Final Report - Asian Development Bank

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES
A. Performance Indicators and Analysis
1. Shaanxi Province is part of western China. The rate of economic growth in western China
has lagged that in the eastern provinces. Shaanxi grew at an average of 7.5% from 1990 to 2000
compared with a national average of 10 to 11%. When coupled with population growth, GDP/capita
falls from 75% of the national average to less than 60%. Since 2000 Shaanxi has seen higher growth
rates that are equal to or above the national average as a result of China’s western development
strategy under the country’s Tenth Five-Tear Plan. From 2000 to 2005 Shaanxi’s GDP grew on
average at 11.5% per annum, increasing the GDP/capita to 63% of the national average. Among the
31 provinces, autonomous regions and independent municipalities in China, Shaanxi currently ranks
16th in terms of population size, 22nd in terms of the size of the economy and production base (as
measured by GDP and industrial production), and 26th with respect to GDP/capita 1 . Shaanxi is home
to about 2.8% to the country’s population, contributes 1.8% to its GDP, and has a land area of
206,000 sq. km. (2.1% of the nation’s total).
2. Shaanxi’s economy is limited by (i) continued dependence on primary sector production, (ii)
limited off-farm employment in rural areas, (iii) below average productivity, (iv) low levels of industrial
production and limited private sector investment, (v) low savings rates to support future investment,
(vi) limited local government revenue for service provision, (vii) markedly lower levels of urbanization
than in other areas (40% compared with 60% in eastern provinces), and (viii) export trade amounting
to only 7% of GDP (compared with 30% for PRC) and FDI inflow of 1.3% of GDP (compared with a
national average of 4%). Economic development in Shaanxi has had inadequate investment, resulting
in a rural dominated economy that lacks the capacity to generate sufficient output for export trade and
an inability to generate paid employment.
3. The higher growth rates since 2000 result from tourism expansion due to rapid domestic
tourism growth and increased infrastructure investment in Shaanxi, especially in the capital Xian. Xian
city accounts for 21% of the population but produces over 40% of the province’s GDP. The poorer
rural counties have GDP/capita less than 30% of the national average resulting in 55 of the 88
counties being classified as poverty counties. In 2004, the average annual income of Shaanxi urban
residents was CNY5,928 ($730 equivalent) while per capita income of the rural population was
CNY1,050 ($130 equivalent). Rural incomes are only 35% of the $1/day poverty criterion and
approximately 50% of the average provincial income level. Low living standards and high levels of
poverty are both a result of past natural resource degradation and also a cause for ongoing
degradation as low incomes preclude returning cultivated land to forest, reducing and then reversing
land degradation, and conserving biodiversity resources. Many countries that are classified as Poverty
Counties are located in the Qinling Mountains including Zhouzhi County where the Project is located
(at Louguantai).
4. Currently Shaanxi has a dual economy with strong economic growth limited to a narrow
geographic location and very weak growth in the wider rural landscape,. Development occurs along
the central transportation corridor that runs through Weinan, Xian, Xianyang and Baoji prefectures
and links Shaanxi with Henan and Gansu provinces. The four prefectures that comprise the corridor
account for about 63% of the Shaanxi population and nearly 75% of GDP. This corridor, which is
dominated by Xian, has GDP per capita that is 19% above the provincial average but still 23% below
the national average. Urban residents, however, have per capita income levels above the national
average. This unbalanced economic and urban development structure is addressed in the Shaanxi
11th Five-Year Plan (see Appendix 4.
5. Tourism is an increasingly important contributor to the Shaanxi economy. China currently is
the fourth largest tourism destination in the world and the largest destination for foreign visitors in
Asia. Visitation in China overall is growing at around 7% per annum with 124 million international
tourists and 1.4 billion domestic tourists in 2006. In Shaanxi Province, visitation totaled 1.06 million
international tourists and 70 million domestic tourists in 2006 and generated receipts of US $5.4
1
Which is used in this document as a proxy indicator for the standard of living and consumer purchasing power
at the provincial and sub-provincial levels.
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