Why Anhui?

    Why did the central government pick Anhui as its first pilot? And what is so special about Wanjiang City Belt?

    To answer these questions, we should take a look at Anhui's geography and history.

    When Deng Xiaoping decided to develop Shanghai's Pudong in 1990, he pointed out that Shanghai should be used as a base for the further development of the Yangtze Delta, for the river's entire middle and lower reaches. In 1992 all the cities along the river, including Wuhu, were open to the outside world. Anhui Province took the opportunity to strengthen its economic cooperation with the Yangtze Delta with a view to propelling the Wanjiang riverine development.

    So the Wanjiang region can be called a frontrunner among the western and central areas in settling industries transferred from the littoral. As a matter of fact, it is a major economic area of Central China and an immediate and convenient choice for industries from the Yangtze Delta cities that lie downstream. Anhui is the most easterly inland province; it borders the coastal provinces of Jiangsu and Zhejiang and is easily accessible by road, rail, water and air. Its production costs are low and infrastructure is advanced compared with its western and central neighbors. Moreover, it is not far from the Pearl River Delta. These conditions make Anhui an ideal choice for industry transfers.

    Historically, Anhui was one of the early provinces to embark on foreign trade when Wuhu City was opened as a treaty port in 1876. About 100 years later, the pioneering of the household contract responsibility system by Xiaogang Village set in motion China's agricultural reform, ushering in the new era of reform and opening-up. Anhui people are known for their business acumen and Anhui merchants' clout once extended across China and beyond. Posterboys for today's Anhui businesses are Nian Guangjiu and Chery. Nian was one of the first private entrepreneurs in New China, starting his business as a street vender of sunflower and melon seeds. Chery is a leading private auto manufacturer with its own brand name; its output – well over half a million vehicles a year – sells on both domestic and international markets. To be home to Chery is a badge of honor for Anhui.

    Early in 2008 President Hu Jintao visited and encouraged the province to take initiatives in accommodating industry transfers and participate in regional economic cooperation. His advice has greatly motivated the local leaders.

You Can't Come Here and Pollute!

    While researching this story, I couldn't help wonder how much choice Wanjiang City Belt actually had, and whether it could stipulate environmental preconditions for accepting transferred industries and projects.

    Chen Qiang, secretary of the CPC Chaohu Municipal Committee, gave me an answer. He emphasized that the cities of the demonstration area must reflect their local characteristics and advantages and must aim at developing new industries of strategic importance; so industrial transfers would involve necessary industrial transformation and upgrading. He said Chaohu would mainly take in six industries: new chemicals, equipment manufacturing, high and new technology, modern logistics, modern agriculture, and modern service industry. The city would welcome technology-intensive and innovative projects but refuse energy-guzzling, high-pollution, and low-yield projects.

    The Anhui Huayi Chemical Co., Ltd. is a standout example of a transfer project in Chaohu. A Shanghai-Anhui cooperative project, at a forecast investment of RMB 35 billion, the company will produce coal-based chemicals from an environmentally friendly refinery process. The first-stage construction will complete in November, after which the company can realize an annual sales income of RMB 4.5 billion and contribute a profit/tax of RMB 600 million. When the entire project completes in 2014, it should achieve annual sales of over RMB 20 billion.

    According to General Manager Hu Guowei, Huayi owns several patented technologies, and its environmental protection system is also world-advanced. For example, it has a water-sprinkled isolation passageway to handle coal dust; both of its sulfur dioxide and hydrogen sulfide discharges are lower than the 165ppm standard, and its wastewater is treated by McWong Environmental and Energy Group, which guarantees Class-One discharge. Huayi's solid waste is processed to make bricks.

    Hu Guowei said they had surveyed more than half a dozen candidate sites around China before finally plumping for Chaohu, whose deep-water wharfs, railways and expressways offer convenient transportation. Chaohu was also generous with its land offer and is relatively close both to Huayi's raw material suppliers and to its customer base. "And it's close to Shanghai, where I'm from, so I'm used to the climate," he added.

    Chaohu saw a capital influx of RMB 38.5 billion in 2010, driven by the demonstration base.