Yantai, The Second-Tier is Boosting Shandong Economy

16/10/2018

In the not-so-distant future, more than half of the rich Chinese will be in cities we’ve never heard of, that’s why is important to understand which are the raising markets. Yantai is leading Shandong Provence’s economy reborn: “Shandong is ready to be more open” said Wang Yi, PRC Foreign Ministry

 

The list of second-tier cities and new first tier cities includes Chengdu, Wuhan, Yantai, Harbin, Shenyang, Nanjing, Jinan, Dongguang and another metropolis, mostly placed in the eastern part of the country. Second-tier cities have become increasingly attractive for investment. They are some of the fastest growing areas, and consumer behaviour is evolving quickly and, in general, trends are similar to first tier trends.

The second tier is generally made up of provincial capitals, sub-provincial cities, Special Economic Zones such as Shandong Province, and other more developed cities with cultural and economic influence.

 

The Chinese government doesn’t have an official definition for the tiers and many businesses use slightly different methods for classification such as Gross Domestic Product (GDP), political administration, population size, development of services, infrastructure, cosmopolitan nature, retail sales etc.

 

Shandong Province was known as an important region in Chinese ancient civilization – Confucius was born here – and nowadays the area is one of the most important cluster and developed economies in China, and “it is looking to further expand its cooperation with the rest of the world”, said Wang Yi, PRC’s Foreign Minister, in Beijing during a worldwide promotional event for Shandong Province, entitled “China in the new era: New impetus, new Shandong, a win-win world.” .

Despite Trump administration’s trade war, today’s China is actively pushing forward new types of international relationship. The eastern Chinese province has accomplished great achievements in the 40 years since China opened its doors and reform began. Last year “its GDP exceeded 7.2 trillion yuan – about 1.1 trillion US dollars – with an average increase rate of 11.5 percent year-on-year” said Wang Yi.

 

 

Who is boosting Shandong economy? Qingdao, the capital of Shandong province, is still the main city of the peninsula, but Yangtai economy growth and development is coming under the spotlight today. The region is working to further advance its innovative ability and competitiveness.

 

Yantai, located along the north coast of the Shandong Peninsula, with almost 7 million people, is currently the second largest industrial city in Shandong, next to Qingdao.

The GDP of this second-tier reached $30.95 billion last year, a year-on-year growth of 7.7 percent and one percentage point higher than that of Shandong province. Value-added industrial output increased by 8.4 percent year-on-year, 2.5 percentage point higher than last year, and the general public budget revenue rose to 18.41 billion yuan, up by seven percent year-on-year.

The city’s fixed-asset investment rose 7.2%  year-on-year, a 0.6 percentage point higher than that of Shandong province. The city is set to support 192 projects. To date, 109 projects are under construction. A marine clean energy integrated supply platform project, an LNG project in Yantai West Port and some other major projects went smoothly.

The baseline indicator was within a reasonable range. The CPI (consumer price index) of Yantai residents grew 9.1 percent, a 0.6 percentage point lower than last year. A total of 33,400 new urban jobs were created which accomplishes 25.1 percent of the annual target.

 

High-tech and green economy the new motto: Yantai Port, actually one of the top 10 harbour  in China, is ready to be more involved in Belt and Road Initiative. Actually there are 15 100,000-ton berths in the port, directly accessing to more than 100 harbours all over the world.

 

According to the Yantai Economic and Technological Development Area – YETDA – , the new economic program are designed to make “green industries” a new growth engine and promote industrial upgrading and greener growth, and are expected to have annual output of nearly 20 billion yuan when all the projects come on stream.

The scrap metal recycling and utilizing project invested by Shandong Dahai Group, a large multi-industry, trans-regional and international enterprise group integrating textile, new energy, new materials and international trade, will help to process the metal scraps of industrial enterprises into recycled non-ferrous metal products, with annual sales expected to be seven billion yuan.

Established in October of 1984, the Yantai Economic and Technological Development Area is one of the earliest approved State level economic development zones in China. The area has introduced more than 1,500 foreign-financed investments of 78 Fortune 500 companies, fostering two leading-edge industries of machinofacture and electronic information and three emerging industries of new materials, biomedicine and optoelectronics.

Located in the Yantai Renewable Resource Processing Demonstration Zone  with a total planning area of 340 hectares, is divided into the three areas of production and processing, management service and pollution treatment. The zone is now home to more than 60 companies, integrating upstream and downstream industries and forming a competitive industrial cluster.

 

Following “Made in China 2025” program, priority will be given to industrial and manufacturing projects, to foreign investments, to commodity export efforts, and to high-tech programs. Second-tier cities are the new engine of Chinese economy.

 

Concerning investments, according to Yantai city government, highlights shall be passenger cars, machinery, electronics and information, refined chemicals, medicine and medical products, bioengineering food processing and new building materials. Meanwhile, foreign investment in tertiary or service sectors will be encouraged. In short, large projects, transnational partnerships, product development and manufacturing shall enjoy priority in the zone.

Second-tier cities such as Yantai, where there’s a high consumption of goods and services, de facto representing the new engine of development for the Chinese economy. But the panorama we are facing is complex. The literature also stresses that second-tier cities represent the future of the Chinese market and at the same time a hope for the many foreign entrepreneurs who intend to break into virgin territory. But now, as Minister Wang Yi saied: “Shandong province will expand its cooperation with the rest of the world”

 

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