The spectacular rise of the Pearl and Yangtze River deltas over the past several decades has inspired city leaders around the country to try and emulate their success by building up city clusters of their own. The national capital has proved to be no exception. For years, plans to develop a greater Beijing area were toyed with but never formalised. This may now finally come to pass. According to local media, a plan for the economic integration of Beijing, Tianjin and the surrounding province of Hebei may be announced early next year. The merits of centrally planned regional integration will be tested.
During China's reform period in the late 1970s and early 1980s, emphasis was placed on labour-intensive manufacturing for export to boost growth. Special economic zones were established to attract much-needed capital, technology and management know-how. The resulting inflow of foreign direct investment ended up being a boon not only for core cities such as Shenzhen, but also for their surrounding areas. As cities like Guangzhou matured, the more polluting, lower-value-added industries within the core were pushed out, first to the suburbs and then to surrounding regions outside city borders, providing neighbouring cities with the opportunity to industrialise.
A paper published in 2011 by the Japan Research Institute showed that the contribution of the core areas-defined as Shenzhen, Zhuhai and Guangzhou-to manufacturing sector added value in the Pearl River Delta (PRD) fell from 54.4% in 2005 to 50.4% in 2009. In the same period, the contribution from the outer-core areas-defined as Dongguan, Foshan and Zhongshan-rose from 34.8% to 37.4%. The paper also showed a shift toward services in the core.
Seeing the success of city clusters in the Pearl and Yangtze River deltas, China's authorities now push city integration schemes in regional development plans. These plans are consistent with the country's fixation with "balanced and co‑ordinated regional development", especially between core cities and surrounding smaller ones.
Horse trading
Such attention was only paid to the national capital in the 2000s, however, as the economic void between the northern coastal area and the south-eastern coastal regions could no longer be ignored. There were steadily mounting concerns that Beijing, Tianjin and Hebei were all competing for industrial supremacy, with very little co-ordination between them.
In 2004 the State Council (China's cabinet) set up a working group to draft a development plan. A draft report put together by a government think-tank, the Chinese Academy of Social Sciences, was completed in 2006. The plan called for the creation of a metropolitan area covering the municipal city of Beijing, Baodi and Wuqing districts and Ji county in Tianjin, and six cities in Hebei province: Zhangjiakou, Chengde, Baoding, Langfang, Tangshan and Qinhuangdao.
After almost a decade and repeated revisions, the Beijing-Tianjin-Hebei conurbation plan has yet to progress further. Lacking a suitable mechanism, the area remains very difficult to co‑ordinate. Conflicts of interest between the three local governments abound, as they are unable to agree on their respective roles. When the initial draft was first put forward, key industries in all three areas were very similar, concentrated on steel, construction materials, cars and heavy machinery. This made any realignment of industry difficult. A final blueprint will require the involvement of various central government departments, as local leaders look unlikely to be able to design and manage the project themselves.
The question of which Hebei cities should be included in the economic circle serves as another sticking point. At present, six cities are listed. However, the provincial authorities hope that more cities, such as Hengshui and Cangzhou, can be included, as they could then benefit from more economic support.
Any plan is likely to prioritise Beijing-centred integration, as the capital continues to radiate into Hebei and Tianjin. Beijing's central business district, in the eastern part of the city, has been expanding further east towards Hebei. Some of Hebei's counties and cities have become de facto satellite towns of the capital; around 200,000 residents in Hebei's Xianghe county and Yanjiao town work in neighbouring Beijing. However, Tianjin is unwilling to take a back seat. The municipality, whose Binhai New Area has been given priority since 2006, aspires to develop as an economic centre in its own right.
Get it together
As discussions continue, events on the ground seem to be driving towards a final settlement. China's president, Xi Jinping, visited Tianjin in May and urged the three provinces to push forward with regional co‑operation. Tianjin and Hebei set up a bilateral co‑ordination group, with a vice-governor and a vice-mayor in charge, to "break institutional barriers". In August local media reported that a plan would be released by early 2014, and in September the State Council released an action plan for the prevention and control of air pollution, addressing Beijing, Tianjin and Hebei as one region.
But even without a comprehensive plan, the process has already begun. At its simplest, the initial draft plan envisaged Beijing focusing on services, Tianjin providing port facilities and Hebei managing industry. This is already taking place, to a certain extent. Leading up to the 2008 Summer Olympics, Beijing worked hard to get rid of its older, highly polluting industries. More than 3,000 enterprises have relocated to the city's fringe districts since the 1990s, including some to Hebei. Shougang, a major steel company, closed its final Beijing production line in December 2010, effectively marking the end of a transition of heavy industry from Beijing to Hebei. In 2012 the capital's growth was driven primarily by services, led by the financial services, retail and information technology sectors.
The question is then whether a centralised plan covering the three provinces will have much of a positive impact. One concern is that Hebei's relative poverty and underdevelopment will pose a drag on the two municipalities. Hebei has yet to develop the mass of suppliers that the PRD has built up to support its main industrial clusters. For example, 80% of the parts supplying the automotive industry in Beijing and Tianjin are manufactured outside the Beijing-Tianjin-Hebei zone, mostly in the Yangtze River Delta industrial belt.
This suggests that Hebei, the intended workshop for its urbanised neighbours, lacks the capabilities and capacity to deliver what they need. Furthermore, efforts to build up this capacity will be expensive. Directing people and business to certain areas requires the use of public resources, which would otherwise go to improving infrastructure and public services in existing metropolitan areas that are already in higher demand. Local leaders might do well to recall that the PRD was built on the back of market-oriented reforms, not a detailed plan.
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