Download Analysis of the Economic Policy and the Tendency of Industrial

Analysis of the Economic Policy and the Tendency of
Industrial Structure Changes in Inner Mongolia
Charng Kao
(Research Member of Current Situation Research
Dept., MTAC, Director and Professor of the
Graduate School of Public Administration,
National Dong Hwa University)
Jing-min Yang
(Master student, Chungsan Institute,
National Chengchi University)
Abstract
The aims of this paper are to study the tendency and traits of economic structure
changes in Inner Mongolian Autonomous Region, and to analyze the role of Chinese
economic development policy and its influence on Inner Mongolian economic
development.
Inner Mongolia has well-developed agriculture and livestock
husbandry, which make Inner Mongolia become an important production base for
grains, oil, sugar and livestock in China. In view of its industrial structure changes
in the past five decades, manufacturing industry puts its focus on energy and raw
materials industries, and the achievement of industrialization is not obvious. In
addition, the development of service industries is comparatively backward.
In
substance, the economic development and industrial structure changes in Inner
Mongolia have always been affected by the strategy of regional economic
development formulated in Beijing; therefore Inner Mongolia lacks its autonomous
stand in industrial development.
adjustment in industries.
This has resulted in an unconventional structural
The inconsistency of industrial development, therefore,
becomes the largest feature of the economic development in Inner Mongolia.
Key words: Inner
Mongolian
Autonomous
Region,
Structure, Economic Development Policy
Industrial
I. Introduction
Inner Mongolian Autonomous Region covers an area of 1,180,000 square
kilometers with the population of 24,000,000 and is located on the backside of
North-east Economic Zone and Pan Bohai Bay Economic Zone, adjoining
Heilongjiang, Jilin, and Liaoning provinces in the northeast, Ningxia and Gansu to its
west, Hebei, Shanxi and Shaanxi provinces in the south, and bordering Mongolia and
the Federation of Russia to the north. It is a resourceful land with dense forests and
wide prairies, and there is an abundance of wild fauna and flora and minerals. It has
the reputation of “forests in the East, iron
in the West, farming in the South, animal husbandry in the North, and coal
everywhere.”
As for the economic development, Inner Mongolian Autonomous Region has
well-developed agriculture and livestock husbandry, which makes it an important
production base for grains, oil, sugar and livestock in China. Inner Mongolia is among
the top five grazing lands of China with comprehensive production capacity in the
lead. Since the establishment of the autonomous region, Inner Mongolia has set up its
initial industrial structure mainly consisting of energy and raw materials industries.
Metallurgical industry, mechanical industry, energy industry, building materials
industry, forest industry, electronic industry, textile industry, food industry and
chemical industry all play important roles in the manufacturing industry of Mainland
China. As far as service industries are concerned, in recent years, the percentage of
service industries in GDP of Inner Mongolia has been increasing. Commerce,
transportation, post and communication industries and financing & insurance industry
are still key industries. Other industries, for example, real estate and social services
industries are still small in scale.
The aims of this paper are to study the tendency and traits of economic structure
changes in Inner Mongolian Autonomous Region, and to analyze the role of Chinese
economic development policy and its influence on Inner Mongolian economic
development. With the introduction and conclusion, this paper begins by a review of
the tendency and traits of economic structure changes in Inner Mongolian
Autonomous Region, and then explores the economic development policy in Inner
Mongolian Autonomous Region. What follows is the analysis of certain issues in
current economic structure in Inner Mongolian Autonomous Region. Finally, it
analyzes the role of national economic development policy and its influence on Inner
Mongolian economic development.
II. Economic Development Policy and Characteristics of Industrial
Structure
1. Economic Development Policy
After its establishment in 1947, Inner Mongolian Autonomous Region in
accordance with the State’s national policy had actively promoted the autonomy in
ethnic minority region from 1947 to 1951. It sought to stabilize prices of commodities
and readjust commerce, tried to revive and develop agriculture and livestock
husbandry with great effort, and actively developed other economies and culture,
education and health care. With these measures, the economy of Inner Mongolian
Autonomous Region regained its vigor and continued to develop. However, compared
with the time before the establishment of the Autonomous Region, the characteristics
of the industrial structure did not change too much.
From 1952 to 1957, Inner Mongolian Autonomous Region implemented the first
Five-Year Plan in line with the country’s policy. The plan followed the general line of
the country during this transition stage and accomplished various developments in the
Autonomous Region, especially local industries. Meanwhile, agriculture, livestock
husbandry, handicraft industry, capitalist industry and commerce were reformed in a
socialist way. Agriculture and livestock husbandry based on cooperation were
developed to support the construction of national socialist industrialization, especially
the construction of Baotou Industrial Base. Local industry, forestry, transportation,
postal and communication services, commerce, education, health care and culture
were actively developed according the blueprint.
From 1958 to 1965, after the Great Leap and the subsequent economic
adjustment processes”, under the policy guideline of “priority over national heavy
industry, Inner Mongolian Autonomous Region developed iron and steel,
metallurgical industry, electricity, coal, forest industry, machinery and textile industry
as key industries, developed agriculture and livestock husbandry to support the
development of industrial system and made Inner Mongolian Autonomous Region an
important production base for energy and raw materials in China. In addition, the
central government strengthened the economic base of Inner Mongolian Autonomous
Region by steadily developing industry, agriculture and livestock husbandry
according to ethnic and regional characteristics.
In 1966, the Cultural Revolution broke out. The turbulence did not end until
1976. During this period, the development of national economy in Inner Mongolian
Autonomous Region was discontinued and the economic constructions were seriously
damaged. The over-development of agriculture and livestock husbandry deteriorated
the ecological environment. The industrial policy was tilted toward heavy industries
to a greater extent.
Since 1978, drastic changes in the industry development policy of Inner
Mongolian Autonomous Region occurred. Under the reform and liberalization policy,
the focus of the policy shifted. The government no longer tilted emphasis on the
development of heavy industries but resorted to the economic development policy of
“forestry and livestock husbandry come first and diversify economic management.”
The contents of this policy are the followings. Inner Mongolian government drew up
different economic development strategies in light of the natural resources and
advantages in each area. Apart from a couple of medium-sized cities, the Autonomous
Region was divided into five economic categories to guide economic activities. The
first category was agro-pastoral economy. The main activity was cultivating pasture
and fodder crops. Agriculture provided the base for livestock husbandry, and livestock
husbandry advanced agriculture. Agriculture and livestock husbandry were combined
and brought diversified economic management, which formed a virtuous circle for
agro-pastoral economy. The second category was husbandry economy. Resources in
pastures were protected, constructed and used to gradually practice livestock
husbandry in scientific way. The third category was forestry-pastoral economy based
on forest and husbandry and managed in diversified ways. The fourth category was
small town economy. Enterprises in small towns and third industries were developed
with great exertion. Economic exchanges between urban and rural areas were
conducted. The fifth category was urban-rural economy. Various raw materials and
primary processing industries were developed to meet the demand of the market.
In August, 1995, the second meeting of the Sixth congress of Inner Mongolian
Party Committee summarized the experiences of Inner Mongolian economic
development after the reform and established “five strategies” for social economic
development in Inner Mongolian. These were: (a) to make changes in resources
transformation patterns; (b) to open up to the world and drive the economic
development; (c) to establish science education zone; (d) to develop human resources;
(f) to promote local brands. The first strategy of resources transformation is the
guideline for the changes of industrial structure in Inner Mongolian. It is to change
gradually the self-contained transformation pattern of raw resources into an open
integrated transformation pattern. The concrete key points are as follows:
(A) Integrated development of pastoral resources: changing from extensive operation
to intensive operation in agro-pastoral industry, from natural agriculture and
husbandry to constructive one, from conventional pattern of production to modern
pattern of production, from self-sufficient and raw materials selling status to
out-oriented and value-added processing pattern, from quantity of productions
demand to quality improvement.
(B) The adjustment and upgrading of industrial economic structure allow the
industrial structure to adjust to the regular pattern of economic development.
Gradually, key industries, such as energy industry based on coal and electricity,
metallurgical industry based on steel and iron, light industry based on the
processing of villus and skin, medicine and food, mechanical and electronics
industry based on heavy-duty trucks and television receivers, and superior
industries, such as building materials industry based on cement, stones, decoration
materials and ceramics and chemical industry based on petrochemical, coal
chemical, alkali chemical industry and oil chemical form an industry cluster with
local characteristics.1
Table 1 The Tendency of Industrial Structure Changes in Inner Mongolia over
the Years
Unit: %
The Percentage of Production
Value by Industry
1947
1978
1980
1985
1990
1995
2000
2002
Percentages of the Numbers of
Employees
First
Industries
Second
Industries
Third
Industries
First
industries
Second
Industries
Third
Industries
77
33
26
33
35
31
25
21
7
45
47
35
32
38
40
42
16
22
27
32
33
31
35
36
88
67
66
61
56
52
52
52
4
19
19
20
22
22
17
17
8
14
15
19
22
26
31
31
Source: Inner Mongolia Statistical Yearbook over the years
2. Characteristics of the Industrial Structure
When Inner Mongolian Autonomous Region was just established, due to
historical, geographical and social factors, its production capacity was extremely low.
At that time, first industries constituted the major part of the national economy
structure and social economy was in the stage of natural economic development
After thirty years of development and under the impacts of Beijing’s
development policy on heavy industries, Inner Mongolian national economy and the
1
Industry cluster is the cluster of satellite factories, which are set up around a core enterprise in the same area.
With globalization, enterprises operate to suit local circumstances so as to promote division of labor and
enterprise integration. Such a trend is more and more popular.
industrial structure have undergone dramatic changes. According to Table 1,
compared to 1947, the percentage of first industries in Inner Mongolian GDP dropped
in 1978 at a considerable rate. The percentage of second industries rose significantly,
exceeded first industries and became the lead of all industries. The industrial system
based on heavy industries, such as coal industry, metallurgical industry and machinery
industry was established. The development of social economy was heading toward
industrialization from natural economy.
After the reform, significant changes in the industrial structure appeared again,
especially the rising percentage of service industries. According to Table 1, if we
compare 2002 and 1978, we can see that the percentage of the production value of
service industries in the industrial structure increased 14% (from 22% to 36%).
Service industries then played a key part in the industrial structure. In addition, the
percentage of the number of employed persons in primary industries in the total
number of employed persons decreased 15% while the percentage of the number of
employed persons in service industries increased 17%. Statistics show that the labor
forces of agriculture in Inner Mongolia transferred to non-agricultural sectors,
especially to service industries.
A. The Structure and Characteristics of First Industries
Before the reform, under the guideline of “emphasis on grain-oriented
industries,” in Inner Mongolian Autonomous Region, most capital and labor forces
were used in the production of grain. Due to the overemphasis on planting industry
and the production of grain, forestry, livestock husbandry and fishery were neglected,
which limited the development of secondary industries and service industries. As a
result, the industrial structure and the structure of agricultural sectors and products in
rural areas lacked diversity. At the same time, the over-cultivation and deforestation
were responsible for the desertification and soil and water losses. The ecological
environment in rural areas continued to deteriorate and the natural agricultural
resources were spoiled in Inner Mongolia. The conservation of ecology and the
economic development were caught in a vicious circle.
After the reform, Inner Mongolian Autonomous Region proposed the guideline
of “forestry and livestock husbandry come first and diversify economic management.”
The government strived to adjust the structures of the economy and agricultural
products in rural areas, to continually increase the percentage of husbandry, forestry
and fishery in agriculture productions, to develop products with special features,
green products, high quality products and branded products, and to upgrade and
optimize the industry. In addition to developing first industries, Inner Mongolia was
also dedicated to expanding second and third industries to make the best use of the
labor forces left from the first industries. Up to then, the structure of first industries in
the Autonomous Region had undergone apparent changes.
From 1978 to 2001, Inner Mongolia improved its structure of first industries.
The statistics in Table 2 indicate that agriculture was not the only focus. Instead,
agriculture, livestock husbandry, forestry and fishery got fully developed. However,
the industrial structure and the structure of the products in first industries still left
room for improvement. The competitiveness of most agriculture by-products on the
market was not strong enough. The deterioration of agricultural ecology, poor
production conditions in agriculture and the lack of financial and technical resources
would continue to impede the development of primary industries in Inner Mongolia.
Table 2 The Tendency of Industrial Structure Changes of First Industries in
Inner Mongolia over the Years
Unit: million US$; %
Year
1952
1978
1980
1985
1990
1995
2000
2001
Production
Value of
Primary
Industries
1206 (100)
2835 (100)
3068 (100)
7320 (100)
15692 (100)
37359 (100)
54316 (100)
55590 (100)
Production Production
Value of
Value of
Agriculture Forestry
966 (80.1)
1880(66.3)
1974(64.3)
4656(63.6)
10313(65.7)
23117(61.9)
30836(56.8)
30757(55.3)
8(0.7)
105(3.7)
135(4.4)
483(6.6)
623(4.0)
1212(3.3)
2361(4.3)
2607(4.7)
Production
Production
Value of
Value of
Livestock
Fishery
Husbandry
229(19.0)
2(0.2)
842(29.7)
8(0.3)
952(31.0)
8(0.3)
2140(29.2)
40(0.6)
4641(29.6)
115(0.7)
12716(34.0)
314(0.8)
20546(37.8)
573(1.1)
21624(38.9)
602(1.1)
Source: Inner Mongolia Statistical Yearbook over the years
B. The Structure and Characteristics of Second Industries
Before the reform, Inner Mongolia’s light industry, such as wood products, dairy
products, leather and fur, bricks and tiles, textiles, clothing, printing and oil and food
processing have been developed on the foundation of previous achievements of its
industry. Meanwhile, with the support of State policy, Inner Mongolia made efforts to
develop resources-oriented heavy industry such as, metallurgical, chemical,
mechanical, coal and electricity industries. Major industrial locations were as follows:
Bai-Yun Oboo Iron Mine is in the west where the Baotou Iron and Steel Cooperative
Industrial Base, coordinating with heavy industry such as, coal, electricity,
construction, chemical engineering, nonferrous metals refining and machinery
industries, and with light industry such as cotton spinning, sugar and food industries
was set up. In Hohhot, there were wool textiles and machinery industries. In Bo-hai
Bay, there was a chemical industry. Lake salt industry was established in Lantai. In
the east, with the forest resources of Daxinganling, the forest industrial base centered
on Yakeshi was set up. Linked industries, such as the processing of wood,
manufacturing of wood products and chemical industry were also established.
After the reform, Inner Mongolia implemented economic responsibility system,
expanded enterprises’ right of autonomy, and encouraged collective and individual
economy development. The government also attracted foreign investments, advanced
techniques and equipment and adjusted industrial structure to increase efficiency.
With all these reforms, industrial structure of Inner Mongolia has a new face. The
statistics in Table 3 show that under the influences of the industry policy of State and
the advantages of regional resources, the ratio of light and heavy industries in Inner
Mongolia did not change obviously after the reform. Nevertheless, heavy industry still
played dominant role in the industrial structure. In terms of ownership, before the
reform, state-owned and state controlled enterprises accounted for the largest part in
the industrial structure in Inner Mongolia. In the early stage of the reform, with the
encouragement of the State policy, collective enterprises still played a significant role.
Up to now, over 50% of the enterprises in Inner Mongolia are still state-owned
enterprises, but the percentage is dropping year by year. In contrast, the percentages of
individual enterprises and other economic types are increasing.
Table 3 The Tendency of Industrial Structure Changes of Second Industries in
Inner Mongolia over the Years
Unit: million US$; (%)
Total
Year
Production
Value of
Industries
Light/Heavy Industry
Classification by Ownership
State-owned
Light
Heavy
and State
Collective
Individual
Other Types
Industry
Industry
Controlled
Enterprises
Enterprises
of Enterprise
Enterprises
1952
1.63(100)
1.06(65)
0.57(35)
0.91(55.8)
0.01(0.6)
0.71(43.6)
0(0)
1978
52.96(100)
22.05(42)
30.91(58)
40.89(77.2)
10.78(20.4)
0(0)
0(0)
1980
59.39(100)
24.58(41)
34.81(59)
46.23(77.8)
13.13(22.1)
0.02(0.1)
0.01(0)
1985
112.93(100)
45.78(41)
67.15(59)
91.86(81.3)
20.38(18.0)
0.65(0.6)
0.04(0.1)
1990
263.33(100) 108.51(41) 154.82(59)
193.14(73.3)
57.69(21.9)
11.55(4.4)
0.94(0.4)
1995
678.87(100) 233.96(34) 444.92(66)
422.47(62.2)
131.55(19.4)
69.20(10.2)
55.66(8.2)
2000 1266.11(100) 488.69(39) 777.42(61)
670.44(53.0)
69.09(5.4)
258.20(20.4)
268.39(21.2)
2001 1401.73(100) 558.48(40) 843.25(60)
717.05(51.2)
56.10(4.0)
280.79(20.0)
347.79(24.8)
Source: Inner Mongolia Statistical Yearbook over the years
C. The Structure and Characteristics of Third Industries
The statistics show that third industries were only account for 22% of Inner
Mongolian GDP in 1978. After more than twenty years of reform, its percentage rose
14% and up to 36% in 2002. Its growth rate exceeded 4% of the average in the
national level. The third industries also recruited a significant number of labor
forces in Inner Mongolia. The number of employees in third industries raised from
297,000 in 1978 to 2,906,000 in 2002, which constituted 31%, a growth from 14%, of
labors in Inner Mongolia.
Table 4 Industrial Structure Changes of Third Industries in Inner Mongolia over
the Years
Unit: %
Industries
Total
Agriculture, Forestry, Livestock
Husbandry and Fishery Services
Geological Survey and Water
conservancy
Transportation, Storage, Postal and
Communication Industries
Wholesale, Retail Trade and Food
Services
Financing & Insurance Industry
Real Estate
Social Services
Health Care, Sports and Social Welfare
Education, Culture and Art and Radio,
Film and Television
Scientific Research and Polytechnic
Services
Government Agencies, Party Agencies
and Social Organizations
Other Industries
1996 1997 1998 1999 2000 2001
100.0 100.0 100.0 100.0 100.0 100.0
0.6
0.8
0.8
0.8
0.8
0.8
1.4
1.3
1.2
1.2
1.1
1.0
17.1 16.5 16.4 16.5 18.1 18.0
27.2 26.7 26.1 25.6 24.5 23.9
19.7 19.7 18.6 17.9 17.4 16.8
5.6 5.5 5.8 5.6 5.7 5.7
8.4 9.4 10.5 10.7 10.9 11.6
2.8 2.7 2.7 2.7 2.8 3.0
6.6
6.8
7.2
7.8
8.0
8.4
1.7
1.9
1.9
2.1
2.1
2.1
7.9
7.7
7.8
8.1
7.9
7.8
1.0
1.0
1.0
1.0
0.9
0.9
Source: Inner Mongolia Statistical Yearbook over the years
According to Table 4, transportation, storage, postal and communication
industries, wholesale, retail trade and food services and the rapidly developed
financing & insurance industry in recent years made up a major part in service
industries in Inner Mongolia. In 2001, these three categories accounted for nearly
60% of service industries. The development of other industries was relatively slow.
Among them, the development of tourism with advantages of Mongolian natural
resource, and the developments of agriculture, forestry, livestock husbandry and
fishery services, real estate, scientific research and polytechnic services are still far
behind.
As for transportation, storage, postal and communication industries, due to the
vast territory of Inner Mongolia, infrastructure per unit area was little. As a
consequence, the development of transportation, postal and communication industries
was rather slow, which severely limited Inner Mongolia’s chance to upgrade and
advance its industrial structure. Since the reform, the development of financing &
insurance industry in Inner Mongolia has been full of vitality. However, saving and
loan are responsible for most activities in this industry. The developments of financial
products like bonds and stocks are so slow that influence the circulation of funds and
the benefits of funds. As to culture, education, and health care are concerned, Inner
Mongolia is still a backward area. Numbers of college students are few. Illiteracy
rate in Inner Mongolia is high. These disadvantages deprive Inner Mongolia of the
chances to develop high and new technique industries.
III. Policy of Industrial Development
Since it was founded in 1947, Inner Mongolian Autonomous Region has
established from natural economy, which lacked a sound industrial base and focused
on the peasant economy and livestock husbandry economy to an integrated industrial
system. In view of production value, the percentage of second and third industries has
exceeded that of agriculture by a large margin. However, as stated in previous
discussion, there is still a long way to go before the industrial structure in Inner
Mongolian Autonomous Region meets the standard of a modern society, especially
when compared with the industrial structure of coastal provinces and cities in
Mainland China.
In June 2003, Inner Mongolia announced, ” The Outline of the Tenth Five-Year
National Economic and Social Development Plan in Inner Mongolian Autonomous
Region.” Plans on the adjustment of the industrial structure include: to promote
agriculture and livestock husbandry and the adjustment of economic structure in rural
and pastoral areas; to expedite the speed of restructuring and reconstructing industries
and upgrading the structure; to develop new and high technique industries with full
exertion; to accelerate the speed of developing service industries; to transform
resources through adjustment of structure; to upgrade industries and innovate
techniques.
The main points for implementation are as follows:
A. To Strengthen the Foundation of Agriculture and Livestock Husbandry
The government will strengthen the foundation of agriculture and livestock
husbandry and help farmers and herdsmen increase their income, give more support
and protection to agriculture and livestock husbandry and increase the infrastructure
of these industries. In addition, the government will use scientific technology to
regulate and advance agriculture and livestock husbandry and the economic structure
in rural and pastoral areas, and manufacture both extensive and intensive products.
They will increase the sources of income for farmers and herdsmen, alleviate their
burdens and insure a continuous growth of their income.
The substantial measures are as follows:
First of all, the government will accelerate the development of high quality and
specific-purpose agriculture products and green products and adjust and advance the
economic structure of plant industry. Secondly, the government will thoroughly
develop livestock husbandry, adjust and advance the economic structure of agriculture
and livestock husbandry and promote the intensification and modernization of
livestock husbandry so that the percentage of the production value in first industries
can reach 40% in 2005. Thirdly, the government will make breeding the most
important part in fishery and combine fishing and processing to elevate the
percentages of water consumption and fishery products. Fourthly, the government will
thoroughly promote the industrial management of agriculture and livestock husbandry,
adjust and advance the economic structure of agriculture and livestock husbandry,
exert the industrialization of important products, such as cashmere, milk, mutton, beef,
leather, potatoes, corn and wheat, secure and expand the advantages of cashmere,
milk and processed mutton on the nation wide market and elevate the overall
economic efficiency of agriculture and livestock husbandry.
B. To Upgrade the Industries and Improve the Industrial Structure
The government will strengthen the leading status of industries, energetically
upgrade and improve traditional industries, expedite the development of high and new
technique industries and elevate the competitive capacity of industry on the market.
During the period of the “Tenth Five-Year” (2001-2005), the average production value
of industry will increase more than 10% every year. By 2005, the percentage of
production value of industry in GDP will reach more than 35%. The percentage of
production value of high and new technique industries in the total production value of
industry should reach more than 10%.
a. To Reform and Elevate Traditional Industries
Processing industries products of agriculture and livestock husbandry should be
market-oriented. The government will thoroughly develop green products, featured
products and high value-added products based on the rich natural resources of Inner
Mongolia and cultivate and develop networks of leading industries with regional
advantages and competition advantage.
In regard to energy industries, market-oriented approach will be applied to
actively develop “coal to power,” “coal to oil” and “clean coal” on the basis of the
resources advantages of Inner Mongolia to expedite coal transformation. The
government will transform coal into power and expedite the “West-East power
transmission” project. In addition to constructing big pithead power plants, the focus
of the development will be shifted to the construction of power plants, networks, and
the expansion of electricity market.
In metallurgical industry, Baotou Iron and Steel Factory will be the base.
Backward pen-hearth steel making technique will be given up and the standard of
steel making equipment and techniques will be promoted to save energy and reduce
consumption. Heavy rails, sheet metals, high-speed wires and seamless steel tubes
will be used in Baotou Iron and Steel Factory. With regard to nonferrous metals, the
government will augment the survey of mines, develop large-scale smelting and
intensive processing and implement intensive management.
In chemical industry, high and new techniques will be introduced and high
value-added and high technique chemical products will be developed and produced.
Petrochemical industry and coal chemical industry will be actively developed based
on the leading advantage of alkali chemical industry. In machinery industry, the
advantage of military manufacturing industry will help to develop machinery industry
and elevate the overall quality of it. The government will strive to establish a
specialized national production base of heavy-duty vehicles in Baotou. In industry of
construction, the government will speedily upgrade techniques of traditional
industries, such as concrete, glass and ceramics industries and develop high-standard
large cement2; Resources such as kaolin, graphite, and stones will be used to develop
more competitive featured products, and increase types of products and enhance their
quality.
b. To Develop High and New Technique Industries with Local Characteristics
Developing high and new technique industries and sustaining the innovation
capacity of high technology are not only the goals of the adjustment and advancement
of industrial structure, but also the directions of the development of industrial
economy during the “Tenth Five-Year” period in Inner Mongolian Autonomous
Region. During the “Tenth Five-Year” period, the featured high and new technique
2
The classification of large cement and small cement is based on the new general standard of six cements.
High-standard cement is harder and has more compressive resistance. It can be used in constructing roads and
bridges, which require higher construction standard.
industries are rare-earth industry, biotechnology and new materials industry.
In rare-earth industry, professional processing of rare earth will be fully
developed. The government will optimize upstream products, develop midstream
products and conduct research and development on downstream products. They will
promote the use of rare-earth products and expand the market. Taking advantage of
local scientists’ talents in rare earth, the scientific research system will be reformed
and research and development will be upgraded. The government will also expedite
the construction of the National Engineering and Research Center of Rare-earth
Metallurgy and Functional Materials, increase investment in the construction of
National Baotou High and New Technique Industry Development Zone, and manage
to make Inner Mongolia the biggest base of scientific research, production and export
of rare earth metals in China.
In biotechnology industry, the government will use the abundant resources of
medical herbs and animal viscera in central area of Mongolia to develop Mongolian
type of medicine, biochemical medicine and microbiological engineering products. In
new material industry, the government will encourage local enterprises to cooperate
with other scientific research institutes outside the region and expedite the
development of new material in light of local characteristics and form a new industrial
cluster in the region.
c. To Expedite the Development of Service Industries
The government will expedite the development of service industries to
strategically restructure the industrial structure. Market orientation, industrialization,
socialization and urbanization will bring service industries developed. In this way,
service industries become an important path to economic growth and also bring
opportunities of employment.
As to tourism, based on regional characteristics of steppe, history, culture and
ethnic folklore, traveling routes, scenic resorts and spots can be mapped out to
optimize tourism resources. Important scenic spots, such as steppe ecological tourism
zones of Hulunbeier and Xilin Gol, the tourism zones of history and culture in Hohhot,
Baotou and Chifeng and the ethnic folklore tourism zone of the Mausoleum of
Chinggis Khan will be improved in their construction. The government will also
expedite the development of local distinctive tourism resources, such as deserts, snow,
hot springs, lakes, seas, and border views and expand the scale of tourism to make
tourism the mainstay of the development of service industries in this region.
In the aspects of business and trade, the government will further strengthen the
market for products of agriculture and livestock husbandry and construct wholesale
centers for sale of major agriculture and husbandry products. Various types of services,
such as chain operation, delivery services, multimode transport of goods and
e-commerce will be employed to enhance the quality and efficiency of traditional
service industries. In financing & insurance industry, capital market will be developed
so that the industry can be open to national and international markets. Local financing
will be developed with full exertion, and non-bank financial institutions, such as stock
companies, trust companies, finance companies and leasing companies. The
government will also expedite the agency services of accounting, auditing,
consultation, assessment, and legal affairs to elevate the overall standard of service
industries.
The government will actively develop community service industries for
residents. Industries of non-compulsory education, cultural activities, entertainment,
educational training, sports and bodybuilding activities, health care will developed
and community service industries will become sunrise industries. Step by step,
various operations will coexist. All kinds of services will enhance residents’ living
standard and form a high-quality and high-efficiency community service system.
IV. The Existing Problems in the Present Economic Structure
Since the reform, the wide-ranged and far-going reform and the market economy
growth have triggered distinct changes of the industrial structure in Inner Mongolia.
Basically, the changes benefit the ongoing growth of national economy in Inner
Mongolia. Objectively speaking, however, some problems still exist in the industrial
structure of Inner Mongolia and the problems will still restrict the future economic
development of Inner Mongolian. The following are the further analyses.
A. Unbalanced Relationships Among the Three Industrial Categories
In accordance with the development experiences of the advanced western
countries, the structure of the three industrial categories transforms from agriculture to
industry and to service industries. So far as the structure of the three industrial
categories in the developed countries is concerned, the first industries contribute little
to GDP, while second and third industries act as leading industries. More than often,
service industries contribute over half of a nation’s GDP. Based on the 2002 data in
Inner Mongolian Autonomous Region, the proportions that the three categories of
industries respectively contribute to GDP are 21:42:36. If arranging the three
categories of industries pursuant to the GDP proportions, the developed countries will
show the arrangement as 3:2:1, while Inner Mongolia 2:3:1. The excessively high
proportion in the first industries and comparably low proportions in the third
industries indicate that the relationship among three categories of industries undergoes
an unbalanced situation.
B. Unduly High Proportion in First Industries and its Weak Industrial Foundation
The ratio of first industries in contributing to Inner Mongolian GDP is higher
than the national average by over ten percent. However, the first industries are weak
in Inner Mongolian economic development due to frequent natural disasters, low
standard of techniques, backward management and the confined ability to expand and
reproduce.
C. Unreasonable Inner Structure of the Manufacturing and Ill-quality Industries
The second industries of Inner Mongolian Autonomous Region manifest an
unreasonable structure, in which the industrial development displays a phenomenon
of over-emphasized heavy industries and underdeveloped light industries. Among the
total production values of industry, those of light industries dropped from 42 % in
1978 to 40 % in 2001, while those of heavy industries rose from 58% in 1978 to 60 %
in 2001. The phenomenon that the industrial development tilted toward heavy
industry has not been improved, but worsens.
Secondly, small-scale enterprises and diffused way of industrial management in
Inner Mongolia has dragged the industrial production away from great benefits of
economy. Moreover, influenced by the conventional system and driven by the local
interests, the industrial structures in Inner Mongolia have become similar and lack
reasonable division of labor between the regions and the enterprises, among which the
light industry proves to be the worst case. The fact that the industries are small but
complete and have their own systems and similar structures not only causes low
productive efficiency, but also loses the size and sharing of the enterprises.
D. Insufficient Quantity, Unreasonable Inner Structure and Low Functions of Social
Service in Underdeveloped Third Industries
The development level of third industries serves as an important index to
measure the economic development of a modern society. According to World Bank’s
statistics, the production value of third industries accounts for over 65% of GDP in
average in high-income countries, over 50% in middle-income countries, and 42% in
low-income countries. Nevertheless, that of Inner Mongolia only accounted for 36%
in 2002, which was obviously lower than most of the countries. In the light of inner
structure of third industries, traditional third industries constitute over two thirds of
the industries, while the newly promising industries, e.g. scientific research and
comprehensive technical services, only stand on the threshold. From the angle of
social service functions of third industries, the social security system of Inner
Mongolia is not sound. The development of third industries are still in the low level in
view of their commercialization, industrialization and socialization, and are turned
into public-welfare-like institutions. The service functions of the society are mostly
shouldered by government agencies.
E. Scattered Structure of Industrial Organization and Low-level Professional
Collaboration
The annual production values of large-scale enterprises in Inner Mongolia are
around JMP$ 440 million in average, which is JMP$ 80 million less than the national
average of JMP$ 520 million; the annual production values of middle-scale
enterprises are around JMP$87 million in average, which is JMP$21 million less than
the national average of JMP$108 million; the annual production values of small-sized
enterprises are around JMP$19.94 million in average, which is JMP$5.75 million less
than the national average of JMP$25.69 million. Most of enterprises in Inner
Mongolia are small-scaled. Small wool spinning factories, leather factories, dairy
factories, wineries, building material factories and sugar refineries locate everywhere.
These “large and complete” and “small but complete” business structure has driven
large enterprises out of the large scale economy, while the small enterprises can hardly
enjoy the benefits of sharing professional labor.
On the whole, the relationship among the three industrial categories in Inner
Mongolia is discordant; the organizational structure of the industries are scattered and
the professional level is low; the foundations of agriculture and livestock husbandry
are weak, the out-of-date techniques and the low productive efficiency cannot offer
better materials for industries; the low quality of industries cannot satisfy the needs of
equipment in every sector of national economics and the needs of people in living.
The low development of third industries cannot offer sufficient services to industrial
and agricultural productions and people’s life. These economical structural problems
will limit future economic development and the industrial structural adjustment in
Inner Mongolia.
V. Conclusion
To sum up, over the fifty years, the industrial structure in Inner Mongolian
Autonomous Region has evolved from abnormal development toward normal
development and its evolutionary route resembles that of the developed countries,
which transits from first industries to second industries and then to third industries.
The proportion of both production values and labor forces of first industries to the
overall industries is sliding down over the years, while the proportion of production
values and labor forces of second industries has increased and appeared relatively
stable and the proportion of production values and labor forces of third industries are
gradually growing.
Furthermore, the shift of industrial structure of Inner Mongolia from agriculture
to industrialization closely relates to Beijing government’s policy, which actively
constructs bases for heavy industries based on the abundant mineral resources in Inner
Mongolia. The development of heavy industries has pushed the subsequent
development in infrastructure and other industries, e.g. light textile industries and
livestock products processing industries. Gradually, natural resource exploitation and
primary processing industries start playing leading roles, and form a style of industrial
distribution with various business and infrastructure structure surrounding the bases of
heavy industries.
Since the industrial development policy of Inner Mongolia focuses on energy
and raw materials, the industrial structure in Mongolia has thus been shaped into those
which supply energy and all varieties of mineral products, raw materials and all sorts
of forestry and livestock products. During the Sixth “Five-Year Plan” (1981-1985),
the Seventh “Five-Year Plan” (1986-1990) and the Eighth “Five-Year Plan”
(1991-1995), Beijing government enlarged its investment on the energy construction,
and strengthened the role of Inner Mongolia in supplying energy and raw materials
everywhere in China. Exporting energy and basic products of raw materials and
importing processing products and consumer goods become Mongolian fundamental
economic pattern-- “replacement of basic industries.”
The slack development of third industries in Inner Mongolia can be attributed to
long-term focus on industrial development but neglect of circulation of products and
transportation, emphasis on material production sectors but disregard of non-material
production sectors, and mistake measures on large charges in some service industries
and financial subsidies. Since 1980s, third industries in China have accelerated its
growth due to Beijing government’s switch of its policy on third industries and the tug
of first and second industries. So far as the employment numbers are concerned, third
industries have gradually increased and tend to replace second industries in a leading
place.
What deserves to be mentioned is that industrial structural changes in Inner
Mongolia have always been influenced by the regional economic development
strategy implemented by Beijing government. From 1953 to 1990, Mainland China
implemented two different regional development strategies. The development strategy
of first phase (1953-1978) stressed the construction of inland areas, called
Equilibrium Layout Strategy. The development of the secondary phase (1979-1990)
emphasized the expansion of coastal areas, called Ladder Step Strategy. During the
first phase, due to the monopoly on ownership and investors, national financial
investment acted as the most significant means to implement regional economic
development. Inner Mongolian Autonomous Region thus paid special attention to
heavy industries with major investment projects and the industries in this region,
especially heavy industries, began expanding rapidly. The industrial structure of this
region thereafter underwent significant changes, during which heavy industries took
the leading status.
During the second phase, the investment objects became diversified, and the
means of implementation were switched to various kinds of favorable policies,
including the authority of examination and approval on the construction items
belonged to the local administration, and taking advantage of policies on foreign
investment, tax, credit and prices. Under this condition, Inner Mongolia cannot
compete with coastal areas where have better economic and geographical conditions,
and its development thus grew much slower than that in coastal areas and so did the
transform of industrial structure. During the end of Seventh “Five-Year Plan” and the
period of Eighth “Five-Year Plan,” Beijing government’s policy slanted toward
industrial investment. Hence, more and more heavy industries were established in
Inner Mongolia and the industrial structure leant to the heavy industries. Therefore,
over fifty years, the structural transformation of Inner Mongolia has always been
influenced by Beijing’s policy in favor of overall industrial investment and been short
of its own autonomy on industrial development.
Generally speaking, in the past fifty years, the national economic development of
Inner Mongolia has certain traits and development focus at each stage. In view of the
whole process, however, the evolution of industrial structure has depended on the
State’s regional industrial policy. The industrial structural changes have been realized
in accordance with abnormal way, which leads to discordance of industrial
development. Among them, industrial development emphasizes heavy industries, e.g.
energy and raw materials, while agriculture and processing industries are still
underdeveloped. The development level of Mongolia stands on the threshold of
industrialization. In some areas, the industrial development still lingers at the phase of
agricultural production. The inconsistent industrial development manifests the most
distinct characteristics of Inner Mongolian economic development.
(The article was discussed at the Seminar of Mongolian and Tibetan Current Situation
on May 3rd, 2004.)
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