India’s Election Results & Central China’s “Accelerated Rise”
A key lesson from the failure of Prime Minister Narendra Modi’s Bharatiya Janata Party (“BJP”) to secure a majority in the Lok Sabha—the lower house of India’s parliament—and to sustain its popularity in traditionally pro-BJP states is the pressing need to solve the issue of economic inequality in India.? With the top 1% of India’s 1.4 billion population owning 40.1% of the country’s wealth while the bottom 50% owns just 6.4%, Mr. Modi faces mounting pressure to deliver during his third term as India’s Prime Minister a strong economic performance, rather than promises, to those who have not yet benefited from India’s progress.
Similar challenges are being faced by Mr. Modi’s counterpart in China, another country with a 1.4 billion population also marked by economic disparity.? The Chinese leadership is rolling out new measures aimed at supporting the “accelerated rise” of Central China.? Given India’s growing competition with China, how China plans to accomplish this goal should be of significant interest to India and its allies.?
Economic Disparity & Central China
Economic disparity in China has a distinct impact on different parts of the country, with coastal provinces Guangdong (RMB 13.6 trillion), Jiangsu (RMB 12.8 trillion), Shandong (RMB 9.2 trillion), and Zhejiang (RMB 8.3 trillion) showing strong economic vitality to record the highest GDPs in the country in 2023, while inland provinces/provincial-level administrative divisions such as Ningxia (RMB 0.5 trillion), Qinghai (RMB 0.4 trillion), and Tibet (RMB 0.2 trillion) have the lowest GDPs.
The six provinces that make up Central China are also marked by such economic disparity. ?In terms of GDP, Anhui (RMB 4.7 trillion), Jiangxi (RMB 3.2 trillion), and Shanxi (RMB 2.6 trillion) are ranked Nos. 11, 15, and 20, respectively, among mainland China’s 31 provinces/provincial-level administrative divisions.? Meanwhile, their neighboring provinces, Henan, Hubei, and Hunan have managed to have higher GDPs (i.e., RMB 5.9 trillion, 5.6 trillion, 5.0 trillion, respectively), resulting in more impressive GDP rankings (Nos. 6, 7, and 9, respectively).?Official sources have identified various strengths which contribute to the stronger performance of these three provinces.? For example, Henan was home to “172 state-level innovation platforms, 12,000 high-tech enterprises, and 26,000 technology-based small- and medium-sized enterprises” by the end of 2023, while Hubei has been “ranked third in the country in terms of the number of national innovative industry clusters” and Hunan has been recognized as a “[a] hub for China-Africa trade and cooperation[, with the province’s] trade volume with Africa reach[ing] 55.67 billion yuan in 2023”.
The “Accelerated Rise” of Central China
Despite the economic disparity among them, the six provinces of Central China, whose population account for more than 28 percent of the country’s total population, are responsible for nearly 22 percent of the country’s overall GDP.? The region’s strategic significance is reflected in its characterization by the Chinese leadership as an “important food production base”, “energy and raw materials base”, “modern equipment manufacturing and high-tech industrial base”, and a “comprehensive transportation hub”.
To fully realize the strategic value of the region, President XI Jinping chaired a top-level meeting in late May to review the Several Policy Measures for Promoting the Accelerated Rise of the Central Region in the New Era.? During the meeting, Chinese leaders emphasized, inter alia, the need to “develop new quality productive forces according to local conditions, […] coordinate the transformation and upgrading of traditional industries, cultivate and expand emerging industries, and plan the layout of future industries [emphasis added]”.
It remains unclear what specific tasks should be taken to ensure the “accelerated rise” of Central China.? However, an article authored by President Xi, which was published a few days after the above-mentioned meeting, provides some clues, as it sheds some light on the meaning of the term “new quality productive forces”. […]
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Global Economic Prospects & China
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In mid-May, the Lin-Gang Area of the Shanghai Free Trade Zone (“FTZ”) issued trial measures to allow eligible companies in the area—criteria used suggest that Tesla is eligible—to export certain data without going through China’s complicated approval system.? Similar measures were adopted by Tianjin’s FTZ in early May, while other FTZs in China are expected to follow suit.? These measures can benefit foreign investors in China significantly.? Yet, the fundamental goal of their issuance is not a mere increase in domestic foreign investment, but rather the implementation of China’s plan to develop its digital economy globally.
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