OBOR Opportunities: Regional Introductions

Xinjiang Autonomous Region

Xinjiang has been designated as the “core area” of the Silk Road Economic Belt. It is an important part of the old Silk Road and shares borders with eight countries: Afghanistan, India, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Russia and Tajikistan.

Xinjiang aims to develop into a transport hub and a centre for financial, logistics, culture and education. It is currently focused on the development of three specific passageways and three bases linking the cities of Hami, Kashgar and Urumqi to the major economic centres in China.

"Xinjiang aims to develop into a transport hub and a centre for financial, logistics, culture and education"

The "three passageways" and "three bases"

• Three passageways: northern, central and southern passageways will link the three economic circles on the east coast - the Bohai Bay (Beijing, Dalian, Tianjin), the Yangtze River Delta (Shanghai) and the Pearl River Delta (Guangzhou, Hong Kong, Shenzhen) - with Kazakhstan, Pakistan, Russia and Tajikistan via key cities in Xinjiang.

• Three bases: bases will be established focusing on oil and gas production and processing; coal, coal power and the coal chemicals industry; and wind power.

"The China-Kazakhstan Horgos Frontier International Cooperation Centre is Xinjiang's only cross-border free trade area and offers preferential policies by way of a bonded zone, reduced import duty and VAT, and free movement of people. It will be further developed to promote trade and connectivity between China and Kazakhstan and to expand across central Asia, the Middle East and on to Europe.

Fujian Province

Private (mainly diaspora) capital investment has had a strong influence on development in Fujian, accounting for 69% of the economy in 2013. The main sources of foreign investment come from overseas Chinese in Hong Kong,Taiwan and South-East Asia. In 20l3, foreign investment from Hong Kong and Taiwan amounted to US$9.875 billion, accounting for 90.2% of the total contracted foreign investment in Fujian Province. In 2013, actual paid-in capital from Hong Kong and Taiwan was US$5.745 billion, accounting for 72.5% of the total provincial paid-in amounts.

In terms of the future, the government’s current economic development plans (set out in the 12th Five-Year Plan) centre on the development of inland areas through urbanisation, industrialisation and agricultural technology.

Another important factor in Fujian’s current phase of development is the Taiwan Straits Economic Zone, which aims to strengthen economic cooperation with Taiwan by developing more advanced manufacturing, and the service sector, as well as the wider integration of transport and infrastructure designed to boost cross-strait trade flows.

Overall GDP has tripled between 2005 and 2012, exceeding RMB 2 trillion in 2013. However, owing to the spatial distribution of industry - much of which is concentrated along the coastline opposite Taiwan where there is easy access to ports - the south-eastern part of Fujian, which comprises the five cities and counties of Fuzhou, Putian, Quanzhou, Xiamen and Zhangzhou, is the economic hub of Fujian, accounting for 76% of the province’s GDP in 2012. Xiamen is the wealthiest city in Fujian (and also one of the wealthiest in China) with GDP per capita of US$13,279. By contrast, the average figure in the rural, mountainous inland area is below US$2,000.

Shaanxi Province

The ancient Silk Road started in Shaanxi Province. It is a major point of the OBOR initiative and emphasis will be placed on improving transport infrastructure and networks, international trade and logistics support, finance and business services, as well as research institutes, culture and tourism.

In 2014, Xian Xianyang Airport introduced 72-hour visa-free transit for visitors from over 50 countries to stimulate its tourist and business sectors.

The rail freight link from Xian to Western Europe, via Almaty and Moscow, benefits from simplified customs clearance at international borders between countries along the route, and a new route is planned to link Xian to the eastern sea port of Qingdao in 2015.

Xian’s Xixian New District is a national- level approved district, which offers preferential benefits to companies from countries along the OBOR route, including tax breaks or exemptions and most-favoured-nation (MFN) treatment. Bonded zones include Xian International Trade & Logistics Park and Xian High-Tech Zone. An Energy Finance Centre is due to open here in 2015, enabling renminbi settlement for energy trading.

Gansu Province

The western province of Gansu is centrally located on the Silk Road Economic Belt and is among China’s most important provinces for new energy development projects (solar and wind power), metals, agricultural production and food processing.

Lanzhou,the capital city, will be a key point on the Silk Road Economic Belt. Two important trade fairs take place there: the Lanzhou Investment & Trade Fair (which is due to be renamed as the China Silk Road Expo in an effort to boost links with Central Asia) and the Silk Road (Dunhuang) International Culture Expo.

Processing and logistics are expected to be streamlined with the approval of Lanzhou New District, which has been approved as the first national district in West China, and the establishment of Lanzhou New District Comprehensive Bonded Zone and Wuwei Bonded Logistics Centre.

Qinghai Province

Qinghai Province is a major channel for trade between Central China, Tibet and South Asia. Qinghai’s provincial development plans are aligned to the OBOR initiative;they aim to strengthen its transport infrastructure, improve its ecological and environmental protection, develop its light manufacturing industries, and expand its energy production capacity and capabilities. Qinghai’s major cities include Golmud, Haidong and Xining. A modern air, rail and road network is planned to bolster Qinghai’s role as a strategic logistics, storage/warehousing, trade and processing hub. This will include customs clearance being integrated regionally and logistics hubs being established: Golmud Logistics Park, Haidong Caojiabao Bonded Logistics Centre and Xining Chaoyang Logistics Park.

Qinghai is also aiming to strengthen and promote its textiles and light manufacturing industries, including food processing (halal food) and Tibetan carpets/cashmere, and it is accelerating the construction of a number of manufacturing and processing bases.

There are plans to support local businesses with more sales and marketing activity in various Central and South Asian markets.

Ningxia Province

The north-western inland province of Ningxia is comparatively under-developed,but it is actively developing opportunities with Middle Eastern and Islamic countries by taking advantage of religious and cultural similarities.

There are three priority projects: the China (Ningxia) Inland Opening-Up Pilot Economic Zone, the Yinchuan Comprehensive Bonded Zone and the China-Arab States Expo. The capital city,Yinchuan, is set to be a key hub on the Silk Road Economic Belt.

Chongqing Municipality

Chongqing is the far-western hub of the Yangtze River Economic Belt, and a major industrial centre and pivotal strategic point on both the 21st Century Maritime Silk Road and the Silk Road Economic Belt. Over the next five years, Chongqing plans massive investment to develop transport, logistics, finance, and scientific and educational centres. It will also reinforce cooperation with Sichuan Province through the creation of a joint Cheng-Yu Economic Zone, which will cover a cluster of industries including automobile, IT, consumer goods, oil and gas and petrochemicals.

Yunnan Province

Yunnan Province in China’s South-West shares borders and links with Laos,Myanmar and Vietnam, and it is well positioned to be a key location for OBOR initiatives in the region as a gateway to South-East Asia and India.

Its OBOR plans already include its role in the development of the Bangladesh- China-India-Myanmar (BCIM) Economic Corridor and the Greater Mekong Sub- Region (GMS) cooperation. Specifically,these plans are to enhance links between China and neighbouring countries by way of rail, road, air, water, energy and telecoms networks.

Jiangsu Province

The important east-coast province of Jiangsu will focus on the development of port and transport hubs to strengthen international industrial cooperation. In 2014, trade volume between Jiangsu and the 64 countries along the OBOR routes accounted for 10.5% of that of all of China,and outbound investment from Jiangsu to these 64 countries amounted to US$4.8 billion (£3.1 billion).

The two key cities in Jiangsu for the OBOR initiative are Lianyungang and Xuzhou.Lianyungang is a port at the eastern end of the New Eurasia Bridge, which will link Chinese and overseas markets both by rail and sea. Xuzhou is an inland transport hub at the intersection of two main railway lines, five national motorways and 11 provincial motorways.

Zhejiang Province

Zhejiang, on China’s east coast and the south side of the Yangtze River Delta, is one of China’s most developed provinces. The relatively wealthy and international cities of Hangzhou, Ningbo, Wenzhou and Yiwu are positioned as its key cities in the OBOR initiative.

Zhejiang is taking advantage of its ports to become an import distribution centre.The provincial government is prioritising the port integration of Ningbo-Zhoushan,as well as the development of Yiwu International Inland Port and the China Hangzhou Cross-Border E-Commerce Comprehensive Pilot Area (see below).

Yiwu also plans to increase investment in transport networks and to develop into a major fast-moving consumer goods (FMCG) and e-commerce distribution hub,as well as an inland port.

Guangdong Province

The coastal powerhouse of Guangdong announced its plan for OBOR in 2015, which outlined nine key sectors including infrastructure, energy production and resources, agriculture and fishing, advanced manufacturing and professional services. Total investment is expected to reach RMB 360 billion (£36 billion) by 2017. The key cities in Guangdong are Guangzhou, Shantou, Shenzhen, Zhanjiang and Zhuhai.

Hainan Province

Hainan province is a major tourist destination. The OBOR initiative emphasises the further development of tourism in Hainan and the improvement of port facilities in the two major cities of Haikou and Sanya. Sanya Airport Economic Zone has been established as a hub for shipping, logistics, warehousing, transport, e-commerce and finance. It is also focusing on expanding its leisure and tourism sectors (e.g. luxury cruises, sailing, flying/air sports). Hainan is also aiming to encourage foreign investment and partnerships for the establishment of high-quality medical institutions (particularly cosmetics and rehabilitation).

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