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Economic crisis makes central and western China suffer more

By Si Tingting (China Daily)
Updated: 2008-11-26 18:00

Compared with coastal regions, China's less-developed central and western parts are likely to suffer more in the unfolding global economic slowdown, warned a senior official from the National Development and Reform Commission (NDRC).

Fledging industrial structures, sharp resource price declines and a weaker capability to handle risks and social conflicts have increased western and middle regions' exposure, said the NDRC's vice-minister Du Ying.

This is the first time the government has made public such a regional risk assessment. Du's judgment, made at a recent national meeting, was posted on the NDRC's website yesterday.

Contrary to conventional thinking that coastal regions in East China will be worst hurt by global financial woes which had already brought many of its export-oriented manufacturers to closure, Du believes the financial crisis will have a deeper impact on less-developed central and western regions in a longer term, though it is not yet visible.

Special coverage: Coping with Financial Crisis Related readings:  China cuts benchmark interest rates by 0.27 percentage points  Interest rates slashed, but Wall Street lose again  Six central banks cut interest rates

An NDRC official, who was present when Du made the speech, told China Daily on condition of anonymity that Du gave three reasons to backup his judgment.

Firstly, economies in central and western China, which are largely small in scale and are resource intensive, will be slow to adapt to the changes brought along by the financial crisis, Du said.

Secondly, as many of the manufacturers in those regions depends on exporting raw materials, their business will be badly hurt as the prices of raw materials keep on dropping in the international market, he said.

Finally, Du believes the weaker economy in central and western regions will not be able to provide enough job opportunities for migrant workers returned from bankrupt manufacturing factories in East China, and then social conflicts will arise. The central and the western regions are China’s major labor exporters.

"To make the central and western regions less vulnerable to the global financial turmoil, I think these regions should shake up their economy by benefiting from an industry transfer from East China," said the unnamed NDRC official. "In addition, I think the central and western regions should take up a bigger share in the government's 4-trillion-yuan stimulus plan."