COORDINATE KEY FACTORS TO DEVELOP THE YANGTZE RIVER ECONOMIC BELT

COORDINATE KEY FACTORS TO DEVELOP THE YANGTZE RIVER ECONOMIC BELT*

April 26, 2018

China’s economy is transitioning from rapid growth to high-quality development. In this new situation, the key to developing the Yangtze River Economic Belt is to coordinate overall progress and individual breakthroughs, eco-environmental protection and economic growth, overall planning and sustained endeavors, abolition of old and cultivation of new growth drivers, and local development and cross-regional collaboration. We must apply the new development philosophy, follow the general principle of pursuing progress while ensuring stability, and strengthen reform, innovation, strategic coordination, planning, and guidance, to make the economic belt a vital force in spearheading the high-quality development of China’s economy.

First, we should coordinate overall progress and individual breakthroughs, and fully protect and restore the ecosystems of the Yangtze River.

The prerequisites for boosting the Yangtze River Economic Belt are to prioritize eco-environmental conservation, to attach the utmost importance to restoring the ecosystems, and to address eco-environmental degradation step by step. This requires us to take a holistic and systematic view of the eco-environment and the Yangtze River Basin and to coordinate the conservation of mountains, waters, forests, farmlands and grasslands when carrying out eco-environmental protection and restoration programs. We must push for overall progress, increase the connectivity and compatibility of measures, and avoid overemphasizing certain areas but neglecting others, or gaining ground on one front but losing the battle on another. While pressing ahead on all fronts, we should seek breakthroughs in pivotal areas, focus on the key problems and key dimensions of each problem, and take targeted and specific measures. By coordinating cross-regional and local programs, addressing both symptoms and root causes, and combining incremental and disruptive advances, we will see that overall progress and key breakthroughs will go hand in hand.

In recent years a lot has been done on all fronts to protect and restore the ecosystems of the Yangtze River, but the task remains formidable. We need to take a long, hard look at the causes. Controlling pollution caused by the chemical sector, managing the water environment, and treating solid waste are interrelated. Are these implemented in a coordinated manner? When carrying out major eco-environmental restoration programs such as those for wetlands, has the source of pollution been identified first? Has a systematic plan based on a holistic view of the eco-environment — and particularly the correlation between rivers and lakes — been devised before treatment measures are taken? 

The Jialing River, a major upstream tributary of the Yangtze River and the main source of drinking water for the residents in about a dozen cities in Sichuan and Chongqing, constitutes an ecosystem of strategic importance to environmental protection. But a report I have read says that more than three decades of development along the river has given rise to a rash of mining and smelting operations in its upper reaches and created more than 200 tailings ponds there, which pose a serious threat to its ecosystem. According to the authorities of some cities located at the juncture of the upper and middle reaches of the river, despite their intensified efforts to prioritize eco-environmental conservation and control pollution, they are beset by pollution coming from upriver regions, which they can do little about. Hundreds of thousands of people in cities and towns along the river face recurring threats to drinking water safety. This shows that current efforts to protect and restore the ecosystems of the Yangtze mostly involve planning at the local level and passive breakthroughs in key areas, and fall short of overall planning and proactive progress. To remedy this situation, we need to coordinate overall progress and individual breakthroughs, keep in mind the general picture, and make sound plans before taking actions, in order to pursue the best possible results. 

I have said that the Yangtze River is sick — very sick. To cure it, we should adopt the holistic approach of traditional Chinese medicine — pinpointing the root causes, applying appropriate measures, and providing systematic treatment. This is the first thing we should do to promote well-coordinated eco-environmental conservation and stop overdevelopment in the Yangtze River Economic Belt. With a holistic and systematic view of the eco-environment and the Yangtze River Basin, we will conduct a survey to identify and classify all potential ecological and environmental risks and hazards, and assess the carrying capacity of the eco-environment and resources, giving our Mother River a thorough health checkup. Responding to the eco-environmental risks and hazards discovered in the survey, and applying the philosophy that mountains, waters, forests, farmlands and grasslands comprise a community of life, we will carry out studies and work out contingency plans and action plans for systematic eco-environmental restoration and protection that tackle the sources of pollution. Then we will take measures targeting different types of problems, seek breakthroughs in key areas, and restore the ecosystems in the way traditional Chinese medicine works — removing harmful elements, strengthening internal organs, and invigorating the circulation of blood and energy. In accordance with functional zoning, we will classify the localities for optimized, prioritized, restricted or zero development, establish a sound long-term monitoring and early warning mechanism for keeping development within the carrying capacity of the eco-environment and resources, and prevent the Yangtze from suffering further “sicknesses” in the first place. Hence our Mother River will forever maintain its vigor and vitality. 

Second, we should coordinate eco-environmental protection and economic growth, and seek a new path of green development that gives priority to eco-environmental conservation. 

The key to green development prioritizing eco-environmental conservation is to balance the relationship between natural resources and economic gains, which is not only an essential requirement for promoting sustainable development but also an important principle for advancing modernization. Eco-environmental protection and economic development are not mutually exclusive; pursuit of one must not necessarily be achieved at the cost of the other. Whether eco environmental protection can succeed is determined, more than anything else, by the economic structure and growth model. Economic development cannot come at the cost of depleting the eco-environment and natural resources, nor must eco-environmental protection mean forsaking economic development. We must protect the eco-environment in the course of economic development, and stimulate economic development through eco-environmental protection. That is how our economic and social development can be congruous with our population, eco-environment and resources, and lucid waters and lush mountains can generate enormous eco-environmental, economic and social benefits.

To promote green development of the Yangtze River Economic Belt, we must first of all have a correct understanding of the issue. In particular, we must not see eco-environmental protection and economic development in isolation or set them in opposition. The practice of pursuing immediate economic growth at the cost of the eco-environment must be resolutely rejected. Some people do not have a clear idea of the potential presented by eco-environmental protection in generating demand, stimulating supply, and creating new growth drivers. Nor have they made enough efforts to explore ways to transform lucid waters and lush mountains into profitable assets. There must be a fundamental change in their way of thinking and action. 

I have read a Xinhua news report about a chemical plant located on a zigzag section of the Yangtze in Shishou City, Hubei Province. As one of the world’s three largest producers in its industry, it is a leading taxpayer but also a major polluter in the local area. For many years it caused heavy pollution, inflicting unspeakable agony on the people in its vicinity. In recent years local eco-environmental authorities have been getting tougher. The plant received a fine of more than RMB27 million, the harshest penalty on polluters in the Yangtze River Basin so far. This forced the plant to close those highly polluting production lines that could not be retrofitted, and invest about RMB100 million to install the most advanced pollution control equipment in the industry. These measures not only ended the longstanding pollution, but also transformed and upgraded its operations. 

Another example is Lishui City of Zhejiang Province, which has followed the path of green development over the past years. The city is unwavering in its protection of the local eco-environment as a golden bonanza and in its endeavors to translate eco-environmental benefits into economic gains. Leading the province in terms of eco-environmental quality, development index, and increase in rural incomes for years, the city is making synchronized advances in eco-environmental protection, poverty eradication, and rural revitalization. 

The Yangtze River Economic Belt should open a new path of green development that prioritizes eco-environmental conservation. 

One, we must fully understand the principles of promoting well-coordinated eco-environmental conservation of the economic belt, stopping overdevelopment, prioritizing eco-environmental conservation, and pursuing green development. Prioritizing and coordinating eco-environmental conservation focus on eco-environmental protection as the prerequisite; stopping overdevelopment and pursuing green development focus on economic development as the outcome. Coordinating eco-environmental conservation and stopping overdevelopment focus on current efforts and measures; prioritizing eco-environmental conservation and pursuing green development point to the direction and path of future development. These principles are consistent and complementary.

Two, we must actively explore ways to transform lucid waters and lush mountains into profitable assets and act on them. We will choose regions with the right conditions for pilot programs to realize the value of ecosystem goods and services, and look for sustainable ways of achieving this with guidance from the government, participation of businesses and other sectors of society, and market based operations. 

Three, we must implement the rural revitalization strategy and win the battle against poverty. To this end, we will tap into the rich eco-environmental resources in rural areas and attract capital, technology and talent into these areas. This will allow us to turn lucid waters and lush mountains into profitable assets and increase the incomes of needy people. 

Third, we should coordinate overall planning and sustained endeavors, and strive to turn our blueprint for development into reality. 

Boosting the development of the Yangtze River Economic Belt is a systematic project that covers all aspects of economic and social development. It cannot be accomplished in one fell swoop. In addition to producing a good top-level design, we should have the vision to lay the groundwork for future success and the sense of responsibility to carry through our blueprint. We should work tenaciously for real results and take solid steps to achieve major success. 

Thanks to concerted efforts by the provinces and cities along the Yangtze River as well as competent agencies, targeted eco-environmental campaigns and pollution control efforts have delivered results in recent years, with notable successes in particular in eliminating illegal docks. Still we must guard against any relapse. Some media have reported that the campaign launched in 2015 to eliminate illegal docks and sand mining in the main course of the Yangtze has achieved good results, but there is a high risk of them reappearing due to strong demand for sand from the construction industry. After an extended period of rigorous regulation, certain agencies have let their guard down. Consequently some owners of illegal docks have begun to stealthily rebuild their facilities, and are attempting to resume operations. Our success in bringing illegal docks and sand mining under control has been hard-won. We must establish a long-term mechanism to prevent their resurgence.

During my field trip to Sichuan Province earlier this year, I saw a good eco-environment in Tianfu New Area, which is the result of overall planning and sustained endeavors. The section of the Fuhe River in Chengdu City, which I talked about at a 2016 meeting on the development of the Yangtze River Economic Belt in Chongqing, is an important ecological corridor of Tianju New Area. I learned during my Sichuan trip that to address heavy pollution in this part of the river, the local government made a three-year plan based on a sound top-level design, aiming to stop pollution in one year, build scenic sites along the river banks over two years, and largely transform the river within three years. By redirecting wastewater, clearing out silt and replenishing water, in addition to measures for landscape upgrading and long-term management, the local government expects to end direct discharge of wastewater into the main course and branches of the river by the end of May, hence ridding the Chengdu section of heavy pollution once and for all. The water quality of Fuhe River at the state-monitored Huanglongxi section was below Grade V in 2015 and 2016, but reached Grade V in 2017, and rose to Grade IV during the first two months of this year, showing a trend of steady improvement. So we can come to the conclusion that once a sound top-level design is made, as long as we hammer at a problem with one blow after another, we will eventually crack it. 

At present and for some time to come, we should continue to implement the Outline of the Development Plan for the Yangtze River Economic Belt. We will carry out a mid-term assessment by considering progress made in its implementation and new developments in the domestic and international environment, and modify the plan to improve it in the light of the evolving situation. In accordance with the principle of integrated planning and based on an assessment of the carrying capacity of the eco-environment and resources, together with a suitability analysis of territorial space utilization, we will do the following: 

• drawing up red lines for ecological conservation, designating permanent basic cropland, and delineating the boundaries for urban development;
• creating a rational framework for the utilization and conservation of territorial space and establishing a sound regulatory mechanism for using our territorial space;
• bringing water utilization, water pollution control, shoreline use, and development of the shipping industry in line with planning for our territorial space;
• making economic and social development, configuration of cities and towns, and industrial restructuring compatible with the carrying capacity of the eco-environment and resources;
• aligning our plan with a negative list for territorial space management to create a strong top-level synergy. 

We need to have a clear timetable and road map to meet our goals, implement them step by step, and proceed steadily. 

Fourth, we should coordinate the abolition of old growth drivers and the cultivation of new ones, and establish a modern economic system in the Yangtze River Economic Belt.

Growth drivers determine the speed, efficiency and sustainability of development. We will steadfastly advance supply-side structural reform to accelerate the shift in growth drivers and establish a modern economic system in the economic belt. Areas along the Yangtze have built up a huge volume of outdated production capacity over a long period of time, which creates many risks, saps growth momentum, and creates strong inertia and a reluctance to abandon the traditional development model and path. If the old growth drivers are not abolished actively yet prudently, or the traditional development model and path are not reformed, the creation of new drivers will be suppressed and impeded. Moreover, mishandling of the issue may trigger “black swan” or “gray rhino” events. 

The old growth drivers must be discarded to make way for the new ones. To promote high-quality development in the Yangtze River Economic Belt, we must have the resolve to make painful adjustments and transformations, phase out old growth drivers, wipe out ineffective supply of goods and services, and abandon the old path of driving growth with investment and input of production factors. In so doing, we will create conditions and make room for the cultivation of new growth drivers, develop advanced production capacity, increase effective supply, accelerate the formation of new industrial clusters, and nurture industries that consume fewer resources, generate more profits, and offer better growth prospects for upgrading the economy. 

Accounting for more than 40 percent of China’s population and GDP and approximately 40 percent of the country’s imports and exports, the Yangtze River Economic Belt is the center of the national economy and the source of its dynamism. But we should also be aware of the long-existing concentration of heavy chemical plants along the Yangtze River, which has made the economic belt a hub of the heavy chemical industry in China. The media have reported repeatedly on the serious problem of the Yangtze being inundated by chemical plants and in particular pollution caused by the manufacture of phosphorus chemicals. The whole industrial chain of phosphorus chemicals, from ore mining and processing to the generation of chemical wastes, poses pollution threats to the Yangtze. Moreover, local governments worry that heavy-handed measures to tackle this problem will erode tax revenues and consequently hamper their ability to fund public wellbeing programs. As a result, they flinch at the prospect of regulating chemical producers, and phosphorus pollution of the Yangtze and its tributaries has increased with every year that passes. 

Since 2016, Yichang City of Hubei Province has come to understand the grim impact on its development of the inundation of the Yangtze by chemical plants, and taken resolute action to solve this problem. It has drawn up a binary plan to control chemical pollution. On the one hand, the city has been working to decommission outdated production capacity, reduce excess capacity, and eliminate the threat of chemical pollution. As a result, 134 chemical plants located by the Yangtze have been closed, refitted or relocated. On the other hand, the city has been developing the fine chemical industry as a new growth driver and guiding its chemical sector to move to the high-end market. The local economy has gained new dynamism. In 2017, the city’s energy use per unit of GDP fell by 7.14 percent and its water use per unit of GDP fell by 13.7 percent; water quality in the Yangtze and other major rivers running through the city was generally good; PM10 and PM2.5 density dropped by 9.3 percent and 6.5 percent; and the city’s contribution to China’s GDP maintained steady growth. This has proved that as long as we adopt the right approach and make solid efforts, we can achieve significant headway in replacing old growth drivers with new ones. 

To boost high-quality development and establish a modern economic system in the Yangtze River Economic Belt, we should put quality first, and give priority to efficiency. This requires us to work hard for higher quality and efficiency and more robust drivers of growth through reform. We should move faster to establish an industrial system that coordinates development of the real economy, technological innovation, modern finance, and human resources, and to create an economy with more effective market mechanisms, dynamic micro-entities, and sound macro-regulation. A key part in this process is shifting growth drivers. To grasp the relationship between abolishing old growth drivers and fostering new ones, we must remove old growth drivers as an essential step to provide new impetus for growth and increase overall economic strength, while keeping watch over the new stages of economic development and new frontiers of technology and fostering new growth drivers as an important means of forging a new competitive edge. 

By implementing the strategy of innovation-driven development, we will transform the unique strengths of the Yangtze River Economic Belt in scientific and technological research and human resources into strengths for development. We will make strenuous efforts to decommission outdated production capacity, raise eco-environmental standards, and strengthen law enforcement, so as to drive industrial upgrading and high-quality development. Also we will seek new breakthroughs in areas such as building multidimensional transport corridors, advancing new urbanization, and expanding domestic and international opening up to reinforce the growth momentum of the economic belt in a coordinated manner. Being a major intersection between the Silk Road Economic Belt and the 21st Century Maritime Silk Road in China, the Yangtze River Economic Belt is designed to coordinate the opening up of coastal, riverside, frontier and inland areas, integrate into the Belt and Road Initiative, and forge new strengths in international economic cooperation and competition. 

Fifth, we should coordinate local development and cross-regional collaboration, and build the Yangtze River Economic Belt into an integrated economic entity of high efficiency.

The economic belt is a river-based economy that encompasses waterways, highways, ports, shorelines, industries and cities. We should employ systems theory to coordinate local development and cross-regional collaboration. All regions and cities in this economic belt have the desire to boost their own local development. This is understandable and important. But they must think of the bigger picture and integrate local development into coordinated development of the economic belt so that every region can play to its own strengths. This will enable balanced and integrated development across the board and create a strong synergy. 

At present, chaotic and low-level competition to produce the same products remains a glaring problem for the economic belt. In some places there are battles for turf and resources, segmented administration, chaotic competition, lack of collaboration, and sabotage of the integration and extension of industrial chains. I have often said that a reason for the high logistics cost in China is low transport efficiency, which is primarily caused by the uncoordinated development, poor integration, and imbalanced structure of different modes of transport. Various modes of transport converge along the Yangtze River. We should integrate and coordinate them to improve overall efficiency. For instance, the congestion at the ship locks of the Three Gorges Dam on the Yangtze has severely disrupted shipping for a long time. Is the solution to be found in a comprehensive transport system? Some experts have proposed building a heavy-haul railway along the river to solve this problem for good. We should waste no time in studying its feasibility and viability. There are more questions to be answered: Can the three city clusters along the Yangtze River set new goals and take new measures for differentiated and coordinated development under the overall plan for high-quality development of the whole economic belt in accordance with their respective geographical location, resource endowment, and economic foundations? Can cities of different sizes decide their orientation and goals in keeping with those of the city clusters they are in, identify their areas of focus for differentiated development, and avoid duplication? This all calls for careful study and sober deliberation. To build a colossal conglomerate, we must coordinate local development and cross-regional collaboration. First of all, we should have a correct understanding of this issue, and then we must attend to relevant systems, mechanisms, and policy measures to coordinate development of the entire economic belt. 

There are several issues I would like to emphasize in this regard. 

One, we should have a clear understanding of what it means when we talk about coordinated regional development. All regions in the economic belt should fully and accurately implement this strategy by adopting targeted policies, taking precise measures, and establishing coordination mechanisms in accordance with functional zoning. They should work to realize equitable access to basic public services, balanced distribution of infrastructure, and marked improvements in living standards. 

Two, the Leading Group for the Development of the Yangtze River Economic Belt must play its role better. It needs to clarify what to preserve, what to abandon, what is prohibited, and what is required in terms of eco-environmental protection, spatial configuration of industries, development and utilization of ports and shorelines, and integrated management of water resources. On this basis it can coordinate initiatives in regions along the Yangtze River. 

Three, we need to improve the inter-provincial consultation and cooperation mechanism to solve major issues in cross-regional infrastructure connectivity and coordinated management of the river basin. These include how to coordinate different modes of transport, lower transport costs, improve comprehensive transport efficiency, use existing shorelines more efficiently, and address the chaotic development of riverside industry and of ports and shorelines. 

Four, we need to streamline administration, delegate powers, abolish local policies and regulations that impede the normal flow of factors of production, remove market barriers, and promote the free flow and optimal allocation of workforce, capital, technology and other production factors across regions. We will undertake innovations in the fiscal and taxation systems and introduce a price negotiation mechanism between local governments to better balance local and regional interests.

* Part of the speech at a meeting on further development of the Yangtze River Economic Belt held in Wuhan, Hubei Province.

(Not to be republished for any commercial or other purposes.)