"The Yangtze River Delta is like a metropolis. Various forms of barriers and monopolies must be eliminated so as to establish a world-class intercity passenger transport network and logistics network," said the outline of the plan for the integration of road transportation in the Yangtze River Delta, which was issued by the Shanghai, Jiangsu and Zhejiang governments on March 11.

Financial co-op begins

The regional integration plan also includes financial cooperation. Information released by the last forum for urban economic coordination in the Yangtze River Delta indicated that Hangzhou would coordinate a joint meeting of regional financial supervisors and financial institutions some time in the future. They will discuss the long-term plan for regional financial cooperation, the expansion of the financial information exchange system, investigation and research activities, and the creation of measures to avert financial risks.

Xiao said financial cooperation in the Yangtze River Delta would be based primarily on two factors. First, Shanghai is accelerating the establishment of an international financial center, so the Yangtze River Delta should grasp this opportunity to use the city's developed financial platform to speed up the development and integration of a regional financial platform. Second, the private economy and foreign-invested companies have been developing fast in Zhejiang and Jiangsu provinces in recent years, requiring trans-provincial financial services.

At present, those involved in the financial sector in the Yangtze River Delta have worked together to grant loans to companies in other cities, perform intercity foreign exchange settlements, complete transactions among money markets and provide financing on the securities market. With greater industrial transfer and industrial reorganization, intercity capital integration has already started. But so far such cooperation has been done only on a small scale.

Xiao said that financial cooperation in the Yangtze River Delta can be fully expanded, so that cities in this region can create multilevel and various financial transaction opportunities, diversify the financing structure and further broaden financing channels by mutually introducing financial institutions, supporting the listing of companies with solid operations and jointly organizing financial exhibitions.

Not so easy

"Although the integration progress has been continuously accelerated in recent years, administrative barriers and regional disparities are important obstacles that block economic integration," Wei Houkai, a researcher from the Institute of Industrial Economics at the Chinese Academy of Social Sciences, told Beijing Review.

Wei said he believes economic integration should include five factors. First, local governments in the region should provide convenient public transportation services so that people can travel easily between cities. Second, they should put in place the same economic policies throughout the region. Third, they should closely work with each other to solve industrial structure problems, prevent or stop vicious competition by the same industries and prevent environmental damage and the loss of talented employees and resources. Fourth, they should reasonably use resources and protect the environment through coordinated development. Fifth, they should acknowledge the free flow of talent and allow people to choose the places where they want to live and work.

Although convenient public transportation would be easy to realize, the other factors would be difficult to achieve, Wei said. For example, local governments are still actively intervening in their economies. Provinces and cities in the Yangtze River Delta are all formulating a new round of individual strategic development plans, contending for foreign investment and making themselves global manufacturing bases instead of working together.

Wei said a market-oriented regional coordination system in the Yangtze River Delta has yet to be formed, and local governments are still pursuing their own interests. This will restrict the progress of economic integration in the Yangtze River Delta.

Jiangsu, for example, wants to establish itself as an important global manufacturing base and a high-level national manufacturing base. By 2010, it wants the added value of its manufacturing industry to reach 1 trillion yuan ($146.63 billion) and have an average annual growth rate of more than 12 percent. By then, it also hopes its manufacturing market share in the world and the country will reach 1.2 percent and 15 percent, respectively.

Zhejiang is also establishing an advanced manufacturing base in the hopes that by 2010 the added value of its manufacturing industry will surpass 800 billion yuan ($117.13 billion) and have an average annual growth rate of more than 11 percent. It expects its manufacturing industry to contribute to more than 11 percent of the country's total annual manufacturing output by that date.

In the meantime, Shanghai is stepping up its plan to establish a "special economic zone" covering 173 square km, including the three districts of Jiading, Qingpu and Songjiang, to reduce commercial costs and compete with Zhejiang and Jiangsu for foreign investment.