In May, Liu Junwei, head of Refiner Technology Corp., moved his company to Nanchang, capital city of Jiangxi Province, and away from the southern boomtown of Shenzhen.

Liu’s company makes LED screens, which are exported to the United States, Japan and European countries. Rising labor costs and a shortage of labor in Shenzhen made him decide to shift inland.

“In Shenzhen, it has become impossible to hire a skilled worker for the usual monthly pay of 1,500 yuan (223.8 U.S. dollars),” Liu said. The monthly minimum wage was 1,100 yuan for a worker in Shenzhen, but in Nanchang, the level falls to 720 yuan.

Liu has hired more than 130 staff in his new plant and planned to recruit 370 more workers. He anticipates revenues of 50 million U.S. dollars this year.

Like Liu, increasing numbers of manufacturers are relocating their plants from China’s east coast or building new plants in the inland region.

A main role of the inland region in China’s boom of the past three decades has been to supply labor to the coastal areas. However, the industrial community is now moving inland from the eastern and southern provinces.

Economists believe the inland shift could be crucial to China’s economic prospects. As the country seeks sustainable growth during increasing economic uncertainties, the accelerated development of the inland would provide a new boost, they said.

On September 6, the Chinese government released a directive to encourage the process of relocating industry inland. Taxation, finance, investment and land policies would be used to support the effort, according to the directive.

It warned local officials to adhere to a market orientation and avoid administrative meddling.

The preferential policies, improving transportation infrastructure and huge market potential all become the main attraction of the inland region, Zhang Zhiwei, an analyst at China International Capital Corporation, said in a report e-mailed to clients.` According to the report, since 2008 the Pearl River Delta and Yangtze River Delta regions have been less attractive for foreign investors, compared with the inland provinces, because of rising labor and land costs.

For the inland region, industry transfers would promote the increase in government revenue and residents’ earnings, which would then boost investment and consumption, Zhang said.

However, it is still not the time to say industry transfers would lead to an inland shift of China’s economic core as many challenges remained, economists said.

After four months operating in Nanchang, Liu found the business reality was not as ideal as he previously thought. For him, the trouble is overall costs increased 20 percent because of higher logistics spending as he had to turn to Shanghai ports for import and export.

Further, workers’ production efficiency was lower here, he said.

Considering the production efficiency problem, the inland areas’ labor advantage would decrease, said Shen Minggao, chief economist for Greater China at Citigroup. Higher operating costs would also make the inland region lose its lustre, he said.

To help the central and western regions catch up with the coast, China has many regional development plans, including plans to develop the western region, to promote the rise of the central areas and rejuvenate the northeast industrial base.

However, in terms of infrastructure facilities, industrial coordination capability&nbsp

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Inland shift of China’s core, a dream yet to come true

After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2 % against the US dollar and moved to an exchange rate system that references a basket of currencies.

The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

China has emphasized raising personal income and consumption and introducing new management systems to help increase productivity.

The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government.

A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.

The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship, whilst retaining state domination of the economy.

The ministry made the announcements during a press conference held in Xiamen on the upcoming United Nations Conference on Trade and Development (UNCTAD) World Investment Forum and the 14th China International Fair for Investment and Trade.

In this period the average annual growth rate stood at more than 50 percent.

China is expected to have 200 million cars on the road by 2020, increasing pressure on energy security and the environment, government officials said yesterday.

Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.

Since the late 1970s, China has decollectivized agriculture, yielding tremendous gains in production.

In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.

China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).

China is one of the world’s major mineral-producing countries.

Alumina is found in many parts of the country; China is one of world’s largest producers of aluminum.

The largest completed project, Gezhouba Dam, on the Chang (Yangtze) River, opened in 1981; the Three Gorges Dam, the world’s largest engineering project, on the lower Chang, is scheduled for completion in 2009.
Beginning in the late 1970s, changes in economic policy, including decentralization of control and the creation of special economic zones to attract foreign investment, led to considerable industrial growth, especially in light industries that produce consumer goods.

In the northeast (Manchuria) are large cities and rail centers, notably Shenyang (Mukden), Harbin, and Changchun.