On July 29, www.zhonghongwang.com reported that Prof. Tao Yitao, delivered a speech entitled “Xinjiang Will Become China’s Economic Take-off Point” at the roundtable dialogue on “Silk Road Academician Forum: Promote Innovation and High Quality Development”. Prof. Tao is the director of the China Center for Special Economic Zone Research (CCSEZR) and president of the Belt and Road Research Institute (Shenzhen) for International Cooperation and Development (BRRI). Here is the transcript:
Roundtable dialogues of “Silk Road Academician Forum: Promote Innovation and High Quality Development” were held in Xinjiang on July 18. The participants carried out in-depth exchanges on “bringing together enterprises, universities, and research institutes to promote industrial revitalization in light of the actual situation in Xinjiang and their respective research fields. They discussed how to combine industrial development with academic achievements for the purpose of promoting the translation of scientific research achievements in Xinjiang's industrial development as soon as possible. Lu Jing, Deputy Director of Xinjiang Uyghur Autonomous Region Development and Reform Commission, introduced the notable achievements in Xinjiang's economic and social development since the 18th National Congress of the Communist Party of China (CPC). He said that with the unprecedented supporting policies for Xinjiang's development, the consistently released stability dividends, and the enthusiasm surrounding the development from people of all ethnicities, our economy and society are facing growth opportunities never seen before. We will uphold a development concept that puts people first and seek high-quality development that implements the central government's requirements, adapts to the reality of Xinjiang, and responds to the expectations of the people through seven aspects, such as strengthening infrastructure construction and distinctive industries, so as to lay a solid foundation for social stability and long-term peace in Xinjiang.
To this end, Prof. Tao devoted herself to the research of and wrote "Xinjiang Will Become China’s Economic Take-off Point". The full text is now published for readers with interest.
During his recent visit to Xinjiang, President Xi Jinping (also general secretary of the CPC) pointed out that "With the country opening wider to the world, the western region being further developed, and the Belt and Road Initiative (BRI) being materialized, Xinjiang has changed from a relatively closed inland region to a frontier of opening-up. The region should develop the core area of the Silk Road Economic Belt, incorporate its regional opening-up strategy into the overall layout of the country's westward opening-up, innovate the system for an open economy, speed up the construction of major opening-up corridors, so that it can make better use of international and domestic markets and resources and actively serve and integrate itself into the country's new pattern of development.”
Xi’s speech is not only a further clarification of Xinjiang’s strategic positioning in the new development paradigm but also a comprehensive and profound interpretation of the same. This means that after more than 40 years of reform and opening-up, the comparative advantages of factor endowment brought by the evolution of economic growth between regions changed; a unified large domestic market triggered by the overall industrial gradient shift in Chinese society is gradually formed; China's geopolitical and economic structure changed due to the change in the international political and economic situation; Chinese society has started the strategic advances of opening up from the southeast coast to the western inland and gradually formed the development pattern of the coexistence and complementarity of the above two regions to accelerate the formation of a unified national market. With its unique geographical location and its "natural" resource endowment advantages, Xinjiang will not only serve as China’s bridge connecting to Central Asia, South Asia, Russia, and even Europe more effectively and as a convenient channel for realizing the dual circulations of the domestic and international economy but also forming China's next “economic Take-off Point" and "growth pole” rapidly. Also, Xinjiang will become a "new foothold" and a “new engine for regional strategies" that will drive China's economy back to sustainable high growth, thus providing solutions for International inter-regional economic and trade cooperation in Xinjiang for the implementation of the B&R initiative.
It can be said that the two major changes in the international situation, the Russia-Ukraine war and the new round of global energy crisis, have sped up the rise of Xinjiang objectively. The combined effect of the above two factors is that Xinjiang is about to become a take-off point for China’s economy.
First of all, with the outbreak of the Russia-Ukraine war, Russia finally agreed to the construction of the China-Kazakhstan-Uzbekistan railway (CKU) to appease the member states of the Collective Security Treaty Organization and gain support from more countries, especially China, the most powerful and favorable friend. The CKU railway, a project that has been negotiated for 25 years, is about to start. The completion of the CKU railway will not only highlight Xinjiang’s geographical position, but also provide more strategic depth for the internal and external circulation of China's economy.
1. The CKU railway will change the world transportation pattern, and Xinjiang will soon become a world-class transportation hub.
At present, Xinjiang's external railway passages are basically from Alashankou Port and Horgos Port outbound. However, the opening of the CKU railway allows goods to be exported from Kashgar westwards, which will be China's shortest freight route to Europe and the Middle East. The freight journey will be shortened by 900 km, and the freight time will be saved by 7 to 8 days. After the completion of the railway, it will connect to Tehran, the capital of Iran, and then Turkey, and finally enter the European countries through Istanbul, the largest city in Turkey. By then, it will take less time from Kashgar to Turkey than to Shanghai by train, which means Xinjiang will have one of the most convenient and efficient external transport corridors. In addition, after the opening of the railroad, the China Railway Express will not rely too much on Kazakhstan, with its transport capacity and production capacity having more room for improvement and expansion brought by its enhanced convenience. Thanks to the construction of the CKU railway, Xinjiang will become a world-class transportation hub that achieves the dual circulation of the domestic and international economy. Thus, China's most promising future economic take-off point will be formed rapidly, which is surprising yet inevitable, due to the establishment of Xinjiang's inland and open hub status.
2. With the increasingly prominent status of Xinjiang as an export-oriented economic growth pole, China will form a development pattern that the opening of the southeast coast echoes that of the western inland. On the one hand, China's foreign trade channels will have the flexibility and resilience since there's more than one way to skin a cat; on the other hand, the pattern of coastal opening and inland opening coexistence will also reduce the various risks and uncertainties brought to China's economy by the changing international situation, thus enhancing China’s economic resilience. From this point of view, Xinjiang being the "take-off point" and "growth pole" of China's economy in the future is not only the result of the economic law of China's society to achieve regional synergistic development but also undoubtedly has long-term strategic significance.
In terms of foreign trade, Xinjiang's total import-export value in the first quarter of this year reached 37.83 billion yuan, an increase of 34.9% year on year, 24.2% higher than the national average growth rate. In particular, the foreign trade volume of Xinjiang to Kyrgyzstan has increased significantly, with the export volume reaching 14.59 billion yuan, an increase of 11.6 times, making Kyrgyzstan the largest trading partner of Xinjiang for the first time. Some experts believed that the opening of the CKU railway will not only herald a significantly consistent rise in the total trade volume between Kyrgyzstan and Xinjiang, but also create an international cross-regional trade and transportation network that runs through Central Asia, traverses the Europe-Asia continent, and connects land and sea. This is due to a rise in the number of countries through which the railroads pass and the increase and extension of the routes that are creating more opportunities for the diversity and possibilities of foreign trade.
3. Xinjiang will become a competitive logistics hub and entrepot trade destination of choice for shipping goods to Central Asia, West Asia, Europe, the Middle East, Russia, and other countries and regions due to competitive logistics costs. The CKU railway greatly shortens the transportation time and thus the logistics cost is bound to drop correspondingly. In comparison with shipping by sea, shipping goods to the West Asian region via the CKU railway will have distinct edges in transport time and freight prices. As such, the freight volume passing through the CKU railway, the new Eurasian continental bridge, will certainly grow by a huge margin due to cost advantages. Of course, the economic development of Xinjiang and its position in the global economic and political landscape will certainly change and play an important role due to the emergence of a more competitive logistics hub and entrepot trade distributing center.
4. Kashgar is most likely to benefit from the opening of the CKU railway. For Kashgar has a unique geographical advantage of “five ports connecting eight countries”. It is not only an important window and transportation hub for China’s westward opening-up, but also an important convenient platform for resource exchange. The Kashgar Special Economic Development Zone, which was approved by the central government in 2010, has already become a policy-based economic growth pole in Xinjiang. Kashgar Special Economic Development Zone is essentially an Inland Opening-up Pilot Economic Zone, just like Shenzhen and other special economic zones that had become the Pilot Demonstration Zones for China's transformation from a traditional planned economy to a socialist market economy at the early stage of reform and opening-up. Kashgar is more than just an economic growth pole of Xinjiang, it shoulders the special mission of creating momentum for reform through opening up inland China and building a new political and economic landscape for China.
In 2021, the fixed investment in Kashgar Economic Development Zone increased by 40.8%, and the capital in place for investment attraction increased by 75.2%. It is estimated that after the opening of the CKU railway, Kashgar's comprehensive bonded zone will become a highly attractive policy highland for Xinjiang to introduce foreign capital and accommodate the industrial transfer. From the perspective of resource allocation efficiency, factor prices, especially labor costs, have shown a general trend of being higher in the southeast than in the northwest with the Chinese society’s advances of opening up from the southeastern coast to the western inland. While the labor dividend in the first-developed and developed regions is gradually disappearing, the labor dividend in the later-developed and less-developed regions is being released or ready to go. Therefore, not only will more enterprises invest in Kashgar, but also more processing and transformation zones and enclave industrial parks will be introduced in Kashgar under the influence of market law, and the resource processing industry in Kashgar will usher in a period of great development. At the same time, the direct export of raw materials after deep processing can expand production chain, and more importantly, it will greatly improve the added value of export products.
Secondly, the world energy crisis has also underscored the importance of Xinjiang's geopolitical economy. Recently, the International Energy Agency issued a warning that the world will face the energy crisis of oil, natural gas and electricity shortages, and this crisis will be far more serious than that in the 1970s. In the future, whether impacted by war, epidemic, or conflict, the global energy crisis may be more severe than we can imagine, so at this time the significance of Xinjiang, a region that holds abundant resources such as oil, cotton, and natural gas, will be strategically highlighted.
1. The opening of the CKU railway is conducive to the development and utilization of oil in Central Asia and the Caspian Sea. This means that against the backdrop of the world energy crisis that may persist, China has opened up a new source of oil imports and an easier way to transport oil, which will enhance our energy security.
2. Under the influence of the uncertainty of the future global energy crisis and the new round of energy technology revolutions, accelerating the development of renewable energy, advancing the energy revolution and developing a clean, low-carbon, safe and efficient energy system is undoubtedly an inevitable and scientific choice to ensure national energy security. Recently, in the "14th Five-Year Plan" renewable energy development plan notice issued by China, Xinjiang ranked first in the onshore new energy bases column. The notice clearly states that to build new energy bases of 10 million kilowatts, northern Xinjiang should focus on wind power, the southern Xinjiang photovoltaic, and eastern Xinjiang a combination of wind power, photovoltaic power, and photothermal power. And by 2025, annual power generation of renewable energy will reach 3.3 trillion kilowatt hours, and during the "14th Five-Year Plan" period, the renewable energy generation will account for more than 50% of the total increase in electricity consumption. We know that Xinjiang is home to nine major wind areas with wind energy reserves exceeding 800 million kilowatts, accounting for about 40% of China's total land-based wind energy resources. And Xinjiang also has a sun blazing desert (Gobi) with a land area of 400,000 square kilometers, which ranks second highest yearly averages for total hours of sunshine in the country. It is indeed God's gift to the development of photovoltaic power plants in this region.
For China, Xinjiang can not only better open the door to westward opening-up, to achieve a “dual circulation” development pattern with the comparative advantage of factor endowment in opening up from the southeast coast to the western inland, but also play a vital role in ensuring our energy security amid a global energy crisis with its comprehensive range of strategic resources with abundant reserves. Therefore, against the backdrop of the changing world situation, the trend of the scaled development of the “Great Western Development”, and the domestic-international “dual circulation” pattern, Xinjiang in a sense serves as Shenzhen Special Economic Zone at the beginning of the reform and opening-up, with a different mission of the time. Shenzhen was the first to explore and complete the transformation from the traditional planned economic system to the socialist market economic system, thereby leveraging China's social reform and opening-up. Xinjiang today will take the lead in exploring the path and route for westward opening-up in China inland. In the process of promoting the gradual formation of a unified national market, Xinjiang will provide more resilience for dual circulations, thus strategically leveraging the reform and opening-up of western China.
Some scholars believe that if Chengdu, Chongqing, and Xi'an can guarantee the lower limit of the development of western China, Xinjiang will directly raise the upper limit in the future, and will become the take-off point of China's economy and the engine of sustainable growth. I believe that the changing international situation and the political and economic geopolitical changes that China is facing, as well as the Chinese society westward opening-up and the dual circulation development strategy, have given Xinjiang a great development opportunity. Xinjiang needs to build a high-level business climate and embrace new concepts to capitalize on the opportunities given by history and the upcoming economic boom. This is because a concept cannot directly change society, but it can change people who will eventually change it. The remarkable achievements made by China is not simply the victory of resources, but the power of concepts, ideas, and systems. Xinjiang can achieve more prosperity only if it embraces new concepts.
(Author: Prof. Tao Yitao, Director of China Center for Special Economic Zone Research (CCSEZR), Shenzhen University (SZU) and President of the Belt and Road Research Institute (Shenzhen) for International Cooperation and Development (BRRI))
This article is reproduced from the Guangdong-Hong Kong-Macao Greater Bay Area Topic Center of zhonghongwang.com on July 29, 2022 with link as follows: https://www.zhonghongwang.com/show-433-249454-1.html
China Center for Special Economic Zone Research, Shenzhen University
July 31, 2022
