China’s hinterland may get hit hard due to global slowdown
A senior official form the National Development and Reform Commission (NDRC) warned less developed central and western parts of China are likely to suffer more than coastal regions in the unfolding global economic slowdown in the long term. Du Ying, NDRC’s vice-president said those regions are more vulnerable to global financial woes because of their immature industrial structures, sharply declining resource prices and a weaker capacity to deal with risks and social conflict.
Du made these remarks at a recent national meeting and they were posted on the NDRC’s website on Nov 26. This is the first public risk assessment made by the government since the outbreak of the financial crisis. Even if the financial storm has sent some export-oriented manufacturers close, he still evades the conventional thinking that the East China will be hit the hardest amid the global crisis.
Present at Du’s speech, an NDRC official told China Daily anonymously that Du offered three reasons to support his point:
First, most business in central and western China are small-scale and resource-intensive so it’s difficult for them to adapt to changes caused by the crisis. Second, businesses based on raw materials will be seriously influenced if the price of raw materials keeps dropping in international market. Finally, less job opportunities for migrant workers from bankrupt factories in East China would give rise to social conflicts. And the central and western regions are major labor exporters in China.
Those are agreed by others. Senior researcher with the State Information Centre Zhang Yongjun said such economic woes suffered by the lower-stream economy (manufacturers) will be passed on to the upper-stream economy (raw material suppliers). He said, “So far, the eastern part of China is more hurt by the financial crisis than the central and western regions, because its economy depends on export and manufacturing. But the impacts will soon pass on to the upper-stream economy, which is located mostly in central and western China.” he also added price fluctuations of raw materials are more violent than those of lower-stream products.
However, local entrepreneurs in such places haven’t got so much pressure from the crisis. According to Yang Xinmin, head of the planning department of Shanxi Coal and Chemical Industry Group based in Northwestern China’s Shanxi Province, he thought East China will be hit more than them because economies in East China depend more on export. But only a small part of businesses in their places get the influences because the pricing system of Coal and crude oil are controlled by the government so that it is seldom affected by the price fluctuation in the global market.
An unnamed NDRC official suggested that the central and western economies should make some changes on its economic form from East China so that they could be much stronger in financial turbulence. He also mentioned that the 4-trillion-yuan stimulus plan should be allocated more to the central as well as western regions.
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