OEM factories and research and development centers, and encourage them to invest in the shareholding reform of small and medium-sized state-owned enterprises, said Chen.

Strengths accentuated

"The six central provinces have opened 20 logistical centers, of which 10 have airports, nine have water ports along the Yangtze River and one has a railway port," said Sheng Guangzu, Director of the General Administration of Customs, on April 26 at the expo.

Statistics from the Chinese Academy of Social Sciences shows the central region hosts 12 of the 20 Chinese cities with great investment potential favored by multinationals in 2006.

The six provinces give priority to the hi-tech industry. Hunan Province, for example, reaped 270.06 billion yuan ($38.6 billion) from the industry, hitting a record-high year-on-year increase of 42.65 percent.

Jiangxi Province has established advantages in three industries involving new materials, optoelectronic engineering, biopharmaceutical and medical devices, and the three industries contributed to more than 60 percent of the province's GDP last year.

The Wuhan Donghu Hi-Tech Zone had gathered 15 state-level laboratories, 13 national research centers of engineering, 37 provincial laboratories and research centers of engineering, and 500-plus research institutes of enterprises by the end of 2007. With 20,000 technical personnel working in the zone, the Donghu Hi-Tech Zone proves to be the most active link in the innovation system of Hubei Province.

The development zone introduced and improved a series of policies related to innovation fund management, venture capital investment and intellectual property protection to encourage innovation, said Liu Chuantie, Deputy Director of the Administration Committee of the Donghu Hi-Tech Zone. He said the zone would continue to perfect the investment and service mechanism of innovation capital, optimize the innovation environment and build a multi-level market-oriented innovation system to serve the enterprises and encourage applications of research results into production.

"We hope that the Donghu zone will soon be integrated into the global innovation network and become an important innovation base in the global optoelectronic industry," said Liu.

According to Li Hongzhong, Governor of Hubei Province, the six central provinces have been working on shaping the regional innovation capacity by optimizing existing systems, management, technologies and services, echoing the Central Government's call for building an innovation-oriented China.

Difficulties ahead

There are certain obstacles to overcome before the central region attains remarkable growth, said Ruan Huabiao, an economist with the Anhui Provincial Economic Information Center attending the expo, who thought the biggest pressure comes from energy saving and emission reduction requirements.

The resource-oriented industries account for a large proportion of the industrial structure in this region. High resource-consuming and polluting industries such as iron and steel, coal, power generation, cement and non-ferrous metal dominate this region, and the region faces enormous pressures from the Central Government to reduce emissions and save energy.

Another difficulty is with the money. Banks on the one hand are putting much stricter requirements on companies applying for loans and, on the other hand, some industries have slowed down due to tightened macro-policies these years, which have created a ripple effect among related industries. The major industries in the central region that enjoy advantages, such as electrolyze aluminum, coke and coal-fired power generation, happen to be industries that slowed down in recent years owing to restrictions put on by the state.

The increase in exports from the region also dropped due to export policy adjustments. From January to August last year, five of the six provinces except Henan saw their exports slow down. Of them, the export increase in Hunan Province dropped by 8 percentage points, and that in Anhui, Hubei, Jiangxi and Shanxi dropped respectively by, 5.2, 4.4, 2.7 and 0.8 percentage points.

"The government will continue to promote energy saving and emission reduction, adjust the export rebate policy and close down backward production capacities, and might expand the list of industries and fields under state restrictions and monitoring," said Ke Changsong, an official with Anhui Province Economic Information Center. "All these factors will bring uncertainty to the development of the central region."