Qitaihe: A Coal-powered City

By XU JING, YU JIE & XIA MINGQUN

Qitaihe will expand from mining to coal deep processing and iron and steel production within a period of ten years.

QITAIHE is such a small city in Heilongjiang Province that we had few expectations of our recent visit there. But upon arrival, we were surprised to discover the local citizens' enthusiastic and thoughtful industrial and ecological development of the area.

Coal and Coke Bring Prosperity

Qitaihe began its development when mining started in 1958, and in 1983 it was designated a prefectural-level city. However, human activity in the area dates back much earlier. In 1986, 3,000-year-old stone tools, including spears and knives, were unearthed along with wooly mammoth fossils. Also, during the Shang and Zhou dynasties, Qitaihe was home to an ancestral tribe of the Manchus.

Since 1958, Qitaihe has provided 300 million tons of coal to China's power, and iron and steel industries. Its coalfield extends 180 kilometers across and 45 kilometers lengthwise, totaling 8,000 square kilometers and has proven reserves of 4.2 billion tons of mainly coking coal. It is one of the three coking coal bases in China and the only one in northeast Asia. The Chinese Ministry of Land and Resources has listed it as one of the "Three Large and Rare Coalfields for Protective Exploitation."

Qitaihe's coal has good qualities - high in calorific value, ash fusibility and chemical activity and very low in phosphor and sulfur. This means the coal is ideal for the production of high-quality steel and coal chemicals, not to mention power generation. Gao Zhijie, secretary of the Qitaihe Municipal Committee of the CPC, is well aware of the city's advantages and its special position in the revitalization of Northeast China's economy. "China's rapid economic development generates a high demand for electric power and steel, which promises great opportunities for a coal city like Qitaihe, " he says. Statistics show that coal generates 70 percent of all power in China, compared with the 30 percent provided by hydroelectric and nuclear power generation. Coking coal is the raw material for the production of coke, which is the fuel needed for tempering fine quality steel. Qitaihe's coal not only sells well to large iron and steel works in China, but is also exported to Brazil, North Korea, Japan, Argentina and India. Steel companies from Japan and South Korea have recently made several visits to Qitaihe several times to talk about coke cooperation projects and coke supply. "We are confident of establishing Qitaihe as a high-quality coking coal and coke base and an energy source in the revitalization of Northeast China's economy," says Gao Zhijie.

Operation Mechanism Leads the Way

In 1986, wooly mammoth fossils were unearthed in Qitaihe.

After years of reform and opening, Qitaihe's growth speed now positions at the upper middle level among the 260 prefectural-level cities in China. In 2003, its GDP was close to 8 billion yuan, per capita GDP 9,100 yuan, and revenues 550 million yuan. Over the past four years its GDP growth rate has escalated from 5.2 percent in 2000, to 8.5 percent in 2001, to 11.5 percent in 2002, and to 12 percent in 2003.

Gao Zhijie attributes the rapid development of the city to the reform of its property rights system. Of Heilongjiang's 13 prefectural-level cities, Qitaihe is the first to reform its 220 state-owned enterprises and transform them into mixed ownership, allowing for the quick development of non-state-owned enterprises and the market economy. In 2000, non-state-owned enterprises in Qitaihe operated at a low level, the biggest having an annual sales income of no more than 50 million yuan. But by 2003, five of them emerged with their annual sales income exceeding 100 million yuan. "This shows that non-state-owned enterprises have a natural affinity with the market economy, and our property rights reform is of great benefit to the local economic development," states Gao Zhijie.

To facilitate the development of non-state-owned enterprises, the municipal government has changed its function from administration to service, and it now works to provide a congenial environment for enterprises to grow. As a result, more and more investors have come to this small city. In 2003, 2.9 billion yuan of investment materialized in Qitaihe, including 34 projects whose investment exceeded 10 million yuan, and eight projects whose investment exceeded 100 million yuan.

The reform has propelled quick development of non-coal industries. A good example is the Double Leaves Furniture Industry Company. In 1995, Double Leaves was only a furniture workshop valued at 700,000 yuan. In 1997 it was reorganized into its present form. In the following years, the company quickly grew into one of top ten furniture producers in China, and its assets increased 100 times. In 2003, its sales income exceeded 100 million yuan, and its products are now exported to EU countries, Russia and Southeast Asian countries.

Qitaihe's non-state-owned economy accounts for 70 percent of the total. This rate is the highest among the 13 prefectural-level cities in Heilongjiang Province. Non-state-owned enterprises contribute 70 percent to the city's employment and 60 percent to its tax revenue. They are the support and backbone of Qitaihe's economy.

Advantageous Regional Position

The city exports coke to Brazil, North Korea, Japan, Argentina and India.

According to Gao Zhijie, Qitaihe also has an advantageous position in regional economic development, apart from its rich resources for coke and healthy development of non-state-owned economy. He points to a provincial map, showing the six cities in eastern Heilongjiang: Mudanjiang, Jixi, Qitaihe, Shuangyashan, Jiamusi and Hegang. Qitaihe is at the center of this cluster of cities. It is connected to the rest of the country by a well-developed highway system. Although it has no airport, it is only a two-hour drive from Mudanjiang Airport, one hour and 20 minutes from Jiamusi Airport and 45 minutes from the feeder line airport in Jixi, which operates flights to Beijing. "We go for easy accessibility rather than actual possession of such facilities, which are good conditions for economic development," says Gao Zhijie. In addition, there are 13 counties and seven state farms around Qitaihe, providing large space for its economic development. Many investors are actually lured by Qitaihe's good position in the region.

In order to maximize its good position, the municipal government has worked conscientiously to enhance its investment environment and create a "relaxed, secure and civilized" operational atmosphere for enterprises. It is the first city in Heilongjiang to put government departments under the supervision of the Municipal People's Congress and People's Political Consultative Conference.

Economic Development Strategy

Within the framework of the economic revitalization of Northeast China, the municipal government has worked out a strategy for Qitaihe's economic development. As a first step, within 10 years it will increase its annual production capacity of raw coal from 20 million tons in 2003 to 40 million tons, its coal washing capacity to 30 million tons, coke production capacity to 10 million tons, electricity installed capacity to 3 million kw, and iron and steel production capacity to 3 million tons. Gao Zhijie describes the idea as "sitting on the coal hill to temper coke, and sitting on the coke hill to temper steel." Second, it will extend the production of coal byproducts and concentrate on coal-gas transformation and coal tar deep processing, with the aim of developing coal chemicals into a dominant industry. Third, it will speed up the integration of mining, coal washing, coking, coal chemicals, iron and steel, with coal-powered electricity generation so as to form billion-yuan industrial conglomerations. The ultimate aim of these three steps is to upgrade Qitaihe from a raw coal producer to a coal product producer. Under this development strategy, the municipal government hopes to quadruple its GDP by 2014 and realize a per capita GDP of US $5,000 by 2020. "We are confident of maintaining the growth momentum and quality of the local economy so as to benefit the people," says Gao Zhijie.

Green Land and Water

Gao Zhijie (first left), secretary of the Qitaihe Municipal CPC Committee, accompanies his provincial counterpart Song Fatang (third right) on a visit to the Xinyuan Coking Plant.

A coal city is not normally associated with greenness, but Qitaihe is a green city: hills are covered by lush vegetation, lakes are blue and rivers clear. "The greatest advantage of Qitaihe is making the best of its ecological environment and maintaining and improving its original ecological beauty," says Gao Zhijie.

Over the past few years, the municipal government has continued with its "Green Waters and Blue Sky" projects. It has invested over four billion yuan in municipal construction, gardening, and preservation of its forests. Inside the city, one can see modern residential areas checkered by main roads 60 meters wide. Turning away from the city proper, one is soon embraced in an expanse of nature. Qitaihe aims to join the ranks of Chinese garden cities within three years.

"We cannot rely on coal forever as it will eventually be used up," says Gao Zhijie. "But beautiful rivers, lakes and hills are nature's blessing. If well protected, they can be a tourism resource and an inexhaustible source of wealth as well as a beautiful place for local people to live."