GANSU PROVINCE

General Background

Gansu - abbreviated as Long - is situated in northwestern China at the upper reaches of the Yellow River.  The province has an average elevation of 1,000-3,000 meters above sea level.  Deserts in the northwestern part cover about 15% of the total area.  The province has a typical continental climate with an average daily temperature contrast of 13 degree.

The population of ethnic minorities accounts for about 8% of the total.  Major groups include Hui, Tibetan, Dongxiang, Yugur and Mongolian.

Lanzhou is the capital of Gansu.  The State Council approved Lanzhou as an inland open city in 1992, enjoying the same preferential policies as in the coastal open cities and the provincial-level administrative power in economic management.

Ga   Gansu is abundant in resources and its reserves of coal and oil are considerable.  It is one of China's most important production bases of nonferrous metal such as copper, aluminum, nickel, lead and zinc.  11 kinds of minerals have reserves ranking 1^st in China. The exploiting scale of Jinchang copper and nickel mine ranks 2^nd in the world. Apart from supplying to the domestic market, the province also supplies to foreign markets such as the US, the UK, Japan and France.  Gansu has great advantages in developing agriculture.  Apart from the famous watermelon, the province is a major agriculture base of Chinese medical herbs. Its output of flax is also high in the country.

The province also has favorable conditions for developing animal husbandry.  Its pastoral area is one of the biggest in China and is good for grazing sheep and cattle.  By-product such as camel wool is famous.

Infrastructure

Overall  -- To improve investment conditions, the Gansu government has invested huge amount of fund to improve the provinceˇs infrastructure. In 2001, the government proposed 75 new infrastructure building projects, ranging from water supply, natural gas to electricity.

Railways ⌒ Lanzhou is a major transportation hub in China.  It is the intersection point of four trunk railway lines (Lanzhou-Lianyungang/Longhai, Lanzhou-Xinjiang, Lanzhou-Baotao and Lanzhou-Qinghai). The international railway between Asia and Europe (the New Asia-Europe Continental Bridge which starts from Lianyungang and joins with the Siberia Railway) also run across the province. The Lanzhou Western Goods Station (the largest station for freight transport in northwest China) is serving as the main transit and consolidation hub of containers on the New Asia-Europe Continental Bridge.

Besides, the government proposes to build a new double-track railway between Baoji of Shaanxi and Lanzhou.  Travel time between the two cities is expected to shorten from the existing 9 hours to 5.5 hours upon completion.

Highways ⌒ Lanzhou is also the pivot of highways in the province.  Five state-grade highways leading to other provinces including Xinjiang and Sichuan are open or under construction.  

Transport ⌒ The Lanzhou international airport has services to 37 domestic and overseas destinations.  Chartered flight from Lanzhou to Hong Kong is also available.

Telecommunications ⌒ Direct telephone services to over 100 overseas countries and regions are available.  Currently, mobile phone subscribers reach 220,000 and the popularization rate is 7.8% in Lanzhou. In 2000, total revenue from telecommunication reached 3.625 billion dollars renminbi. More than 335,000 people own cell phones and 80,000 computers have access to the internet. The government also starts to build a information highway connecting Taiyuan, Yinchuan and Lanzhou.

Water  --  In 2001, the Gansu government  declared that it will invest more than 610 million dollars in 3 years to improve the water supply system of the province.

The central government is aiming to improve the water supply system of the northwestern provinces, including Ningxia, by conducing water from the upper Yangtze River to upper Yellow River. The first stage of this project is expected to be completed by 2010.

Electricity ⌒ The Liujiaxia hydropower station is one of the largest in China, having a capacity of 1 million kWh.  With the abundant hydropower resources of the Yellow river, Gansu is able to provide electricity for the neighboring provinces including Qinghai, Shanxi, Sichuan and Ningxia.

Oil Supply ⌒ Construction of Lanzhou-Chengdu-Chongqing oil pipeline will be started.  It would pass through 30 counties and cities in Gansu, Shaanxi and Chongqing with an annual oil delivering capacity of more than 5 million tons.  Also, one of the key projects in the Tenth 5-year plan is to construct a oil pipeline network that connects Xinjiang, Gansu, Henan, Hubei, Jiangsu, Jiangxi and Shanghai. The network extends so far as to Turkmenistan and East Siberia. The long oil pipeline will provide a major passage to deliver oil products from the northwest region to the southwest region upon completion in 2002.

Supply ⌒ A new natural gas pipeline, Sebei-Xining-Lanzhou, linking Qinghai and Gansu provinces is under construction.  The pipeline runs 953 kilometers from Sebei Natural Gas Field in the Qaidam Basin, through Xining of Qinghai to Lanzhou.  It aims to deliver 2 billion cubic meters of natural gas from northwest to the eastern parts of China and expect to be completed by October 2001.

Industries

In 2000, the added value of industrial output of the province totalled Rmb32.8 billion and industries are mainly located at Lanzhou, Jinchang, Baiyin, Tianshui and Yumen.

Gansu is an important base of oil refining and petrochemical industry.  The roles of the Lanzhou Oil Refinery and the Lanzhou Company of Chemical Industry are significant in developing petrochemical industry in China.

In order to accelerate development of its resource-based industries, the province has introduced incentives to encourage foreign investment in the mining, refining and processing of minerals.

Lanzhou and Tianshui are two major centres to produce machinery.  At present, the province supplies over half of the oil-drilling equipment in the country.  Gansu is also the major industrial base of high-speed camera and imitated tape-making equipment.  In recent years, the textile industry including wool and cotton spinning, knitting and chemical fibres have also developed quickly.

Tourism

Gansu has good advantages in developing tourism.  Lanzhou is an important stop on the Silk Road, which connects the famous historic sites such as Dunhuang Grottoes, Bingling Temple Grottoes, Labuleng lamasery and Maiji Mountain Grottoes.  Other tourist sites include Jiayuguan Pass at the westernmost end of the Great Wall and Tulu Gully.

In 2000, about 213.1 thousand tourists (+47.4%), including 143.4 thousand foreigners (+51.6%) visited the province and generated revenue of US$55 million (+48.6%).  The country will build a new tourism economic zone in Dunhuang.  The new zone will be located at the Yitang Lake and cover an area of 5 square km.  The city has stipulated preferential policies to attract domestic and overseas investment for the zone. 

Besides, Gansu will co-operate with other 9 provinces and autonomous regions in establishing a tourism information network and arranging a tourism fair bi-yearly.  Concerned parties include Qinghai, Sichuan, Shaanxi, Shanxi, Henan and Shandong provinces, as well as Inner Mongolia and Ningxia Hui autonomous regions. 

Consumer Market

Retail sales of consumer goods in Gansu rose by 9.3% to Rmb36.3 billion in 2000.  Lanzhou is the largest consumer centre that accounts nearly half of the total sales.  The second largest centre is Tianshui and Baiyin, each accounting for about 8% of the total sales.

Lanzhou has been developed into a major distribution centre of goods in northwestern China. The Lanzhou Commercial and Trade Center is the largest commercial building in Gansu.  Besides, Lanzhou has over 300 commodities distribution markets including markets of non-ferrous metals, petrochemicals, machinery and electronics, building materials, fur and wool, grain, medicinal herb, vegetables and fruits.

Major department stores and shopping centres in Gansu include Lanzhou Mingzhu Department Store, Lanzhou Industrial and Commercial Shopping Centre, Lanzhou Hua Lian Supermarket. Baiyin Tongcheng Shopping Arcade and Jinda Daxia Co. Ltd.

Science and Technology

Although not as well developed as the eastern provinces, Gansu leads China, even the world, in certain research areas. Jiuquan is one of the satellite launching centre in China. The particle accelerator RIBLL, built in 1997, is among the most advanced accelerators in the world.

Foreign Trade

Gansuˇs major export items included machinery, petrochemicals and garment.  Major export markets were Japan, Hong Kong, the US, Republic of Korea and Germany.  Total amount of trade in the first half of 2001 reached US$ 332 million, 68% more than the trade in the same period last year. To stimulate trade, the Gansu government established 10 export industrial bases, ranging from IT industry to agriculture.

Export was US$420 million, increased by 10.5%. Import was US$270 million, increased by 50%. Hong Kong was the largest import sources of Gansu, accounting for 31% of the total.  Other import sources included Australia, the US, Germany and Japan. 

The  nearest seaport of Gansu is Tianjin, 2,000 km away.  As an incentive for exports, the government decided to provide transportation subsidies to all exporting enterprises, including FIEs, in the province.

Hong Kong is the 6th largest trading partner of Gansu. In 1999, the scale of trade between the two was US$ 18.59 million. Gansu imported US$ 0.49 million from and exported US$ 18.09 million to Hong Kong.

Foreign Investment

In 2000, foreign investment increased strongly. The number of projects increased from 67 to 76. The contracted amount rose by 49.8%, from US$82.3 million to US$123.4 million. The actual utilized amount of foreign investment rose strongly by 51.9% to US$ 62.4 million.  Major sources of investment came from the US, Hong Kong, the UK, Philippines and Taiwan.  Major foreign investments were mainly engaged in construction, property development, food and beverages, machinery, electronics, petrochemical, pharmaceutical, textiles and other light manufacturing industries.

To boost the development of the central and western regions in China, the State Council has issued new investment regulation policies in early 2001. It also gives FIEs national treatments and encourages FIEs to reform, merge, buy and join the state own enterprises.  Under the existing policy, FIEs are entitled to a three-year tax reduction and exemption.  The new policy stated that foreign-invested enterprises in the central and western regions would enjoy another three years of preferential tax rate when the term expires.  The tax rate can be further reduced to 10% if an enterprise is proved to export more than 70% of its annual output in terms of value.

Economic Indicators of Major Cities (1999)

Source: Gansu Yearbook 2000

Major Economic & Technological Development Zones (ETDZs)

Lanzhou High and New Technological Development Zone is the only state-level ETDZ in Gansu.  Approved by the State Council in 1988, the Lanzhou Development Zone aims at developing hi-tech industries such as new materials, fine chemical products, biotechnology,  medical products, mechanical and electrical products.

Other provincial-level economic development zones in Gansu include:

West Baiyin Area - a production base of nonferrous metal.

Tian Shui Economic and Technological Development Area Characterized by convenient transportation and good heavy industrial base.

East Jinchang Economic Development Area - characterized by a co-existence of raw material refining, processing industries, hi-tech products and scientific and technological development.

Lianhai Economic Development Area - a base of energy and nonferrous metal industries.

Longxi Economic and Technological Development Zone  produces in tradition herbs and timber, also has a good industrial base.

Xicheng Economic Development Area - a base of nonferrous resources exploration.

Dunhuang Tourist & Economic Development Area

Linxia Nationalities Economic Development Area

Economic Indicators

Notes: * In Renminbi real terms

^{^} Latest full population census figure, 1999 figure was estimation based on previous census.

Sources: China Statistical Abstract, CEIC database

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