Economists: Flexible Policies Key for West Development
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Economists believe government innovation and more flexible policies are important for China's western regions to accelerate their development.
The issue was discussed at a press conference launching a research report on the urbanization process of western Chinese cities in Beijing on Monday.
The research, directed by Professor Li Yining, a leading economist from Peking University and Nobel Prize winner in Economics Professor Robert Mundell from Columbia University, USA, was initiated to trace Chinese western cities' urbanization process over the past ten years since China launched the West Development Strategy.
Chengdu, the capital city of southwest China's Sichuan Province, was chosen as the sample city for the research.
It was found that Chengdu has accomplished fundamentally-coordinated development in rural and urban areas.
The report found sufficient employment is an important factor for the success of urbanization and a flexible policy system is key to guaranteeing that.
To illustrate the point, Li took the development of private economy as an example.
"It doesn't depend on the government investment to guarantee good employment status. It is more important for the government to offer a flexible policy environment," said Li. "To offer a low tax rate for individual business and favorable financing policies to private companies will create more employment opportunities."
Private economy holds more and more importance in urbanization process in China, said Li, and Chengdu's experience of making great efforts to develop private economy is worth copying.
Prof. Mundell proposed that government institutions in the western regions should try to attract foreign direct investment (FDI) to stimulate the development.
"Foreign direct investment is tremendously important because foreign direct investment brings technology and capital and markets all mixed up in the same patch," said Mundell. "So, you have the automatic markets of selling those things abroad."
By the end of 2009, 139 Fortune Global Top 500 companies had settled subsidiaries in Chengdu.
In addition, both economists said education and training are very important to further develop the western regions. Li said the western regions should have a plan to offer vocational training to the surplus workforce before sending them out for jobs.
"The labor force in the western regions actually can not meet the requirements of modernization," said Li. "Only by vocational and technical education and vocational trainings, can they find jobs outside their hometown."
The past ten years have witnessed a great development in China's western regions with an annual economic growth of almost 12 percent.
The report reveals that Chengdu's model of urbanization contributed adaptable experiences for other cities in the western regions.
China launched the "West Development Strategy" in January 2000 to help underdeveloped western regions catch up with the more prosperous eastern regions.
The western regions comprise 12 provinces, autonomous regions and a municipality, which have a combined population of about 370 million and account for 71.4 percent of the country's total land area.
(CRIENGLISH.com January 19, 2010)