The Chinese state has made concerted efforts to replicate in its western region the economic successes of the east, but the ‘go west’ policy is fraught with obstacles
China’s ‘go west’ strategy or xibu da kaifa commenced in 2000, promulgated by the then President Jiang Zemin, amidst much fanfare at the ancient capital of Xian. It proclaimed a commitment to bridge the growing regional divide between China’s eastern coastal provinces, which have flourished under the economic reforms of the last 20 years, and its land-locked western provinces, which have remained largely untouched by the reforms.
A decade has gone by. There is a celebratory din surrounding the stream of official reports from China this year, but it is pertinent to ask, what are the real gains from the policy-driven industrial and infrastructure expansion, which has been heavily financed by the state?
The regional divide and the uneven development is a corollary of China’s size (almost three times bigger than India) and geographical diversity, which favours the eastern seaboard. State Statistical Bureau (SSB) statistics of 2004 show the eastern coastal region accounted for more than 30 per cent of China’s population, 54 per cent of its GDP and more than 80 per cent of its foreign direct investment (FDI). The so-called ‘golden coastline’ (huangjin haian) has a strong presence of special economic zones, economic and technological development zones, coastal economic open zones and custom-free zones, due to the state-driven preferential policies of the 1980s and 1990s.
In stark contrast, the SSB concedes that the western region, which constitutes the largest area, supported 29 per cent of the population, accounted for just 17 per cent of GDP, and garnered a meagre 3.2 per cent of the FDI. Not much has changed since — 2010 statistics show that the western region accounted for 18.5 per cent of GDP in 2009. Unofficial reports say more people are moving to the prosperous east.
China’s western region — one-third of the total area — consists of 12 provinces (Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Sichuan, Chongqing, Guizhou, Yunnan, Tibet, Guangxi and Inner Mongolia), large areas of which are geographically frail: beset by cold, dry weather, rough terrain, limited arable land, poor infrastructure and home to three-fifths of China’s 105 million-strong minority population.
Of these, Chongqing is a young municipality, directly under central administration, created after separation from Sichuan province in 1997. Sichuan and Xinjiang provinces are not as poor as the rest: Sichuan is the largest provincial economy of the west, and the largest market in the western region with a long-established industrial base; the economy of oil and natural gas-rich Xinjiang is dominated by state-owned enterprises, and it is the only province of the western region with a GDP per capita above the national average. Shaanxi province (capital: Xian city) also has a strong industrial base. Expectations are that in the future Chendgu (in Sichuan province), Chongqing municipality and Xian will constitute the golden triangle of the region.
The western region is home to the dreaded Drapchu Prison (in the Tibetan Autonomous Region or TAR), labour camps (in Qinghai province) and the nuclear testing grounds in the Tarim basin at Lop Nor (in Xinjiang province), and because of the recent ethnic conflicts in TAR, Gansu and Xinjiang provinces, it is colloquially known as luan or chaotic.
However, the western region is resource-rich — Xinjiang province has oil fields and Gansu province petro-chemical industries — and has attracted many state-owned industries. But these are largely extractive, primary and mining-related, drawing comparison to the ‘east colonising the west’ thesis.
The peripheral status of the western region can be attributed, in part, to China’s roller-coaster regional development strategy. During the 1960s and 1970s, the model of resource allocation, san xian or ‘Third Front’, sought to avoid concentrating industries on the ‘First Front’ (first line of attack, the coastal belt), or the adjacent ‘Second Front’, but instead concentrated large capital projects in interior or ‘Third Front’ locations. But since 1980 there has been a reversal, underlying which was Deng Xiaoping’s belief in the comparative advantage and productive efficiency of the coastal region.
Under Deng, the coastal areas were earmarked for preferential policies — tax breaks for foreign and domestic investors, easier access to domestic capital and greater freedom in foreign trade. In fact, after a lull in reforms (following Tiananmen in 1989), Deng, during his historic southern tour of 1992, declared, “Areas with the potential for fast growth should be encouraged to develop as rapidly as they can.”
But the growing polarisation between the western and eastern regions led to an increasing debate within China. Economists such as Hu Angang (known for his proximity to China’s political elite) and Wang Shaoguang actively pushed for bridging the gap. Thus was ‘go west’ born.
Over the past decade, the state has sought to improve the investment environment by offering tax breaks, opening up linkages between provinces and invigorating the sleepy west by pumping in an estimated RMB 2.34 trillion (about $320 billion) for more than a hundred infrastructure, environment, energy and water projects.
The gains are visible — an impressive build-up of infrastructure (expressways, east-west networks, upgradation of inter-provincial and local roads). TAR, once a remote area, is no longer so, with the commencement of the Golmud-Lhasa section of the Qinghai-Tibet railway in 2006 and the west-to-east gas and power transmission pipeline, a 4,200-km gas pipeline that runs through eight provinces to Shanghai in the east. Though critics have slammed China’s ‘state-environmentalism’ — a ‘green wall’ from Xinjiang province to Heilongjiang province, which lies in the extreme north-east — the project is on track. Water conservation and afforestation projects in the upper reaches of the Yangtze and Yellow River have been undertaken, and grazing grounds have been successfully returned to forests.
However, in the long run, it remains to be seen whether the development is sustainable. Much of the industrialisation, greening programmes and infrastructure development were backed by large subsidies, state-investment or Beijing’s ‘cheque-book’. The largesse was also top-down — and there are hitches on the ground.
There are lacunae in primary education, tertiary education and health care in the mountainous, arid or desert regions populated by minorities — a formidable barrier to development. Moreover, China’s coastal region is known for its spirit of enterprise (clusters, township and village enterprises, special economic zones like Guangzhou and Shanghai province), which the western region lacks. The bulk of the rich overseas Chinese entrepreneurs who invested heavily in the coastal region is from the eastern region.
Today, the state might have created suitable ‘nests’ for birds of investment to fly in, but they are literally in the desert, unable to attract FDI, skill and talent, and are struggling to stay afloat with state support.
The effort to encourage migration to the western provinces has had little success. China’s army of migrants continues to march to the coastal region. Moreover, large areas of the western region have been racked by ethno-religious violence — Xinjiang province in 2009 and TAR in 2008. Thus, much of the gains appears to be blood-transfusion, the result of government investment, and not consumption or indigenous enterprise.
So, while the commitment and execution of the ‘go-west’ policy is praiseworthy, making it self-sustaining is fraught with obstacles. The road to replicating the eastern success in the west seems, at least until now, the one less travelled.
The author is a Singapore-based Sinologist
