Upcoming industry investment event highlights new momentum for Central China’s rise

A panoramic view of the Binjiang New City in Changsha, Central China's Hunan Province File photo: VCG

A panoramic view of the Binjiang New City in Changsha, Central China’s Hunan Province File photo: VCG

Chinese officials announced on Tuesday that the six provinces in Central China will each host a targeted industry supply chain investment promotion event during the 13th Expo Central China, which will be held in Changsha, the capital of Central China’s Hunan Province, from May 31 to June 2. Experts anticipate the event will inject new momentum for the region’s rise.

The move marks the first innovative endeavor since the critical investment event’s inception in 2006, adding to China’s robust drive to build the region into favorable destinations for industrial transfers from coastal areas amid economic restructuring.

Vice Minister of Commerce Ling Ji introduced the key highlights of the upcoming event during a press conference on Tuesday, which include industrial chain investment promotion sessions led by central provinces, focusing on advanced manufacturing sectors such as modern petrochemicals, new materials, electronic information and new-energy vehicles, aiming to attract foreign investment.

The six localities are Hunan, Hubei and Henan in Central China, Anhui and Jiangxi in East China, and Shanxi in North China.

Experts believe that the innovative sessions will highlight collaborative endeavors across regions aimed at fostering integrated economic development and attracting external investors to strengthen ties with the global economy amid the country’s pursuit of high-quality development and high-level opening-up.

The six central provinces so far have hosted a total of 55 state-level economic and technological development zones, serving as vital platforms for industrial transfer. In 2023, these zones achieved a regional GDP of nearly 3 trillion yuan ($414.65 billion), with total trade exceeding 1 trillion yuan and actual foreign investment reaching $2.4 billion, according to official data that Ling cited.

Ling also unveiled the ministry’s forthcoming measures to accelerate the rise of Central China. Focus areas include strengthening foreign investment and trade, enhancing domestic trade circulation, and expediting the establishment of trade cooperation pilot zones and free trade zones, in a bid to elevate regional integration that is in line with the plan of high-quality development.

The plan aligns with China’s ongoing push for the rise of the central region. China’s leadership at a top-level symposium in March called for solid efforts to further energize the central region at a higher starting point, due to its pivotal role as important bases for grain production, energy and raw materials, modern equipment manufacturing and high-tech industries, and as a comprehensive transportation hub.

The central region holds strategic importance and is an ideal destination for industrial relocation from coastal areas due to its geographical, labor and infrastructure advantages. The phased industrial transfer plan will aid the country’s high-quality development and help avoid industrial relocation to other countries, Tian Yun, a veteran economist based in Beijing, told the Global Times on Tuesday.

“Central provinces such as Hunan and Hubei have unveiled plans to transition toward middle-to-high-end industries, positioning themselves as leaders in industrial upgrades,” Tian added, noting that with the ramping-up of policy support from the central government, the region’s economy will gain new development momentum.

During an investigation and research tour in Anhui on Friday, Chinese Premier Li Qiang called for greater efforts to foster emerging industries and future industries, make breakthroughs in core technologies in key areas, and create new engines for sustained economic growth, which experts said showed the central government’s firm stance in promoting the rise of the region.

The region’s industrial relocation and growth are pivotal for China’s industrial chain security. The central provinces, with their solid manufacturing base and research capabilities, can serve as key nodes in China’s industrial chain development, further promoting the country’s industrial chain security and long-term sustainable development, Bian Yongzu, a senior industry research fellow and visiting scholar at Yale University, told the Global Times on Tuesday.

Bian stressed that amid the global green economy trend, China has made remarkable accomplishments in a series of high-tech sectors by cultivating leading enterprises and industrial zones, which “offer favorable conditions and set models for the central region’s development in related fields.”

The region is vigorously advancing its high-quality development driven by the new quality productive forces – a key focus of this year’s expo. 

In 2023, the central region’s combined GDP reached nearly 27 trillion yuan, more than one-fifth of the national total, highlighting its crucial role in the economy, according to official data.

Hunan’s high-tech industry investment rose by 7.9 percent, with high-tech manufacturing’s value added up by 14.7 percent and information services up 13.1 percent.

The initiative to promote the rise of the central region was initially introduced two decades ago. Over the past decades, the momentum of the central region’s advance has been robust. Official data indicates that during China’s 13th Five-Year Plan period (2016-20), the economy of the region grew at an average annual rate of 8.6 percent.

‘Overcapacity’ accusation goes against economic principles, denies global division of labor

Over-protectionism. Illustration: Chen Xia/GT

Over-protectionism. Illustration: Chen Xia/GT

Recently, the West has been unreasonably hyping up the false narrative of “overcapacity” in China. Even the IMF warned on Tuesday that China’s policies that boost supply would worsen overcapacity, reinforce deflationary pressures, and potentially provoke trade frictions.

While the IMF doesn’t explicitly mention any specific industry, it is probably referring to China’s new energy industries in light of recent US pressure on green Chinese products. Yet, whether or not China has excess capacity should be determined by economic rules and facts, not political agenda led by the US.

The current global distribution of production capacity is a result of the combined effects of industrialization and market-based economic activities over the past few decades. Cooperation based on comparative advantages is crucial for optimizing the resource allocation of global factors, also an important approach for improving productivity and well-being among countries.

From the perspective of economic principles, equating fluctuations in supply and demand with excess capacity goes against the normal rules of the market economy and actually works counter to the rationality of international division of labor and economic globalization. If a country with supply exceeding demand is recklessly considered to have excess capacity, then all export economies in the world, not only China but also the US, have overcapacity issues in terms of their exported products.

In this sense, the narrative of “overcapacity” and criticisms of industrial subsidies are merely rhetoric fabricated by the US to hinder China’s competitiveness.

China’s economic advantage in its “new three” products – new energy vehicles, lithium-ion batteries, and photovoltaic products – stem from its competencies and are shaped through full market competition, rather than subsidies from the government. While the US accuses China’s industrial policy of violating international regulations and worsening overcapacity, the scale of American subsidies to new energy industries is far greater than in other countries, as the CHIPS and Science Act and the Inflation Reduction Act have showed. For example, the detailed rules of the Inflation Reduction Act stipulate that only electric vehicles assembled in North America are eligible for a maximum subsidy of $7,500 through federal tax deductions, which is a blatantly discriminatory subsidy law.

By comparison, China’s industrial policy adheres to the principles of market economy and fair competition. For instance, in a statement published on its WeChat account on Wednesday, the National Development and Reform Commission said that China plans to introduce additional measures to support the development of the new energy vehicles. These measures include fostering industrial innovation through scientific and technological advancements, encouraging enterprises to increase investment in research and development, and facilitating the optimization and restructuring of the new energy vehicle industry. Moreover, China will remove all restrictions on foreign investment in manufacturing, inviting global auto companies to participate in the Chinese market and industrial chain to benefit from the advancements in new energy vehicle technology.

In fact, China’s competitive new energy products have created huge opportunities and support for the global industries and markets. Its technological innovation in new energy vehicle sector presents significant development opportunities for global auto industry. Also, China is the only country in the world that has all the industrial categories listed in the United Nations industrial classification system, including 41 industrial categories, 191 medium categories and 525 subcategories. And its efficient industrial system has played a crucial role in maintaining stability of the global auto supply chain. 

Furthermore, China is a major driving force behind the world’s rapid expansion of renewable power generation capacity. China’s installed capacity of renewable energy exceeded 1.45 billion kilowatts in 2023, accounting for more than 50 percent of the country’s total installed power generation capacity, according to data released by the National Energy Administration. Power generated from renewable energy sources such as wind and solar power now accounts for more than 15 percent of China’s total electricity consumption.

China has always been committed to promoting high-level opening-up and offering opportunities for market access to other countries, with the aim of achieving mutually beneficial results. And it is hoped that all parties could be engaged in rational discussions based on facts and economic principles when it comes to green development, rather than resorting to baseless accusations and attacks.

The article was compiled based on an interview with Jin Ruiting, researcher at the Academy of Macroeconomic Research of the National Development and Reform Commission. [email protected]

Beijing’s Fengtai district unveils first private tech innovation center

Beijing’s first private enterprise technology innovation center was unveiled on Tuesday in Fengtai district. [Photo provided to chinadaily.com.cn]

Beijing’s first private enterprise technology innovation center was unveiled on Tuesday in Fengtai district. The center provides a 100,000-square-meter industrial and service space for private technology enterprises, aiming to foster the development of new quality productive forces and nurture cutting-edge industries.

In recent years, Fengtai has engaged with partners in fields such as rail transportation, aerospace and the digital economy, attracting 600 enterprises to its fold, according to the district government.

Wang Shaofeng, Party secretary of the Fengtai district, expressed the district’s commitment to serving the capital’s functions and promoting integrated urban-industrial development.

He stated that Fengtai will continue to make progress in various sectors to accelerate high-quality development.

Future and modern industries are two key areas on which the district focuses. The satellite internet industry park, located in the Fengtai Science and Technology Park, spans approximately 100,000 square meters and focuses on the development of satellite application industries, including communication, navigation and remote sensing.

The industrial park aims to attract more partners and establish a new commercial aerospace industry hub.

Meanwhile, the Beigong low-altitude economic industrial park in Fengtai’s Beigong Town is set to release around 2 million square meters of industrial space gradually.

Leveraging Fengtai’s aerospace and rail transportation industry clusters, the park will prioritize the top-level design, research and manufacturing of products such as drones and flying cars.

As one of Fengtai district’s nine key signed projects, the largest JD home appliance mall in the country, invested by JD Group, is poised to settle in the district.

Spanning around 70,000 square meters of retail space, it will include trendy home appliances, home decor, entertainment and outdoor sports, offering consumers a comprehensive “one-stop home” shopping experience.

According to district government data, in 2023, Fengtai’s regional GDP was 218.75 billion yuan ($30.18 billion), a 6.5 percent increase from the previous year.

Fixed asset investment reached 78.49 billion yuan, marking a 19.6 percent year-on-year growth. The district’s market vitality continued to surge, with 21,300 new market entities established, a 32.2 percent year-on-year increase.

Advanced manufacturing magnet for foreign firms amid upgrades

Daimler trucks are displayed during the 6th China International Import Expo in Shanghai in November. PHOTO/CHINA DAILY

BEIJING — China’s advanced manufacturing is attracting the attention of foreign-invested companies amid an innovation-led upgrade of the nation’s industrial chain.

“We see booming innovations in areas including new energy vehicles, and connected and automated driving trucks in China, and we consider China a place to pursue the development and application of such future-oriented products,” said Holger Scherr, president and CEO of Beijing Foton Daimler Automotive Co Ltd, and head of the Mercedes-Benz business unit.

David Fan, executive vice-president and China president of Japan-based auto parts supplier Marelli, also pointed to the growing innovation capabilities of the Chinese market as one of the important reasons for the country’s market and supply chain having an irreplaceable role for Marelli.

China’s manufacturing sector has remained a land of opportunity for foreign-invested companies over the years for its manufacturing prowess and the most comprehensive industrial chain in the world. In 2023, foreign investment into the sector accounted for 27.9 percent of the total, up 1.6 percentage points from the previous year, official data showed.

This year, the country has put developing new quality productive forces — featuring high-tech, high efficiency and high quality — atop its agenda.

The upgrade of industrial and supply chains is among the three aspects, that the development of new quality productive forces will cover, said Zhang Qingjie, head of digital enablement and head of AI at KPMG China.

Some foreign-invested companies have already noticed the gradual repositioning of China’s industrial chain, and are adopting a preemptive strategy to tap into the shift.

“We plan to promote a model of inverter compressors for heat pumps this year in Europe. The model is developed through a technology platform that we built in China, reflecting the change of the Chinese market’s core competitiveness from a comprehensive supply chain to an innovation-oriented one,” said Xu Yang, president of the China unit at Danfoss, a Denmark-based energy efficiency solutions company.

Xu said the company has been actively leveraging China’s innovation capability and improving its smart manufacturing. In April, Danfoss will launch construction of the second phase of its Haiyan campus in Zhejiang province, which is its largest manufacturing base in China, according to Xu.

Unbreakable bonds span decades

Wuhan and Duisburg bear a lot of similarities. Wuhan is located at the confluence of the Yangtze River and the Han River in central China. It is an important industrial city with an excellent geographical location and convenient transportation by land, water, and air.

Duisburg is also a significant industrial city in the Ruhr area of western Germany. Situated at the confluence of the Ruhr River and the Rhine River, it is a crucial water and land transportation hub in Europe.

The two cities joined hands in 1982 to become the first pair of sister cities between China and Germany. Decades have passed, and people continue to remember, celebrate, and renew this enduring friendship.