No massive out-shoring of manufacturing: experts
The Chinese economy is facing what officials call “triple pressures,” but the country’s vast central and western regions are seeing a marked acceleration in activity.
During the just concluded eight-day Mid-Autumn Festival and National Day holidays, among the top 10 cities that saw explosive consumption, eight were in the central and western regions. Southwest China’s Chongqing city topped the list, followed by Chengdu city, Sichuan Province, according to data from WeChat, a popular social media and payment app released on Sunday.
Chengdu received 25.87 million visitors, up 86.9 percent year-on-year and 12.2 percent higher than 2019 levels, which helped generate a total of 23.78 billion yuan ($3.31 billion) in tourism revenue, up 170.6 percent from 2022.
Tourism is hardly the sole area in which the central and western regions see robust recovery. On Sunday, as a train loaded with 110 containers of goods including Indonesian shortening and Vietnamese sweet potato starch departed from Qinzhou, South China’s Guangxi Zhuang Autonomous Region, for Chongqing, the total number of trains through the new western land-sea corridor connecting China’s western region with Southeast Asia, has exceeded 30,000 since the first train operated in 2017.
In the first half of 2023, provincial-level regions along the corridor saw combined exports of 350 billion yuan via the new corridor, up 40 percent year-on-year, according to China Media Group on Saturday.
Against the backdrop of downward pressure for the economy, the booming activity in China’s less-developed central and western regions has gained much attention, including from the Western media, even though eastern coastal regions remain the powerhouses of the world’s second-largest economy.
In an article published on Saturday, the Wall Street Journal reported that even as the US and some of its allies are seeking to persuade businesses to embrace alternatives to China, companies are still finding the country’s vast interior holds “big advantages.”
While many countries such as Mexico, India and Vietnam are vying for China’s manufacturing “crown,” factories have largely shifted from China’s coastal regions to the interior, where costs remain competitive, according to the report. As a result, the region has seen an export boom, with exports from the 15 central and western provinces soaring 94 percent from 2018. In the 12 months through August, these provinces saw combined exports of $630 billion, vastly surpassing those of India, Mexico and Vietnam, the report said.
The trend is the latest evidence that China’s manufacturing sector remains at the top worldwide and the Chinese economy is remarkably resilient despite the “triple pressures” – shrinking demand, supply shocks and weakening expectations, Chinese economists said.
This shows “the trend for the national economy in which development will be increasingly balanced and gaps among regions will further diminish,” which helps ensure long-term sustainable development for the Chinese economy, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Sunday.
Yet, for Chinese economists, what’s happening in the central and western regions comes as no surprise, as China has long been focused on developing the interior with national strategies and policy measures, as part of its pursuit of balanced development.
“The trend of [manufacturing capacity shifting inland] actually started a decade ago,” as part of China’s plan to transfer industries toward the central and western regions, while letting the coastal regions focus on advanced technologies and innovation, Tian Yun, a Beijing-based economist, told the Global Times on Sunday.
The plan has been carried out in an orderly way, with the relocation of labor-intensive industries to the interiror and massive investment in the upgrading of infrastructure in the central and western regions.
Still, the bustling activity in the central and western region may just be the beginning, as there is still enormous potential for the regions to further develop, which in turn offers a huge boost for the country’s long-term growth, the economists said.
“The per capita GDP in most places in the central and western regions is still $10,000 or lower, so there is a huge room for the region’s growth,” Tian said, adding that further investment in infrastructure and improvement in the business environment will be crucial for the central and western regions.
(Global Times)
