More Than Sand and Grass

Inner Mongolia embarks on new development model By Lan Xinzhen

More Than Sand and Grass

Inner Mongolia embarks on new development model By Lan Xinzhen

Conjured up images of vast, romantic deserts and endless expanses of grasslands quickly come to mind at the mention of the Inner Mongolia Autonomous Region, one of China’s five autonomous regions. But another geographic tag should also get pinned to this region in north China: economic oasis.

The GDP of Inner Mongolia enjoyed a 14.3-percent year-on-year increase in 2011, 5.1 percentage points higher than the national average and the fifth highest nationwide. But before 2011, the region’s economic growth had ranked first nationwide for seven consecutive years.

“The slowing down is partly related to the international economic environment,” said Feng Renfei, deputy secretary general of the autonomous regional government. “But the more important reason is that we began to transform the economic development pattern in line with China’s sustainable development policies.”

This year, Inner Mongolia expects to achieve a 13-percent growth rate, leaving some leeway as it adjusts its economic structure, Feng said.

Resource dependent

Inner Mongolia is a main producer of beef, mutton, and fur and leather products. Yili Group and Mengniu Group, China’s two dairy giants, are headquartered here.

Economic growth in Inner Mongolia, however, mainly relies on mineral resources and energy reserves. The region boasts more than 60 kinds of verified mineral resources, including rare earth, coal and silver. While China accounts for more than 80 percent of the global rare earth output, the region contributes 90 percent of the national total.

Statistics from the autonomous regional government show that the region’s manufacturing industry accounts for more than 70 percent of its total GDP. There are 3,061 foreign-invested companies in the region, with 75 percent engaged in the manufacturing sector.

From 2000 to 2010, the region witnessed the fastest growth of coal, electricity and steel production nationwide, a huge contribution to its economic development. But it is impossible for the region to continue this mode in the upcoming 10 years, said Pan Zhaodong, a research fellow at the Inner Mongolia Academy of Social Sciences.

“Inner Mongolia has now come to a crossroad. Transforming its development mode is a serious issue,” said Pan.

Transformation in progress

Government officials in Inner Mongolia agree that the most pressing issue is finding a way to change the region’s economic development pattern without causing too many tremors to the local economy.

“As a region abundant in natural resources, Inner Mongolia, to achieve sustainable development, should think about how to overcome its long-term over-dependence on resources and energy industries,”said Wei Xiaoming, inspector of the autonomous regional development and reform commission.

Some regions in China that used to depend on their ample natural resources for development are now finding themselves backed against a wall as those resources run out. Today, Inner Mongolia is facing a similar problem. In 2011, the coal industry contributed 12 percent of the region’s total GDP, and its output value and profits accounted for nearly a quarter and a half of the region’s industrial sector, respectively. But this kind of uneven industrial structure will create too many risks and is overall unsustainable, said Wei.

The autonomous regional government has enacted plans to help its economy steer clear of the natural resource trap by upgrading the resource sector. Last year the region produced 1 billion tons of coal, with 610 million tons shipped to other regions and less than 30 percent used in Inner Mongolia.

The region will also develop its nonresource sector.

“This is key for our future development. It’s equally important for upgrading the development mode of the resource sector,” said Wei.

Inner Mongolia sets the goal that nonresource industries should account for more than 50 percent of the industrial sector, with strategic emerging industries accounting for more than 8 percent. In the future, non-resource industries should become the pillar for regional economic development, according to the Information Office of Inner Mongolia.

Nurturing the service sector is also considered a breakthrough for the region’s transformation. “In the next five years, we will raise the output value of the service sector from the current 30 percent of the regional total to 40 percent, which can bring us more added value,” said Wei.

Inner Mongolia has enormous potential to develop its service industry. The Chinese Academy of Social Sciences divides China’s provinces, autonomous regions and municipalities into three tiers according to their percapita GDP. The first tier embraces three municipalities, namely Tianjin, Shanghai and Beijing, whose per-capita GDP has surpassed 80,000 yuan ($12,680). Inner Mongolia, whose per-capita GDP stood at 57,515 yuan ($9,116) in 2011, belongs to the second tier. Besides Inner Mongolia, all other members of the second tier are east China’s coastal developed provinces, which are renowned for their leading position in the service sector.

“Inner Mongolia is used to relying on natural resources. Transforming the economic development pattern is like making a U-turn in a small alley, which is quite difficult. It needs wisdom and time,” said Wei.

GREEN LAND: Livestock on the grassland in Tongliao,Inner Mongolia Autonomous Region

Emphasizing ecology

In spring, winds often carry sands from Inner Mongolia to other parts of north China. The frequency of these sandstorms has increased as desert limits expand on the heels of environmental deterioration.

Due to the unique geographical position, Inner Mongolia is considered a frontline region for the ecological defense of north China. In 2011, the State Council enacted a document to ensure Inner Mongolia’s status as an important ecological barrier.

“When developing the economy, we have the concept that ‘environment comes first and ecology is the base.’ We have a firm hand on ecological protection and construction,” said Wang Yuming, Vice Chairman of the People’s Government of the Inner Mongolia Autonomous Region.

Inner Mongolia has set stricter regulations for corporate environment protection responsibilities. The Yuntong Nonferrous Metal Co. Ltd., located in the city of Chifeng, processes copper. Nonferrous metal processing companies are usually major polluters and energy depleters in China. However, in the factory of Yuntong, visitors find neither sharp odors nor waste gas emitted into the air.

“From 2005 to 2008, we carried out technological renovation in line with the requirements of the autonomous regional government,” said Han Zhi, General Manager of Yuntong. “Now, all the waste gas, water and residues can be recycled and reused.”

Inner Mongolia also gives generous incentives to protecting its grasslands. Last year, the region provided 5 billion yuan ($792.5 million) in subsidies to restore 1 billionmu(666.7 billion square meters) of grasslands. Each year, it also plants numerous trees and nurtures shelter belts to combat the encroaching desert.

The region now has the largest area of forests and grasslands in China, covering 355 millionmu(236.7 billion square meters) and 1.32 billionmu(880 billion square meters) respectively.

“Inner Mongolia has made the biggest contribution nationwide in fighting against desertification, increasing carbon sinks, maintaining water and soil and purifying the air,”Wang said proudly.

In a bid to tackle desertification, Inner Mongolia has relocated residents in desert areas to regions with a better ecological environment, a process that began in the 1990s. It has also treated desert areas by planting trees and grass.

During the past decade, hundreds of thousands of residents have been relocated to more people-friendly areas.

“The reality shows that ecological immigration is an effective way to combat poverty in areas with a harsh ecological environment. It plays a huge role in helping herdsmen get out of poverty, as well as curbing ecological environment degradation,” said Wang.