China View: China's Western Development Strategy
Since 1999, the Chinese government has tackled the economic development of Western China through its China “Western Development Strategy” (WDS), also known as the “Go West” strategy. The initial plan has transformed over the years to address the needs of Western Chinese provinces, in which the economic and social development moves at a different pace compared to Eastern China. In fact, the ultimate problem to be solved is the uneven distribution of the population in China and, consequently, the unequal growth of wealth, which prioritizes the Eastern coastal regions compared to other remote areas.
“Relocation Trends of Regional Economic Development.” (Credit: The Beijing Axis Analysis)
Western China covers the 6 provinces of Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, and Qinghai, three autonomous regions, being Tibet, Ningxia, and Xinjiang, and the municipality of Chongqing; however, the “Western Development Strategy” has also included another two autonomous regions, being Guangxi and Inner Mongolia. As shown in the map below, these are developing areas covering 71.4% of Mainland China’s soil but hosting less than 30% of the overall population.
These areas, therefore, are in need of an economic strategy targeting their long-term growth. As discussed in previous Modern Treatise articles of the China View weekly column , the rural-urban migration phenomenon is also one of the main causes of regional inequality, as lack of manpower in the West determines a greater lack of resources and, therefore, the ultimate widening of the wealth gap.
“Regional Inequality.” (Credit: The Economist)
China's Western Development Strategy is made of numerous large and medium-sized initiatives that have turned West China into a hot investment spot also due to the preferential policies put in place by the Chinese government, to facilitate capital input and the further opening up of Western provinces. These projects have evolved over time. Since China’s “Go West” strategy has began 1999, the main focus of economic projects has been that to build infrastructure in western China. For instance, in 2002, this plan has initiated the construction of the West-East Gas Pipelines, a set of natural gas pipelines that have interconnected Western to Eastern regions and have seen the cooperation of companies such as PetroChina, Royal Dutch Shell, Gazprom, ExxonMobil, and Sinopec. Currently, at least 3 projects of the West-East Gas Pipelines have been deemed successful. In particular, the West-East Gas Pipeline II has connected the Xinjiang city of Khargos to Guangzhou in Guangdong, reaching a length of over 9000 kilometers. Similarly, the West-East Gas Pipeline III project started in 2012, currently runs from Horgos in Xinjiang to Fuzhou in Fujian covering a distance of over 7000 kilometers.
Another important contribution of the “Go West” strategy has been the construction of the Qinghai-Tibet railway, also known as the Qingzang elevated railway, connecting Xining in Qinghai Province to Lhasa in Tibet. This initiative has been particularly determinant in easing the geographical isolation of Tibet. Since its completion in 2006, trains to and from Lhasa have increased. For instance, the tracks Beijing-Lhasa and Shanghai-Lhasa (2010-onwards) run daily, whereas the Chengdu/Chongqing-Lhasa runs every other day. This development has both contributed to the technological advancement of Tibet and Qinghai as well as the inflow of tourism in western regions.
The West Triangle Economic Zone is another initiative, part of the Western Development Strategy, that contributes to nearly 40% of West China's GDP and includes the cities of Chengdu, Chongqing and Xi’an. These cities are highly developed and have great potential for further growth, therefore, were able to attract investment from Eastern Regions towards western China. For this reason, they have also been called hi-tech cities, where both central and local governments policymakers have attempted to encourage the formation of high tech development hubs as well as innovation and entrepreneurship hubs. Overall, the West Triangle Economic Zone has been one of the most successful plans of the greater “Go West” initiative, engaging with international corporations such as Microsoft, Intel, Toyota, Coca-Cola, Citigroup, HSBC, JPMorgan Chase, Ford Motor Company, Mitsubishi, and Boeing. Subsequently, the development of these areas has also sped up their growth and fostered tourism to top historical sites nearby. Xi’an, in particular, is the city at the heart of China which was once the starting point of the Ancient Silk Road and is home to the Terracotta Army.
Such historical significance has always contributed greatly to tourism in Xi’an, bringing in billions of yuan yearly. One problem with the West Triangle Economic Zone is that, while it has attracted multiple companies to invest in these cities and by extension in their provinces, it has driven away FDI from other neighboring provinces. It seems, therefore, that obstacles for equal provincial development persist and that more economic strategies will be needed to overcome regional disparity issues.
According to the State Council’s official website, “From 2000 to 2016, the Chinese government invested 6.35 trillion yuan ($914 billion) in 300 major projects, mostly in infrastructure and energy, in western regions. […] In 2016 alone, 743.8 billion yuan was invested in 30 major projects in western regions, according to the National Development and Reform Commission.” Overall, therefore, cooperation between Eastern and Western China has improved, demonstrating it can be helpful for uniform economic development. But it is important to mention that regional development has not eliminated the wealth gap between provinces yet.
The Chengdu-Chongqing Economic Rim is a continuation to the West Triangle Economic Initiative and, according to a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee on October 16, 2020, will represent a new era for West China's growth, instituting a new beginning post-COVID-19 pandemic. The Chengdu-Chongqing Economic Rim is industry-oriented and aims at expanding the industrial diversity of Sichuan and Chongqing, ranging from automotive to electronic machinery to equipment manufacturing. During the first three quarters of 2020, China’s imports and exports grew by 11.4% in Chongqing and 22.7% in Sichuan due to the beginning of this initiative. According to Economist Intelligence Unit Analyst, Dan Wang, cited by the South China Morning Post, “The strategic importance of the western regions was elevated after Covid-19. China wants to strengthen its influence in Central, Western and Southeast Asia for national security reasons and to protect China’s central position in global supply chains.”
At the same time, however, the “Go West” strategy is receiving criticism due to the current obstacles set by the pandemic, which makes it unlikely for foreign firms to invest abroad and, especially, put resources into long-term initiatives with uncertain consequences and not an immediate return. Another challenge to be faced is that of prioritizing green policies in western China, as there is an urgent need of addressing environmental problems. With the “Go West” strategy, China has the chance to reinvent its approach when industrializing underdeveloped areas and has a great responsibility to prevent West China’s environment from suffering as East China has. The Western Development Strategy could be a chance to give precedence to sustainability and push forward environmentally-friendly policies that could aid the resolution of alarming environmental issues.
