Business / Opinion

Green shoots in Wuxi offer fresh hope

By Ed Zhang (China Daily) Updated: 2014-06-30 07:02

Reading about China's economic transition in the official press tends to be all good, about solid progress being made every day.

Just as reading about it in some overseas columns gives the impression that nothing is going on except that which points toward a general slowdown or even collapse. But in reality, neither picture is ever that black-and-white.

Green shoots in Wuxi offer fresh hope
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Green shoots in Wuxi offer fresh hope
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The time and the risks involved are often widely underestimated or overestimated, depending on what you read and where.

But generally, many of the views expressed tend to fall into a number of themes.

First, that local governments across China are ready and willing to play a heroic role, by guiding their economies perhaps in a way similar to how they once promoted village factories in the 1980s, or courted overseas investors in the 1990s.

Second, that their strategies virtually mean that local businesses are encouraged to try just about anything to succeed or survive.

Third, that many of these seemingly comprehensive strategies actually lack one or two - or maybe even more - of the most important aspects of political and social development needed for any economy in transition to succeed.

Or fourth, as time goes on and the economy starts to struggle, that local governments are being forced to reshape their strategies altogether.

But despite these different, often vague pictures being painted - good or bad - there is at least one way to tell for sure which transitional Chinese city strategies are working or failing. That's by looking at what they don't do, and the effectiveness with which they actually stop doing it.

At some stage, many cities in China will have to discontinue supporting the industries that still generate low-skilled jobs (important for stability) and local tax revenue, while adding to the cost (still to be directly counted by the official statistical reports) of environmental protection.

Any economy that is still based on heavily polluting industrial operations is simply anti-transitional, and any transitional strategy that does not require the discontinuing of such operations is flawed.

More often than not, heavy industrial operations only add to the severity of a country's industrial overcapacity and to the cost of genuine transition.

Unconfirmed reports say that some local governments still assist the very industries that are being outlawed by the environmental regulators, by allowing their factories to operate at night and discharge their waste into the underground water system.

Local officials, who have been rewarded by the polluters in the form of handsome bribes in the past, are just buying time before they are exposed and brought to justice.

In less serious cases, some officials have been found to allow local factories to hide, or not report at all, their true production outputs at a time when industrial overcapacity is actually harming the economy more than any crime ever has.

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