Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
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.) References: 1. Mu Er, ‘The Characteristics of the Industrial Structure Change in Inner Mongolia for the Past 50 Years’, Inner Mongolia Statistics, 1997: 3, 24-26. 2. The Outline of the Tenth Five-Year National Economic and Social Development Plan in Inner Mongolian Autonomous Region, June 2003, The website of the Commission of Development and Reform in Inner Mongolian Autonomous Region: http://www.nmgfgw.gov.cn/data/2003000229.htm。 3. The Outline of the Strategies carried out by Inner Mongolian Autonomous Region on Developing the Wes, , July 2003, The website of the Commission of Development and Reform in Inner Mongolian Autonomous Region: http://www.nmgfgw.gov.cn/data/2003000465.htm。 4. Inner Mongolian Autonomous Region Statistical Bureau, Inner Mongolia Statistical Yearbook, various issues from 1990 to 2002. 5. Li Jiun-ching, ‘The Characteristics and Adjustment of the Industrial Structure Change in Inner Mongolia’, Inner Mongolia Statistics, 2002: 4, 19-20. 6. Ma Liang, ‘The Analysis of the Status Quo of the Industrial Structure in Inner Mongolia’, Northern Economy, 1997: 6, 16-18. 7. Ma Liang, ‘The Analysis of the Status Quo of the Industrial Structure and Adjustment in Inner Mongolia’, Theoretical Research, 1997: 3, 22-25. 8. Chen Yung-tau, ‘The Key Problems of the Optimization and the Solutions of the Industrial Structure in Inner Mongolia’, Theoretical Research, 1998: 3, 17-21. 9. Chen Shin and Li Shr-shan, ‘The Optimization of the Industrial Structure in Inner Mongolia’, Journal of Liaoning Technical University (Social Science Edition), 2003, vol. 5:1, 17-18.。 10. Wu Shin-di, ‘The Status Quo and the Solutions of the Third Industries in Inner Mongolia’, Occupation Studies, 1997: 3, 46-47. 11. Wu Dian-ting and Shr Pei-jiun, ‘Exploration of Certain Problems on Inner Mongolian Economic Development’, Economic Geography, 1996: 1, 24-30. 12. Liu Li-jiuan and Mei Tian-lin, ‘Several Key Points of the Great West Development Plan Carried Out by Inner Mongolia’, Macroeconomic Management, 2000:7, 39-41.