The Yangzi Delta Economic Region has the largest regional economy in China as measured in gross regional product. The area also is the most attractive location for both domestic and international investment.
The Yangzi Delta Economic Region (YDER) is located in the central part of the east coast of China. It covers an area of 109,654.2 square kilometers, only 1.14 percent of China’s total area, and has a population of 83.24 million, which accounts for only 6.33 percent of China’s total population. It also contains sixteen major cities, which include one provincial-level municipality (Shanghai), three subprovincial-level cities (Nanjing in Jiangsu Province and Hangzhou and Ningbo in Zhejiang Province), and twelve prefecture-level cities (Suzhou, Wuxi, Changzhou, Zhenjiang, Nantong, Yangzhou, and Taizhou in Jiangsu Province and Jiaxing, Huzhou, Shaoxing, Zhoushan, and Taizhou in Zhejiang Province).
History of the Delta
The Yangzi (Chang) River delta is the triangular alluvial tract at the month of the river, enclosed or traversed by its diverging branches. It is the biggest river delta in China. Humans moved there in two large-scale migrations to hunt and farm after the delta was formed. The first migration occurred during the South and North Dynasties (220–589 CE), and the second one occurred during the Song dynasty (960–1279). The migrants built irrigation systems (from the tenth century onward) and vibrant cities and developed local industries. The Yangzi delta became the main cultural and economic center of China and enjoyed the reputation of being a “land flowing with milk and honey.” The key cities of the region in premodern times included Suzhou, Nanjing, Hangzhou, and Shaoxing. The silk manufacturing industry in this region, especially in Suzhou, became famous during the Tang (618–907 CE) and Song dynasties. Suzhou silk even made its way to Rome along the Silk Roads.
Shanghai is located near the point where the Yangzi River flows into the East China Sea. It is one of the top three seaports in the world now, the largest city in China, and the starting point of modern Chinese industry. Shanghai began to become the hub of the Yangzi delta region and even the economic center of the whole of China gradually after 1842, when China was forced to open Shanghai to British trade and residence. Many Chinese “firsts” occurred in Shanghai, such as the first textile factory, the first flour mill, the first medicine factory, and the first electric fan factory. By the 1930s Shanghai had become the center of all economic activity in Asia and the financial center of Asia, as Hong Kong later became.
After establishment of the People’s Republic of China in 1949, the country finally was able to stop wars on its own territory. China’s economy recovered and developed step by step, although China was still isolated from the Western world and suffered internal political troubles from time to time. Shanghai’s average GRP (gross regional product) growth rate from 1952 to 1978 was 10.17 percent, higher than the country’s GDP (gross domestic product) growth level, which was 6.68 percent during the period. However, the growth rate of both Zhejiang and Jiangsu provinces was lower than China’s average at 6.08 percent and 5.48 percent, respectively. The total GRP created by Shanghai, Jiangsu, and Zhejiang was RMB65.68 billion (at current prices) in 1978, accounting for 17.82 percent of China’s total GDP in that year. And as the economic center of China, Shanghai had a GRP of RMB27.28 billion in 1978, accounting for 7.48 percent of China’s total GDP. The preceding figures reveal the delta’s, and especially Shanghai’s, significant position in China’s economy before China’s economic reform was launched in 1979.
The Pearl River delta in the southeast part of China was the most dazzling star in China in the 1980s. Benefiting from its superior geographic position (adjoining Hong Kong) and its reform and open policy, the Pearl River delta region achieved dramatic economic growth during the period and attracted the attention of the whole world. Capital and managerial experts moved into the Pearl River delta and made this region a famous business area. The average GRP growth rate of Fujian and Guangdong provinces from 1979 to 1990 was 11.61 percent and 12.83 percent, respectively, obviously higher than the country’s GDP growth level of 9.08 percent during the period.
The situation in the Yangzi River delta was different from that in the Pearl River delta during this decade. The non-state-owned sector, especially the township and village enterprises (TVEs) in the Yangzi delta region achieved rapid growth, but Shanghai’s performance was relatively slow. Jiangsu and Zhejiang provinces grew faster than the whole country (at 11.14 percent and 11.87 percent, respectively), but Shanghai’s average GRP growth rate was only 7.49 percent from 1970 to 1990, only 58 percent of Guangdong’s growth level. And Shanghai’s GRP contribution to China’s total GDP dropped to 4.19 percent in 1990. Compared with its share of 7.48 percent in 1978, the figure reflects the relative decrease of Shanghai’s economic significance in China.
The Yangzi delta got its chance in the 1990s. With the deepening of China’s economic reform, the strategic emphasis of China’s economic development shifted, and the Yangzi delta region, especially Shanghai, became the focus again in the 1990s. After 1991, especially after the seminal visit of China’s leader, Deng Xiaoping (1904–1997), to Shanghai in 1992, the provincial and municipal governments in the Yangzi delta began to implement far-researching reforms, and the result has been economic growth rates higher than those of other major Chinese cities as well as of most Asian “tiger” economies since 1992. Statistics show that the average annual GDP growth rate was 10.13 percent for the whole of China from 1991 to 2006, but the rate for Shanghai was 12.03 percent, the rate for Zhejiang was 14.18 percent, and the rate for Jiangsu was 13.61 percent, more than two times the growth of the four tigers (Hong Kong 6.8 percent, Taiwan 4.9 percent, Korea 4.2 percent, and Singapore 7.9 percent) during this period.
Establishment of the Economic Region
To promote economic collaboration among the cities in the Yangzi River delta and to facilitate sustainable development of the region, the Fourteen Cities Collaboration Office Director Conference was launched in 1992, including the cities of Shanghai, Nanjing, Wuxi, Changzhou, Zhenjiang, Nantong, Yangzhou, Suzhou, Hangzhou, Ningbo, Jiaxing, Huzhou, Shaoxing, and Zhoushan. After negotiation among the municipal governments of these fourteen cities and Taizhou, a new prefecture-level city in Jiangsu Province, a new regional economic institution, the Coordinating Committee of Yangzi Delta Urban Economies, was set up in 1997. Members agreed that the standing committee chairman would come from Shanghai and that the executive committee chairman would come from one of the other fifteen cities (in turn). A formal session among the members is held every two years, and a standing office is set up in Shanghai as the liaison office to deal with day-to-day administration. During the fourth session of the committee, which was held in Nanjing in 2003, another prefecture-level city, Taizhou in Zhejiang Province, was accepted as a member of the committee. At the fifth session, which was held in Shanghai in 2004, members decided that a formal session would be held every year. Hence, clearly economic collaboration in the delta is seen as important to the region’s growth, and the cities’ leaders are working to manage economic development together.
Economic Importance in China
The YDER is already the largest regional economy in China as measured in GRP. It and the Pearl River delta (PRD) and the Bohai-Rim Economic Circle (BREC) are China’s three major industrial belts. In 2006 the YDER’s GRP increased to RMB3,952.57 billion (about $503 billion), accounting for 18.88 percent of China’s total GDP and equal to 57.27 percent of South Korea’s GDP and more than four times the Philippines’ GDP.
The per capita GRP in China in 2006 was RMB16,165. All sixteen cities in the YDER surpassed that figure. Shanghai kept its top position among China’s thirty-one provinces (and provincial-level municipalities), and Zhejiang and Jiangsu ranked fourth and fifth. Among the sixteen cities in the YDER, two had a per capita GRP of more than RMB70,000, more than four times the country’s average.
The YDER is the most attractive location for both domestic and international investment, and Shanghai has regained its reputation as the most important international municipality in Asia. The YDER accounts for 16.83 percent of China’s total investment in fixed assets (seven of them more than RMB100 billion individually) and 47.17 percent of China’s total amount of foreign capital actually used (actually used foreign capital is the amount that is definitely invested in contrast to the amount that was promised to be invested). Its contribution to China’s total imports and exports was 35.55 percent in 2006. By the end of 2006, Shanghai had signed foreign direct investment contracts with foreign business people from 127 countries and regions, and the number of contracts reached 445,000 with a contracted value of $114.54 billion. More than 150 multinationals have set up their regional head offices in Shanghai, and there are 150 international investment companies and 196 foreign research and development centers. Shanghai is expected to have more multinational regional head offices than Hong Kong by 2010.
The YDER also has become an important international integrated circuits manufacturing base. China’s total microcomputer output was 93.36 million units in 2006. Out of every 1,000, about 742 came from Suzhou or Shanghai. In integrated circuits the YDER’s output accounted for 62.26 percent of China’s total, and most of them were made in Shanghai and Wuxi, accounting for 39.33 percent of China’s total output.
The automobile industry is another rising industry in the YDER. Eleven cities of the YDER have been involved in motor vehicle manufacturing and contributed 13.75 percent of China’s total output in 2006. The YDER is also famous for its electronics industry. Of China’s home washing machines, 61.42 percent were made in the YDER in 2006, and Ningbo’s contribution to China’s total output was more than 31.4 percent in that year.
Rapid economic growth has brought local people better lives. The average annual disposable income per capita of urban households in YDER in 2006 was RMB17,208 (about US$2,051), 46.34 percent higher than the country’s average level (RMB11,759).
Reasons for Growth
The largest contributor to the rapid GRP growth in YDER has been the GRPS (gross regional product from secondary industry). In 2006’s GRP 3.7 percent came from primary industry, 55 percent from secondary industry, and 41.3 percent from tertiary industry. From 1990 to 2006 the average annual growth rate of industry value-added was 15.15 percent in the YDER. During the same period the average annual growth rate of its GRP was 13.48 percent.
Now the driving force for the YDER’s economic growth is shifting from traditional processing industries to modern manufacturing and service industries. The share of information technology increased from 4.5 percent in 1990 to 13.6 percent in 2005, and the share of the textile industry decreased from 20.1 percent to 8.8 percent during the same period. The tertiary industry’s share in the GRP of Shanghai is more than 50 percent. In the other fifteen cities service industries are growing rapidly, although the share in GRP is still less than 50 percent. The YDER is upgrading from a huge processing workshop of the world to one of the most important international manufacturing bases.
The economic growth in the YDER, however, has been highly dependent on the rapid growth of investment, both domestic and international, in the area. Because of the limitation of land and other natural resources and industry duplication in many cities, this kind of growth is hard to sustain, and the increase in industry value-added and the domestic and international investment in the YDER have been going down in recent years.
In 2010 Shanghai will hold the World Exposition. The exposition will be a great chance not only for Shanghai but also the whole of the YDER. The exposition will benefit all the cities in the region as well and bring them into closer collaboration. Finally, with the improvement in the regional transportation system, the YDER is becoming a three-hour economic circle (it takes less than three hours to complete any travel from one city to another within the YDER), and more products bearing the “Made in China” label will go to the rest of the world from there.
Xiangming Chen. (2007, April). A tale of two regions in China: Rapid economic development and slow industrial upgrading in the Pearl River and the Yangtze River deltas. International Journal of Comparative Sociology, 48, 167–201.
Source: Shu, Ping. (2009). Yangzi Delta Economic Region. In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 2559–2562. Great Barrington, MA: Berkshire Publishing.
Yangzi Delta Economic Region (Cháng Ji?ng s?nji?ozh?u j?ngjìq? ????????)|Cháng Ji?ng s?nji?ozh?u j?ngjìq? ???????? (Yangzi Delta Economic Region)