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Special> China International Fair For Investment & Trade> Beijing Review Exclusive> Trade
UPDATED: July 12, 2009 NO. 28 JULY 16, 2009
A Double-Edged Sword
The global financial crisis has not slowed the country's urbanization pace

China's large-scale infrastructure construction and industry revitalization plan in response to the financial crisis will provide impetus for a new round of urbanization, the blue book also said.

Transitions and upgrading

In the last three decades, China's urbanization was accompanied by rapid economic development. In the early 1980s, the rural population accounted for nearly 80 percent of the total.

The urban population surge reflected economic growth and internal labor movement, including 130 million migrant workers who left rural homes to work in the cities, said Shan.

In 2008, China had 88 cities with local GDP of more than 100 billion yuan ($14.7 billion), 66 percent of which are located in the Yangtze River Delta, southeastern coastal area and the Bohai Rim region, according to the blue book.

These 88 cities account for 42 percent of the country's total population and 75 percent of total GDP, the blue book said.

With price surges, appreciation of the renminbi and the global financial crisis, the coastal areas have been trapped in a predicament. Exports in the eastern area have declined since last November.

It is fair to say that the economy in the coastal area now has two big missions, namely, economic transition and industrial upgrading, said Wei Houkai, co-editor-in-chief of the blue book, at the ceremony.

The fundamental problem in the coastal area is its inappropriate economic structure, Wei said, namely, traditional industries accounting for a strikingly high proportion of the whole structure in coastal cities, small and medium-sized enterprises and processing trade being the major source of exports, high energy consumption, high emissions, low value-added products, and lack of innovation and independent brands.

"This traditional development model has come to an end and we must fulfill urban transition and upgrading," Wei said.

According to Wei, giant metropolises such as Beijing, Shanghai and Shenzhen should also make the transition to a high-end development model.

This March, the State Council approved Shanghai's plan to turn the city into an international shipping and financial center.

Shanghai's economy is currently driven mainly by industry. Since finance and shipping belong to the service industry, the two-center plan will help Shanghai accelerate its economic transition, said Pan Jiahua from CASS.

Recently, the Central Government has repositioned Shenzhen as an open and innovative city, which means it will next focus on exploring independent innovation and system reform. The city will push for innovations in core high technologies, including information technology, bioengineering, new materials, new energy, aviation and aeronautics and environmental protection, according to a report in Shenzhen Daily.

Cities should shift from their extensive and unsustainable growth model to a resource-efficient, land-efficient and environmentally friendly growth model, said Wei.

Balanced development

The urbanization rate varies greatly among different areas.

According to the National Bureau of Statistics, the urbanization rates of Shanghai, Beijing and Tianjin are the three highest in China, at 88.7 percent, 84.3 percent and 75.7 percent, respectively. The urbanization rate in southwest China's Guizhou Province, by contrast, is only 27.5 percent, the lowest in China.

Amid the financial crisis, the average economic growth rate in eastern cities fell more than 4 percentage points last year, while cities in central and west China saw a less dramatic fall. The GDP growth rate of Wuhan, the capital city of Hubei Province in central China, decreased by 0.5 percentage points in 2008, and Chongqing Municipality in southwest China, 1.3 percentage points, according to the blue book.

Cities in east China rely heavily on overseas demand, said Wei Houkai. The ratio of dependence on foreign trade in Guangdong Province hit 140 percent in 2008, twice the national average, he said.

Industry transfer between regions could be a viable way to achieve balanced development, the blue book suggested.

China should push forward industry and technology transfer from cities in the coastal area to central and western areas, said Shan.

The GDP growth rates of central and west China exceeded east China in 2008, which demonstrates a comparatively balanced development trend for China's regional economy, the blue book said.

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