance of land. Liaoning used to be a region noted for lush forests and pastures. But after a ban on migration was lifted during the Qing dynasty, large numbers of people in central China migrated to the northeast of the country more than a century ago. As a result of population growth and the development of modern industries, Liaoning has become a place where rivers dry up and dust storms are frequent. The spoiled ecological environment there is extremely difficult to restore and rebuild.

The reason that I dwelt so much on this issue earlier in this article is that many of our past planners failed to have this common sense. When a "third frontline" was to be built, the city of Xining, a place noted for lack of coal and iron mines and for thin oxygen, even built a "May 7" iron and steel plant of its own. When the concept of western region development was raised, some people dreamed of turning the Xinjiang Uygur Autonomous Region into China’s California. When the idea of diverting water from the south to the north was raised, some people began attempting to turn the Hexi Corridor into a land of fish and rice by diverting water from the Yalung Zangbo River. With mass fund injections, many of these construction projects claimed to have reaped "enormous benefits" within a short time, even though they were against the common sense of geo-economics. But in the long run, the heavy prices involved have to be paid by our posterity. As China’s per capita possession of resources is far lower than the world’s average level, we do not have much natural resources and environmental tolerance to waste.

II. Basic Features of China’s Current Period of Economic Development

Through persistent efforts both during the planned economy and since the beginning of reform and opening up, the Chinese economy has passed the "take-off" period of industrialization defined by Rostow and entered the so-called development period of "moving to maturity", which will last at least till the middle of this century if the general tendency of peace and development do not take the adverse trend. During the 50 years, China’s agricultural output value will decline to about 10 percent of the gross domestic product and the rural population will drop to about one third of the national total. Because exports continue to be one of the driving forces for economic growth, the manufacturing output value will unlikely be lower than that of the service industry and will continue to play a leading role in pushing economic growth. The distribution of the employment-boosting industries will be different from this pattern. More and more new job opportunities will appear in the emerging tertiary industry (or the service industry in the broad sense) in the urban areas instead of in the manufacturing industry.

From a different perspective, the above-said development period can be called an economic growth period characterized by a transition from labor-intensive industries to technology-intensive industries. Although industrialization in the modern sense is a process of capital and technology continuing to replace labor, the "take-off" period of the countries that develop later generally begins from the labor-intensive manufacturing industry by taking advantage of their low labor cost. The problem is that if the fruit of economic growth is to be shared by all residents, labor cost is bound to gradually rise. One of the important features of the period of "moving to maturity" is that with the improvement of the people’s living standard, sustained economic growth and higher product competitiveness in international market should rely more on the improvement in labor quality instead of low labor cost. And with the improvement in labor quality and knowledge possession, the technology-intensive industries will progressively replace the labor-intensive industries to become the main driving force for economic growth.

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