China Steps up West's Opening

China plans to make a greater effort to develop the western region to balance regional development, and infrastructure investment will be a key part of the strategy, officials and experts said on Thursday.

"It's clear that the western region is now the key area for China's economic opening-up in a new era. A new round of western region development requires us to deepen the development," said Du Ying, vice minister of the National Development and Reform Commission.

In a keynote speech on the China-Arab States Infrastructure, Investment and Trade Cooperation Workshop held in Yinchuan, capital of the Ningxia Hui autonomous region, Du said: "We will first put more effort into enhancing infrastructure in the region and establishing highways connecting the developed coastal areas, as well as to speedways to neighboring countries."

Yang Guang, director of the Institute of West Asian and African Studies at the Chinese Academy of Social Sciences, said that "investment in infrastructure will be the key in the new wave of western region development".

"We will also promote specialized industries in the western region as well as boost industrial upgrading and transformation," Du added.

China put forward the strategy to develop the country's western region in 2000. The policy covers the municipality of Chongqing, six provinces from Gansu to Sichuan and Yunnan, and five autonomous regions. The area altogether accounts for about 70 percent of the country's land area, nearly 30 percent of its population, but less than 20 percent of its GDP.

The western region has recorded faster economic growth than the coastal area for five straight years since 2007. In 2011, imports and exports in the western region reached US$184 billion, 9.4 times that of 1999. Foreign direct investment in the western region totaled US$11.57 billion, 10 times of that in 1999, according to Du.

"A new wave of western-region development in the second decade of this century has very good opportunities, as the government restructures its economic growth to domestic consumption and the investment environment significantly improves in the western region," Du said.

Since last year, the government put forward plans to help Yunnan province open to the southwest; help the Inner Mongolia autonomous region to open to the north; and set Heilongjiang Province as the bridgehead for the border economic opening-up. It also sets two economic development zones in the Xinjiang Uygur Autonomous Region and three pilot zones for border economic opening-up in Inner Mongolia, which are forerunners for the opening-up to the west, Du said.

"The scope of opening to the west is very broad. Eight of China's 14 neighboring countries experienced annual economic growth of above 6 percent in recent years and are thus the potential areas for economic expansion.

"Also, we have different resource structures from other Asian countries and share high complementarity in trade and energy cooperation while regional cooperation mechanisms developed quickly for common interest. European countries are also willing to cooperate with China and its huge market to fend off the debt woes," Du said.

The NDRC, China's economic planning body, "is also researching policies and guidelines for opening-up in border areas and inland in order to set an overall guide for opening the west", according to Du.

Florene Eid, CEO of Arabia Monitor, a service provider of economic research and strategy, said that opening-up the west is the only way for China to keep attracting foreign direct investment.

"But the government needs to put forward incentives because overseas investors know little of the region," Eid said.

Vice-Premier Li Keqiang said on Wednesday that the government has approved the establishment of "an inland opening-up trial zone" in Ningxia and "a comprehensive tax-free zone" in Yinchuan as part of a major effort to promote economic opening-up of the region.

"We encourage State-owned companies to engage in oil and gas cooperation in Arab states and Muslim countries as well as enhance the energy cooperation level with long-term cooperation mechanisms," Du said. "Also we will enhance Ningxia's infrastructure supaport for economic opening-up through encouraging private capital to railway, highway and building up water projects."

"The government will also introduce domestic and overseas financial institutions into the opening-up trial zone while encouraging local enterprises to participate in the country's financial innovation. Land supply will be properly increased to support the zone development," Du added.