Haixi: Industrial Upgrading through Development of a Circular Economy

By DONG YANGMING

Haixi: Industrial Upgrading through Development of a Circular Economy

By DONG YANGMING

Goji berry production base.

LOCATED in one of China’s less economically developed regions, Haixi Mongolian and Tibetan Autonomous Prefecture, Qinghai Province, is grappling with the conundrum of how to attain rapid economic development through industrial restructuring while promoting ecological progress.

Upgrading Industry

Haixi Prefecture’s long history and diverse culture owe much to its location at the four-way intersection of Qinghai, Gansu, Xinjiang, and Tibet. A strategic gateway to neighboring countries from China’s northwest, Haixi has jurisdiction over two cities and three counties. The prefecture has a permanent population of 509,100, a migrant population of 160,000 who have lived in the region for at least a year, and a foating population of around 100,000 working for enterprises and construction projects. This includes 36 ethnic groups, which account for 32 percent of its total population, the majority of whom are Mongolian and Tibetan.

Covering an area of 325,000 square kilometers (about 41.7 percent of the total province), the prefecture mainly consists of desert, semi-desert, and alpine meadow, with an average elevation of 3,000 meters. In 2015 its GDP stood at RMB 43.99 billion – an annual average growth of 10.1 percent – and its per capita GDP exceeded RMB 100,000.

In recent years, Haixi has set itself the goal of accelerating its circular economy and upgrading basic industry.

Achieving all this calls for comprehensive restructuring of basic industry, regarding products, technology and equipment, as well as environmental protection, thus enhancing its overall competitiveness. Haixi will hence strengthen enterprise cooperation, resource circulation and integration between its salt lake chemical, petrochemical, coal chemical, and metallurgy sectors.

Regarding its salt lake chemical industry, Haixi will build a deep-processing industry chain, focusing on exploitation of such resources as potassium, sodium, magnesium, lithium, boron and bromine. This will create a vital salt lake industrial cluster worth more than RMB 100 billion. Haixi is also proactively building a national base of sodium carbonate and sodium hydroxide production.

To promote its petrochemical industry and expand its exploitation scale, the prefecture will build a 10-million-ton oil and gas feld, consolidating the status of the Qinghai-Tibet Plateau as a strategic petrochemical base, and creating an industrial cluster worth RMB 50 billion.

With regards to its coal-based chemical industry, Haixi’s focus is on clean and effcient utilization that will support the development of its salt lake chemical industry. It will vigorously develop downstream products, and build coal exploitation, coal chemical industrial and byproduct utilization chains, so to build an industrial cluster with a value of more than RMB 100 billion.

Haixi is also optimizing the metallurgical industry in efforts to upgrade its traditional industries and nurture down-stream supporting industries. It plans to build a gold industry with an estimated value of RMB 10 billion and a national leading nickel sector.

Industrial parks will play a key role in local industrial upgrading. Haixi has built two in Golmud and Qarhan, each with a total investment of RMB 100 billion, and four in Delingha, Da Qaidam, Uland, and Dulan, each with an investment of RMB 50 billion, to encourage technological innovation among enterprises in the industry chain, and boost low-carbon circular economic development.

Haixi will monitor the harmonious development of all enterprises, set up service platforms for small and medium-sized enterprises, and so strive to develop a real economy. By exploring crowd-funding and encouraging mass entrepreneurship to support rapid growth of medium-sized, small and micro enterprises, the prefecture will foster more local businesses to add impetus to its economic development.

Moreover, Haixi will accelerate brand building, cultivate brand-name products, and expand superior enterprise groups’ proprietary brands and core competitiveness.

The above ambitions all need infrastructure support. Haixi will carry out coordinated development of railways, highways, and civil aviation, and build an extensive modern transport system. This will include the Golmud-Dunhuang Railway, the Golmud-Korla Railway, the expansion of Golmud Airport, the Golmud-Lhasa Highway, the Golmud-Chengdu Railway, the Xining-Golmud Railway, and Dulan Airport.

The prefecture will strengthen the water supply infrastructure by building a hydro-junction, protecting water sources, regulating rivers, reconstructing irrigated areas, and improving urban flood control. These measures will resolve the uneven distribution of water resources and poor water conservation in certain regions, comprehensively guaranteeing food prevention capability and rational allocation of water resources.

Haixi will also reinforce its power transmission capacity by building a transmission and transformation line between southeastern Xinjiang and its Yukai Township, an extra-high voltage electric transfer passage between northwestern Qinghai and central China, and smart power grids. It will extend the power system to include outlying industrial and mining areas, and upgrade the rural grid. Haixi will moreover intensify the construction of information infrastructure, and achieve full optical and 4G network coverage.

Boosting Emerging Industry

Haixi is encouraging and developing emerging industries, such as new energy, new materials, and new business modes, characteristic bio-industry, and modern services. The prefecture is building lithium battery, photovoltaic, and photo thermal industry clusters, to make emerging industry a signifcant growth pillar.

The focus of its new energy industry is raw material production, equipment manufacturing, system integration, and product application. Haixi will build a new energy system including photovoltaic (fve gigawatt), photo-thermal (four gigawatt) and wind power (three gigawatt), and increase the share of clean energy to more than 80 percent in its power supply. In doing so it will create a national-level new energy industry demonstration base.

With leading enterprises as the core, and by establishing investment and financing, development and design, manufacturing, installation and testing systems, as well as operation management, Haixi will concentrate on technical research and market exploitation of photovoltaic and wind power generation, power transmission, and smart power grids, as well as integral elevation of the new energy industry.

Through a reshuffe of upstream and downstream enterprises, Haixi will realize a broader scope and optimum distribution of resources and scale expansion by allocating resources to competent enterprises. Via strategic planning and policy guidance, the prefecture will thus form an industrial development pattern of clear goals and distinct local features.

To foster the new material industry Haixi will, on the back of its advantageous salt lake chemical, petrochemical, coal, and metallurgical industries, give priority to chemicals, new energy, building and metallic materials, extending the industrial chain and expanding product added value. Haixi highlights new materials, such as magnesium-base alloy, nickel, cobalt, lithium battery, highend chemical composites, and polymer and whisker materials, with the aim of creating an advantageous new materials industry agglomeration.

As a nod to the “Made in China 2025”strategy, Haixi will beef up its manufacturing industry to include photovoltaic, wind power, electric car, drone, high speed rail components, military materiels, and high-end equipment.

To cultivate new business models, Haixi will promote deep integration ofInternet and other industries, formulating a new strain of economic development. By developing broadband, digital technology and big data industry, Haixi will hasten smart-city construction in Golmud and Delingha, thus impelling construction of information service centers.

To expand the e-commerce economic scale and cultivate a group of major business portals and e-business enterprises, Haixi will promote a combined system of traditional and online marketing by building a bulk commodity exchange center for potash fertilizer, inorganic salts, sodium carbonate, and goji berries. To promote the development of e-business in rural areas, Haixi has built a twoway channel for urban manufacturing products heading to the countryside and for rural agricultural products reaching city dwellers.

The prefecture will also accelerate the application of the Internet of Things and development of Internet finance, and support Internet-based financial products, services, and technological and platform innovation. It will moreover develop P2P borrowing and crowd-funding, and encourage fnancial institutions to build innovative online platforms.

The development of facility agriculture has boosted the local planting industry remarkably in recent years.

Meanwhile, Haixi is developing emerging service industries such as modern logistics, finance, science and technology services, information consumption, as well as energy conservation and environmental protection.

To strengthen characteristic bio-industry and boost the local goji berry industry whose value is expected to reach RMB 10 billion, Haixi has established a goji berry plantation standard and built a plant base on the Qinghai-Tibet Plateau. It has also extended the deepprocessing industrial chain and build industrial parks in Delingha and Dulan.

Haixi strives to develop the animal husbandry sector and improves relevant infrastructures, such as fencebuilding, chicken breeding, drinking water facilities, and grass fodder plantations. Breeding and processing bases for various breeds of cattle, yak, sheep and goat are in the works.

In developing controlled environmental agriculture, Haixi is concentrating on fruit and vegetable bases in Golmud, Delingha, Dulan, and Uland, and building up local processing and logistic sectors. The prefecture is also propelling the integrative development of animal husbandry and industry in efforts to develop urban husbandry and tourism agriculture.

With the aim of promoting the modern service industry, Haixi will vigorously galvanize the tourism market and develop tourism products by propagating local attractions, most prominently the Chaka Salt Lake and Golmud. The prefecture will also develop industrial tourism relating to photovoltaic power generation and the Qarhan salt pan; hold cultural festivals and other activities, and strengthen the marketing of its main tourist routes. Haixi also has plans to showcase local scenic spots with cultural connotations, with its ultimate aim to boost the tourism industry with regards passenger fow volume and income.

In its drive to develop the cultural industry, Haixi is proactively cultivating a cultural market and new cultural businesses with a view to constructing cultural industrial parks and characteristic cultural brands.

It will develop modern logistics bybuilding comprehensive logistics parks in Golmud, Delingha, and Da Qaidam, as well as logistics centers in such areas as Qarhan, Huatugou, Xiangride, Nuomuhong, and Chaka. By promoting facets of the traditional service industry like commerce, accommodation, and catering, Haixi will enhance its service level by building a network of modern community services covering pensions, health care, nursing, property management, and care for the elderly.

As early as 2008, Qinghai Province confrmed its strategy of creating an ecofriendly province. In recent years, Haixi has consistently carried out key ecological engineering projects, including desertification control, the Northwest-North-Northeast China shelter belts, and ecological protection of the Baishu Mountain.

The prefecture has expanded its farmland by 4,000 hectares and forested land by 42,100 hectares. It now has 2.47 million hectares of conservation wetlands, and 1.22 million hectares of public forest. Haixi has thus recovered key ecologically functioning areas, significantly enlarged its lakes and wetlands, controlled desertification, and achieved a forest coverage rate of 3.5 percent – 0.5 percent more than in 2010.

Haixi has achieved remarkable results in its efforts to carry forward comprehensive control of the Muli mining area, through pit backfills and environmental remediation, and so resolved prominent environmental problems in mining areas. Local enterprises’ environmental awareness has been consistently raised with respect to energy conservation and emissions reduction, and energy consumption per unit of GDP consequently reduced.

Haixi’s focus also encompasses urban and rural forestation and beautification, evident in its comprehensively improved national and provincial highways, key scenic spots, and rural sanitation.

Haixi combines ecological remediation and industrial development, utilizing sandy wasteland to plant goji berries. The cultivated area of red goji berry now covers 30,600 hectares, generating a processing volume of 768 tons and a production value of RMB 3.07 billion per annum. The black goji berry cultivation area covers 1,850 hectares, with a 41-ton processing volume and a production value of RMB 510 million.

Goji berries.

Integrating with the Belt and Road Initiative

In recent years, Haixi has responded actively to the Belt and Road Initiative by transforming itself into China’s bridgehead to central, western, and southern Asia, and by strengthening economic and trade cooperation, and cultural and educational exchanges with countries and regions along the Belt and Road. Haixi will thus step up connectivity and infrastructure construction and build an important channel and pivot to the west and the south.

By deepening regional cooperation with the Beijing-Tianjin-Hebei region, the Yangtze River and Pearl River deltas, as well as neighboring Tibet, Xinjiang and Gansu, the prefecture will elevate the developmental level of its open economy and form a new pattern of openingup and cooperation. For this it is also working on a free trade zone in Golmud and an inland opening-up pilot area in Qaidam.

Haixi has established offices in Beijing, Shanghai, and Guangzhou to attract local investment as well as that from South Asia, Hong Kong, and Taiwan. To effectively undertake industrial transfers from eastern China, Haixi promotes major cooperation projects and has built an export commodity processing base. The prefecture also holds frequent, large-scale conferences, forums, and expos on potash fertilizer, the photovoltaic industry, the magnesium industry, and goji berries, forming a characteristic platform for economic and trade cooperation.

Haixi’s goals for economic and social development from 2016 to 2020 can be summed up as: eradicating poverty, and comprehensively building a moderately prosperous society; propelling traditional industry transformation and upgrading the salt lake chemical, petrochemical, coal, and metallurgical industries; creating new energy, new materials, new business models, local specialty bioindustry, and modern service industry; and building itself into a national demonstration area for circular economy, ethnic unity, new energy, and urban and rural integration.

From the economic perspective, Haixi will strive to maintain an average annual GDP growth of more than 7.5 percent, including 12 percent for primary industries, eight percent for large enterprises (annual revenues from core business no less than RMB 20 million), and 12 percent for tertiary industries. It intends to increase local public fnance revenue by seven percent annually, and fxed investment by 15 percent, and to increase the per capita disposable income of urban and rural permanent residents by eight percent year-on-year. Haixi will thus become the most vibrant prefecture in China’s Tibetan areas.