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Access China Access China Gansu September 2012 Room 801-802 Tower B Gemdale Plaza No. 91 Jianguo Road Chaoyang District Beijing 100022 China Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Economist Intelligence Unit Economist Intelligence Unit 26 Red Lion Square The Economist Group London 750 Third Avenue WC1R 4HQ 5th Floor United Kingdom New York, NY 10017, US Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Fax: (44.20) 7576 8500 Fax: (1.212) 586 0248 E-mail: [email protected] E-mail: [email protected] Hong Kong Geneva Economist Intelligence Unit Economist Intelligence Unit 60/F, Central Plaza Boulevard des Tranchées 16 18 Harbour Road 1206 Geneva Wanchai Switzerland Hong Kong Tel: (852) 2585 3888 Tel: (41) 22 566 2470 Fax: (852) 2802 7638 Fax: (41) 22 346 93 47 E-mail: [email protected] E-mail: [email protected] This report can be accessed electronically as soon as it is published by visiting store.eiu.com or by contacting a local sales representative. The whole report may be viewed in PDF format, or can be navigated section-by-section by using the HTML links. In addition, the full archive of previous reports can be accessed in HTML or PDF format, and our search engine can be used to find content of interest quickly. Our automatic alerting service will send a notification via e- mail when new reports become available. Copyright © 2012 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopy, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. Published by The Economist Intelligence Unit, 26 Red Lion Square, London WC1R 4HQ. Symbols for tables “0 or 0.0” means nil or negligible; “n/a” means not available; “–” means not applicable Gansu 1 Gansu 2 Province summary 3 Highlights 5 Consumer profile 6 National and provincial initiatives 7 Industry 10 Infrastructure 10 Politics 12 Provincial cities 13 Forecast summary 14 Annual Data Editors: Victoria Lai (editor); Elizabeth Cheng (consulting editor) Editorial closing date: September 11th 2012 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: To request the latest schedule, e-mail [email protected] Access China September 2012 www.eiu.com © The Economist Intelligence Unit Limited 2012 2 Gansu Province summary Main economic indicators 2010 Rank GDP Nominal GDP (Rmb bn) 412 27 out of 31 GDP per head (Rmb) 15,626 30 out of 31 Consumption Disposable income per head (Rmb; urban) 13,189 31 out of 31 Total expenditure per head (Rmb; urban) 9,895 28 out of 31 Population (m) 26.4 22 out of 31 External trade (US$ bn) Exports (by location of producer) 1.3 29 out of 31 Imports (by location of consumer) 6.1 24 out of 31 Exchange rate Rmb:US$ (av) 6.77 – Foreign investment (US$ bn) FDI utilised 0.1 29 out of 31 Sources: Economist Intelligence Unit; National Bureau of Statistics. Gansu’s economy is largely shaped by its geographic position on the upper reaches of the Yellow River. For the most part the province is sandwiched between the Tibet-Qinghai Plateau and the grasslands of Inner Mongolia, giving it both relatively mountainous and semi-arid conditions. Han Chinese currently account for around 91% of the population. Hui Muslims make up only 5%, with the remaining 4% comprising Tibetans and other ethnic minorities. The province is one of China’s poorest, most sluggish and least accessible. Although it is making progress in infrastructure linkages, the province will continue to struggle to attract foreign investment. Private consumption is likely to remain weak. Incomes are low even in the provincial capital, Lanzhou, and the increase in average incomes can only be described as unspectacular. Despite an official increase in minimum wage rates of up to 36.5% from April 2012, wages remain much lower than those of the eastern seaboard, as do property prices. The province is relatively exposed to natural disasters, including drought and earthquakes. However, with the national “Go West” policy diverting considerable investment into infrastructure building, the economy has improved significantly in recent years. However, Gansu is a logical place for certain types of investment. For example, the province has a strong mining base, with more than 90% of China’s nickel reserves. The area’s climate also lends itself to investment in renewable energy; its windswept and sparsely populated plains are viewed as one of the best locations in China for wind-farm development. The Jiuquan New Energy Equipment Manufacturing Industrial Park is the largest of its kind in China. By 2015 total wind-power installation capacity in Jiuquan will expand to around 13 gw. Gansu’s installed wind-power capacity is now the second-largest in the country. Access China September 2012 www.eiu.com © The Economist Intelligence Unit Limited 2012 Gansu 3 Highlights Economy • Gansu’s GDP continues to grow at the double-digit rates seen over the past eight years, reaching Rmb500bn (US$79.4bn) in 2011—the first time it reached the Rmb500bn milestone. GDP growth accelerated to 12.5% in 2011, from 11.8% in 2010, in contrast with the slowdown in the national trend. • The secondary sector grew especially quickly in 2011, by 15.2%, to reach just over Rmb250bn. Growth was driven mainly by the activity of large industrial enterprises. Fixed-asset investment reached Rmb418bn (US$66.3bn), an increase of 40.2%—the fourth-fastest rate of growth in China in 2011. • In 2012, growth in Gansu has accelerated from end-2011, a departure from national trends. The province is relatively less vulnerable to the external environment, as it relies heavily on domestic investment and government support. In the first two quarters of 2012, GDP growth surpassed 12%. As government spending continues at high levels, the Economist Intelligence Unit forecasts a slight acceleration in GDP growth to 13.7% in 2012. Industry • The fast pace of development in the wind-power sector in Gansu has led to inefficiencies and fears that the sector is overheating, according to the China Electricity Council. Data from the National Energy Administration show that 10 tw hours of wind power went unused in China in 2011, owing to bottle- necks in the power grid, and Gansu was among those with the biggest surplus of power. • The Hexi Wind Power Corridor, covering the prefectures of Jiuquan, Zhangye, Wuwei and Lanzhou, is being developed as a demonstration zone for renewable energy. The plan is part of China’s push to reduce its depen- dence on foreign oil and gas. Gansu is estimated to have the potential to provide 80 gw of capacity, mostly from the Hexi Corridor. In early 2011 a state-owned power enterprise, Huadian, signed an agreement with the provincial government to invest Rmb60bn (US$9.5bn) in the development of regional energy projects over the current five-year plan (FYP, 2011-15) period. • The southern city of Tianshui may see an increase in economic activity, notably in machinery manufacturing, as a result of the establishment of the Guanzhong-Tianshui Economic Zone. The zone was approved by the State Council (China’s cabinet) in 2009 and is one of three western development zones listed in the 11th FYP (2006-10). Although the greater part of the zone lies in Shaanxi province, improving links with a much richer neighbour will bring new opportunities to Gansu. • Several companies backed by the provincial government have run up enormous debts with banks. After regulators announced in October 2011 that some local-government-backed companies would be allowed to defer loan payments, media reports revealed that the Gansu Provincial Highway Aviation Tourism Investment Group was one of four transport infra- structure companies that owed banks a combined Rmb200bn (US$31.7bn). The other three were from Guangdong, Hunan and Sichuan. The four asked Access China September 2012 www.eiu.com © The Economist Intelligence Unit Limited 2012 4 Gansu to defer Rmb34.4bn in interest payments. These liquidity problems are thought to have impeded the progress of some projects. • Gansu is a major recipient of infrastructure stimulus spending. The current FYP calls for the outlay of around Rmb200bn on infrastructure to improve rail and road links between Gansu and neighbouring regions. The railway network will be extended by 5,000 km and 1,600 km of expressways will be constructed. Work has already begun on upgrading the railways between Lanzhou (the provincial capital) and Chongqing municipality and between Lanzhou and Urumqi (the capital of Xinjiang). Construction of the first metro line in Lanzhou is due to start in October 2012; a comprehensive system will be in place by 2020. A number of airports are also being built. However, financial difficulties among some of the rail companies involved are slowing progress, especially on the line linking Lanzhou to Chongqing.
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