Xuzhou, an example for economic transition

(Xinhua) Updated: 2014-03-11 13:17

Xuzhou has also become a comfortable city to live in, with forest coverage increasing to around 30 percent, the highest among all 13 cities in Jiangsu. The city attracted an influx of new businesses and its population grew by more than 400,000 between 2006 and 2013.

Greener economy

After rapid economic growth over the past three decades in China, many resource-depleted and smog-plagued cities are trying to make economic transitions like Xuzhou's. Chinese policymakers have also stressed fostering greener economic growth and pushing forward similar urban transitions.

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Smoggy memories

China will cut outdated steel production capacity by a total of 27 million tons this year, slash cement production by 42 million tons and also shut down 50,000 small coal-fired furnaces across the country, according to the government work report delivered by Premier Li Keqiang last week.

"We will strengthen energy conservation and emissions reduction and impose a ceiling on total energy consumption. This year, we aim to cut energy intensity by more than 3.9 percent," Li said.

Li's latest statement pointed to the urgency of reducing outdated production capacity and supporting industrial upgrades to help Chinese companies climb up the global value chain, said Zhuo Yongliang, head of the Development and Reform Research Institute of Zhejiang Province, a think tank in Jiangsu's neighboring province of Zhejiang.

In Xuzhou, the former energy base for economically prosperous Jiangsu, at least 318 paper mills and 99 cement factories were forced to close between 2007 and 2012, and more than 20 proposals for new steel, chemical and coking plant projects were rejected by the city's planners.

Market role

Other experts, including Nicholas Borst, China program manager of the Washington-based Peterson Institute for International Economics, support giving the market a bigger role in China's economic transition.

"China has rightly focused on reducing excess capacity in many industrial sectors, including cement, steel and glass. However, the approach of the government to achieve consolidation through administrative measures has seen minimal progress," Borst told Xinhua.

"A better strategy would be to embrace the decisive role of the market and allow unprofitable firms to go bankrupt. This type of consolidation would help ensure that the least productive firms are required to exit the industry," he said.

Borst's view is echoed by Sun Tao, a senior economist with the Washington-based International Monetary Fund, who suggested unleashing the vigor of the market and private-sector companies.

If the Chinese government can allow the market to play the decisive role in allocating resources and provide all kinds of companies with fair and highly efficient financing channels, there will be a new industrial structure in line with the market demand, Sun said.