Last Sunday, 13 provincial-level regions in China released economic growth rates, with Chongqing Municipality leading in economic growth. The Southwestern region's economy grew by 10.7 percent year-on-year. It was followed by Northern Tianjin Municipality (9 percent), Central Hubei Province (8 percent), and Hunan Province (8 percent), according to media reports.
Drivers of Economic Expansion
According to a report by the Global Times, a major factor behind Chongqing's success was its rapid development of many industries from other provinces since 2008. Niu Li, Director of the Macroeconomic Research Office at the State Information Center, says that crucial sectors such as electronics and vehicles, became a key driving force fueling the city's growth.
"Other provinces in Southeast China are employing similar fast industrial transformation methods and nurturing new driving forces," says Niu.
Experts are particularly impressed that Chongqing has led the country in economic development in the past 11 quarters. In the last year, the restructuring of various industries has helped fuel China's economic growth and the efforts of local governments such as Chongqing have greatly contributed.
Continuing the Trend
The success of Chongqing has inspired other provinces to focus on reforming State-Owned Enterprises (SOEs). Provinces such as Qinghai, and Shanghai are following suit and will intensify their efforts in 2017. For Wang Danqing, partner at Beijing-based consultancy ACG, SOE Reform has been a core task and challenge for the provinces.
"Many resources can be introduced into the market via SOE reform to release dividends, which will become a driving force for the next round of China's economic growth."
Last year, China intensified its efforts in cutting industrial overcapacity and 2017 will look no different, as the country will also enhance support supply-side reform. However, Wang notes that various regions will employ different strategies to achieve economic development this year.
Take Eastern China, for instance. Cities are enhancing their industrial structure and eliminating outdated capacity. This strategy will be important in optimizing growth in crucial industries.
Experts are closely watching these new developments as local governments chart their own course toward economic growth.