The Bohai Sea rim economic circle is believed to become a new economic engine for the country in the near future. But its potential needs to be further tapped for an integral development of the area.

First conceived in 1986, the concept of a Bohai Sea rim economic circle was once highly thought of by the government and experts early on. It involved a relatively complete economic system and good conditions for regional co-operation; the coastal area would be focused on export-orientated processing and trade, while the inland area had developed heavy industry and a manufacturing base. Abundant energy and mineral resources had made the region even stronger.

Yet this concept gradually faded from sight as the country's southern and eastern regions experienced eye-catching economic growth in the 1980s and 1990s.

Economic competition in China today is based on industrial interactions instead of administrative divisions. The Zhujiang River Delta in the south and the Yangtze River Delta in the east both have established modes of co-operative development, and are advancing with concerted regional efforts.

The Bohai Sea rim area has thus fell behind in this round of resource relocation and conformation.

Facing Japan and the Republic of Korea, the Bohai Sea opens to the Pacific Ocean in the east, and is surrounded by Liaoning, Hebei and Shandong provinces as well as the Tianjin Municipality, which is an hour's drive from Beijing, the nation's capital.

But economically, it can further expand to a much larger area to embrace Beijing, Shanxi Province and the Inner Mongolia Autonomous Region, accounting for 12 per cent of the country's territory and 20 per cent of the nation's 1.3 billion population.

This area holds China's most successful development zone, its most renowned high-tech park, its best group of private ventures, the densest intellectual resources, and the nation's strongest established industrial base. In addition, it includes China's centre of politics and culture, high-ranking ports, rich natural resources, and abundant cheap labour and skilled workers.

But even Beijing's successful bidding to host the 2008 Olympic Games has not yet been promoted within the Bohai Sea rim area as a whole.

The Beijing-Tianjin-Hebei region, which has the strongest economic strength in the rim area, is now facing a slowdown in economic growth. Different administrative divisions in this area are not currently complementary to each other in terms of industry and economy, due to various regional barriers.

Research indicates that the sluggish economic integration process has become a bottleneck for the region's development at present.

Experts believe that a strong concept of planned economy is the major factor behind the differences between the development of the Bohai Sea rim area and that of the other two delta areas.

There is also too much government interference in economic life because of a high percentage of State-owned enterprises in the area, pointed out Chen Yao, a researcher of the Institute of Industrial Economy with the Chinese Academy of Social Sciences (CASS).

The government has forceful control over various resources and an economy with strong political connections has been bred in this area. People here have a strong political perception yet less of a concept of market economy. A healthy market mechanism has not been cultivated yet.

Another factor is that although there are two municipalities directly under the central jurisdiction in this region, namely Beijing and Tianjin, there is none playing a leading role in terms of regional economy.

Wang Yiming, deputy director of the Macro-Economics Research Institute under the National Development and Reform Commission, added that these two municipalities have strong motives for economic competition instead of complementary co-operation. There has not been enough co-ordination in industrial development, but rather constant disputes over interests and competition over limited regional resources.

Besides, there is no obvious regional division of labour. Lacking integrated regional planning, many cities engage in similar industrial structures. Competition among the 60-odd ports has even caused a large waste of resources.

Other issues hindering regional co-operation include a poorly-managed flow of human resources, inconvenient traffic network and serious regional barriers.

Wang holds that there are actually three independent economic subdivisions in the Bohai Sea rim area: The Liaodong Peninsula with Dalian as its open port and Northeast China as its hinterland; the Beijing-Tianjin-Hebei section, with Tianjin as the principal port; and Shandong Peninsula, with Qingdao as its major port and the peninsular area and part of East China as its hinterland.

Each could develop into an independent economic circle, yet the integral strength of the area would be weakened.

Fan Jie, deputy director of the Institute of Regional Development and Resource Research under the Chinese Academy of Social Sciences, brought up a typical example: A 300,000-ton ethylene project was once planned in this area, and several cities came up to bid for it. It turned out that the project was divided into three 100,000-ton projects, due to egalitarianism.

When foreign ethylene projects normally get to be 600,000 tons in scale, none felt any particular advantage in production and all eventually expanded to become 300,000-ton ventures later. But this still duplicated construction at a rather low level.

Thus besides a need for improved regional planning, unified implementation above the administrative division is needed for the overall development of the Bohai Sea rim area.

Wang Yiming proposed that a greater Beijing city circle should be developed first, as Beijing enhances the functions of business, finance, information and technology in the area while Tianjin can further develop its functions as a port and manufacturing base.

Once this integration be sorted out, there can be a core, or leader, in the Bohai Sea rim area that will be able to promote economic integration with the Liaodong and Shandong peninsulas.

He also suggested that regional networks for traffic and information resources should be developed, while division of labour directed by market forces should be furthered.

"With its potential fully tapped, the Bohai Sea rim economic circle can move ahead of the Zhujiang River and the Yangtze River deltas in the next 10 years,'' he added.

(People's Daily   October 06, 2003)