Areas take an extreme approach to relocation

"We have Shanghai's largest 'enclave'", has becomes a catchword for Dafeng, a prefecture in north Jiangsu province, seeking to attract investment from Shanghai.

Last week, the Dafeng's government delegation came to Shanghai with the support of the Jiangsu provincial government, to attract Shanghai enterprises to its empty industrial parks.

The 80,000 educated youths from Shanghai working in Dafeng, 210 kilometers north of Shanghai, in the "cultural revolution" (1966-76) has become the most valuable tie connecting the small place with Shanghai.

The three farms covering an area of 307 square kilometers where they worked half a century ago in Dafeng, constitute the largest "enclave" of Shanghai. They are a vegetable and grain -production base for the largest city in China.

The prefecture governors felt pleased that they had secured nearly a 10 billion-yuan ($1.6 billion) investment in at a one-day event from 28 enterprises in equipment manufacturing, marine biotechnology, new energy and new materials.

This is a big deal for Dafeng, whose gross domestic product last year was only 44 billion yuan, compared with Shanghai's 2.15 trillion yuan.

Although the central government urges receivers, like Dafeng, to use industry relocation from big cities as an opportunity to upgrade their own industries, some industry relocations from Shanghai to Jiangsu seem to go against that goal.

When Shanghai tried to become a global financial center, it moved some manufacturing industries to neighboring Jiangsu. The relocation started a contest with relevant city governments in Jiangsu, who tried their best to attract, in a condescending manner, enterprises moving out of Shanghai. But they seldom thought about their old industrial base that was developed over hundreds of years on local natural conditions.

Almost all receiving cities in the Yangtze River Delta are developing a similar industrial structure that features what is labeled "strategic emerging industries," which appears in the central governments' supportive files.

The central government did not expect that many local governments would go to extremes in carrying out its directional policies. Enterprises in the 18 cities in the delta region that are key industries to develop include biotechnology, new materials, telecommunications, new energy and equipment manufacturing.

Different city governments mete out similar preferential policies in taxes and land use to attract enterprises in those industries from Shanghai, or encourage local businessmen to change to those industries. The governments pay more attention to industrial scale than the core competitiveness of their technology and innovation.

Some emerging industries quickly become overcapacity industries. After 2011, wind power and photovoltaic-equipment manufacturing, which had been strongly supported by governments at various levels since the 2008 financial crisis, quickly became burdens for local governments, because of shrinking demand from foreign markets and the fast production rate at home.

The fast economic growth driven by huge investment can help promote local officials in the hierarchical system of local governments that is still ruled by the blind pursuit for growth.

It explains why many powerful state-owned enterprises built their petrochemical and energy industries at the most beautiful and easily accessible coastal areas without meeting any opposition from local governments.

In Qinzhou, a port city in the Guangxi Zhuang autonomous region facing the Beibu Guld of the South China Sea, the gross domestic product decreased by one-fourth last year, just because a petrochemical factory suspended its production for six months for an overhaul. Not far from the factory is the hometown of the rare Chinese White Dolphins.

In this sense, the new round of industry relocation from center cities to smaller cities may further distort the regional industrial structure and damage the environment.

Some places with good soil and water have the necessary conditions and traditions to develop modern agriculture, an industry China badly needs to improve its grain output, protect arable land and revitalize its hollowing-out villages.

But a rigid farmland contract system, under the pretense of protecting that farmland, deters most potential investors and companies.

Defeng and Nantong in north Jiangsu are two cases in point. They have huge areas of intertidal zones on their coast to the Yellow Sea. Hundreds of rivers create new land in their river mouths to the sea with the sand and mud carried by the water.

But the governments are adept in taking advantage of loopholes in the land-replacement system to build new industrial parks on fertile farmland, while labeling some new, actually barren and saline-alkali, land created at the river mouths as farmland, to ensure the overall area of farmland does not shrink in their reports to higher authorities.

The farmland on which the two city governments built various industrial parks to attract Shanghai's enterprises used to be China's main grain-production base since the Tang Dynasty (618-907).

Dafeng is famous for elk and a number of wild birds in its wetland. Nantong has the largest freshwater fish farms in the world. But these lands and waters are increasingly besieged by industries invited by the governments.

liyang@chinadaily.com.cn