China Western Development () is an economic policy applied in Western China as part of the effort to reduce imbalances in development between China's coastal regions and its interior.

The policy covers six provinces (Gansu, Guizhou, Qinghai, Shaanxi, Sichuan and Yunnan), five autonomous regions (Guangxi, Inner Mongolia, Ningxia, Tibet and Xinjiang), and one municipality (Chongqing). Despite making up 71.4% of mainland China, this region holds only 28.8% of its population () and 19.9% of its total economic output ().China Statistical Yearbook 2016, National Bureau of Statistics of China

History In 1978, under the leadership of Deng Xiaoping, the People's Republic of China began the reform and opening up by changing from a command economy to a market economy. The coastal regions of eastern China benefited greatly from these reforms, and their economies rapidly grew. In contrast, regions in the western half of China lagged behind economically. In 1988, Deng described the strategic concept of "two overall situations," stating that while coastal areas should speed their economic development, once they reached a sufficient level of development, they should help the interior regions develop.

Jiang Zemin sought to address the regional imbalances, holding the belief that underdevelopment made the western region at risk for social discontent and foreign interference. In March 1999, he proposed a developmental strategy for the western region at the 9th National People's Congress. He would elaborate on the plan in June 1999, during which the phrase great western development was used, marking the start of the policy. In a development symposium in Xi'an that month, Jiang stated that increasing development in the western and central regions of China was a matter of political and social significance, as well as economic significance.

Premier Zhu Rongji visited the western region to gather the view of officials from Western China on the plan. Consequently, the State Planning Commission drafted an early plan for the proposal before submitting it to the Politburo Standing Committee of the Chinese Communist Party in November 1999. A Leadership Group for Western China Development (西部地区开发领导小组) was created by the State Council in January 2000, led by Zhu. The plan for western development was formally put forward during the fifth plenary session of the 15th Central Committee of the Chinese Communist Party.

For these purposes, the western region is defined as Sichuan, Gansu, Guizhou, Yunnan, Qinghai, Shaanxi, the municipality of Chongqing, Ningxia, Xinjiang, Inner Mongolia, Guangxi and Tibet.

Timeline of events 1999: the Western Development guidelines are clarified 2000: the Western Development plan begins 2001: the official website of the Western Development program is launched 2002: construction of the West-East Gas Pipeline begins 2003: the policy of "Returning Grazing Land to Grassland" comes into effect 2004: the Law on Promoting Western Development is listed on the legislative plan of the 10th National People's Congress 2005: compulsory education tuition and fees become exempt in western areas 2006: the Qinghai-Tibet railway begins operation 2007: the Ministry of Finance invests 280 billion yuan in the west to support key projects 2009: Formation of the West Triangle Economic Zone

Strategy

The main components of the strategy include the development of infrastructure (transport, hydropower plants, energy, and telecommunications), enticement of foreign investment, increased efforts on ecological protection (such as reforestation), promotion of education, and retention of talent flowing to richer provinces.

Transportation The western development bureau affiliated to the State Council released a list of 10 major projects to launch in 2008, with a combined budget of 436 billion yuan (64.12 billion U.S. dollars).

These projects included new railway lines connecting Guiyang and Guangzhou, Lanzhou and Chongqing, Kashgar and Hotan in Xinjiang; highways between Wanyuan and Dazhou in Sichuan Province, Shuikou and Duyun in Guizhou Province; airport expansion projects in Chengdu, Chongqing and Xi'an.

They also include the building of hydropower stations, coal mines, gas and oil transmission tube lines as well as public utilities projects in western regions.

The Qinghai-Tibet railway project set a milestone in Tibet's local development, connecting Tibet with central China. Prior to its completion, Tibet could not be reached by railway.

Hydraulic projects The Big Western Line is a proposal for diverting water from the upstream sections of six rivers in southwestern China to the dry areas of northern China through a system of reservoirs, tunnels and natural rivers. Some of the southwestern rivers include the Mekong, the Yarlung Tsangpo and the Salween. The Big Western Line is a possible element of the South–North Water Transfer Project.Craig Simmons. "Solving the Entire Chinese Water Crisis ", The Atlanta Journal-Constitution via The Progress Report. Retrieved on 2008-06-29. The project was one of the most controversial proposals .

Hydropower

As part of the program, China's five large state-owned hydropower companies planned, underwrote, and built the majority of dams on the Lancang River and its tributaries.

Taxation Foreign-invested enterprises in the west region operating in specified industries received a preferential corporate income tax rate of 15% as well as 50% for three years after graduating from the basic tax holiday. Foreign enterprises in transportation, electricity, water conservancy, mail services, and broadcasting had a full tax exemption for 2 years and 50% tax relief for an additional three years afterwards.

Effects

Economic developments

China's attempts to develop its western regions have had varied effects on the West's economic development. While massive investment has been accompanied by a boost in GDP across all western regions, the broader policy has failed to achieve its goal of eliminating the economic gap between China's East and West.

Initiatives encouraging Chinese from wealthier and more crowded regions of China to move to the less crowded western regions has resulted in population growth in several cities, most notably Qinghai with its increase of 12.6%.Goodman, David S. G.. “The Campaign to ‘Open Up the West’: National, Provincial-level and Local Perspectives.” China's Campaign to “Open Up the West”: National, Provincial-level and Local Perspectives. Ed. David S.G. Goodman. Cambridge: Cambridge University Press, 2004. 8-9.

Nevertheless, the economic growth rate of China's East continues to exceed that of the West, causing the western share of domestic product to continue to fall. The West's contribution to the GDP decreased from 20.88% in 1990 to 17.13% in 2000.Gu Chaolin, ShenJianfa, and Yu Taofang. “Urban and Regional Development.” Developing China's West: A critical Path to Balanced National Development. Ed. Y.M. Yeung and ShenJianfa. Hong Kong: The Chinese University Press, 2007. 182. Relative levels of GDP per capita in the West decreased from 73.30% in 1990 to 60.87% in 2000.Gu Chaolin, ShenJianfa, and Yu Taofang. “Urban and Regional Development.” Developing China's West: A critical Path to Balanced National Development. Ed. Y.M. Yeung and ShenJianfa. Hong Kong: The Chinese University Press, 2004.185. In 1990, Shanghai's per capita GDP was 7.3 times that of Guizhou, the poorest province in China; by 2000, the figure had grown to 12.9 times.Yeung, Y.M. “Introduction.” Developing China's West: A critical Path to Balanced National Development. Ed. Y.M. Yeung and ShenJianfa. Hong Kong: The Chinese University Press, 2004.15. Evidence from the China Statistical Yearbook also confirms the increasing economic gap between China's West and East, indicating that the east-to-west GDP ratio increased from 2.98 in 1980 to 4.33 in 2000.

Xi Jinping's Belt and Road Initiative built upon the strategies of Jiang's Western development efforts.

Foreign investment

Since the introduction of economic reform and open-door policy in 1978, the western region has been in a disadvantageous economic position because it promises a less lucrative return to the investors than its eastern competitors. Therefore, one of the major objectives of the Open Up the West initiative was to bring in foreign investment by creating a more stable investing environment through infrastructure construction. This was a success for the western development project at some level, for statistics shows a substantial growth in foreign investment in the western regions, from US$1,837.35 million in 1999 to $1,922.19 million in 2001. However, not all areas in the western region shared in this progress. While foreign direct investment in Chongqing grew US$17.56 million between 1999 and 2001 (from US$238.93 million to $256.49 million), foreign investment in Guizhou, Guangxi and Ningxi declined significantly, dropping about US$19.71, $250.96 million, and $34.54 million respectively.Fan Jie. “Western Development Policy: Changes, Effects and Evaluation.” Developing China's West: A critical Path to Balanced National Development. Ed. Y.M. Yeung and ShenJianfa. Hong Kong: The Chinese University Press, 2004.100.

The situation in Guizhou reveals a particularly pernicious effect of the Western Development Program. Despite the fact that Guizhou received 53.3 billion yuan in infrastructure construction in 2001 alone, more than the total amount given by the Ninth Five-Year Plan (1995–2000), its foreign capital declined from US$40.9 million in 1999 to $29.29 million in 2001, an astonishing 31% decline, reaching its lowest point since 1997. Contrary to what the state had intended, the West-East Electricity Transfer Project in Guizhou only assured the continued increase in foreign investment on the coast, as most of the electricity generated in Guizhou was transmitted to Guangdong.

Tim Oakes, associate professor of geography at the University of Colorado at Boulder, argues that the decline of foreign investment in certain western regions is a consequence of Beijing's attempt to recentralize the province's economy through mega-projects such as Guizhou's west–east electricity transfer project.Oakes, Tim. “Building a Southern Dynamo: Guizhou and State Power.” China's Campaign to “Open Up the West”: National, Provincial-level and Local Perspectives. Ed. David S.G. Goodman. Cambridge: Cambridge University Press, 2004. 173. The strengthening of central control over the economy has eroded the trust of foreign investors. In the case of Guizhou, while the Chinese central government intended to attract foreign investment in the power sector through the West-East Electricity Transfer Project, only 5% of foreign investment entered the energy sector. About 75% of Guizhou's foreign investment was channeled into manufacturing and 15% to real estate development.Oakes, Tim. “Building a Southern Dynamo: Guizhou and State Power.” China's Campaign to “Open Up the West”: National, Provincial-level and Local Perspectives. Ed. David S.G. Goodman. Cambridge: Cambridge University Press, 2004. 169. Because the campaign's economic program is strongly central planned, the campaign has actually discouraged foreign investment, working against its original intent.

Environmental protection