Side Views

The Harbin ambition — Lin Yanqin

September 21, 2012

SEPT 21 — The broad, smooth roads leading to downtown Harbin are lined with a sight familiar to visitors to any up-and-coming Chinese city: soaring condominiums and office buildings, many of them vacant and some bearing optimistic “for sale/lease” banners. In the distance, skeletons of new developments rise inexorably, still flanked by tower cranes and awaiting completion — hopefully occupation, too.

Days before we arrive on our media tour of Harbin, a section of an eight-lane bridge, part of a 1.9 billion yuan (RM925 million) project, collapsed after only nine months of use, killing three and injuring five, and spawning concerns as to whether safety has been compromised in the country’s infrastructure boom.

All of this makes for an apprehensive introduction to the capital of Heilongjiang province, especially as debate mounts over whether China’s economy is headed for a hard or soft landing, and whether its massive public spending — mainly on infrastructure projects — can steer its economy through the rough seas ahead.

FROM FARMLAND TO AVIATION

Harbin, whose GDP grew a comfortable 12.3 per cent last year to 424.34 billion yuan, appears to be gearing itself to meet this challenge. It has set its sights on becoming the economic hub of Northeast Asia, banking on its proximity to Russia, Japan and South Korea, its strong manufacturing base, and good regional transport connections to give it a boost as the global economy stutters.

The city offers investors incentives such as tax exemptions for the first few years of a company’s operations, and a lower income tax rate compared to other cities, said Zhang Lixin, standing member of the CPC Harbin Municipal Committee and chief director of the city’s Publicity Department.

More importantly, the city is ramping up its economy for the future —adding new sectors such as civil aviation, clean technology and new materials manufacturing to its traditional economic base of heavy equipment manufacturing and agriculture.

In February, it proposed disbursing 380 million yuan to develop industrial parks, and 150 million yuan to support research and development and business incubation in these new high-tech sectors. Meanwhile, the city also invested some 270 billion yuan in urban infrastructure projects such as roads and bridges last year.

R&D MUSCLE

Some of its investments have yielded results — the Harbin Hafei Airbus Composite Manufacturing Centre, a joint venture between Airbus and Chinese partners supplying parts to Airbus, began operations last year. The company will grow its current staff strength of 280 to 600 in five years as orders pick up, said a representative.

And apart from clear blue skies in summer — something often missing in polluted larger cities like Beijing — Harbin boasts 48 universities and 369 research institutes, including the well-regarded Harbin Institute of Technology. In 2008, the city reported it had 45,000 people engaged in scientific research, including 36,000 engineers.

Harbin also recorded a low unemployment rate of below 3.5 per cent last year (the national average was 4.1 per cent), and Zhang said the city has not faced social unrest over unemployment, despite rapid urbanisation as rural residents move to the city in search of better-paying jobs and prospects.

The government has also dedicated some of its public spending towards redeveloping shanty towns with 120,000 new low-income housing units in the next five years.

CHALLENGES AHEAD

All across China, such infrastructure in cities like Harbin might be up and running — but if the foreign investments don’t materialise, it could result in an increase in non-performing loans for banks, affecting the stability of the Chinese banking system, said Standard Chartered economist Edward Lee.

Whether building industrial zones can effectively drive growth will depend on global and domestic demand. “Beijing pushed hard in 2008 and 2009, and this led to real estate speculation and inflation, so I think they are moderating the pace, and the impact of such projects will be much smaller,” he said.

“In the long-term, such investments have to be carefully concept-driven, and more important is to grow the middle class and support urbanisation (to grow domestic demand).”

Infrastructure aside, Harbin also needs to be able to deliver quality supplies for manufacturing — Hafei Airbus noted that it has had to import certified materials as there were no qualified suppliers in China.

It was also difficult initially finding people with the right skills in Harbin for certain positions, and the company had to look to other Chinese cities for talent. “But people don’t necessarily want to move to Harbin from Shanghai,” a representative said, noting Harbin’s bone-achingly cold winters — temperatures dip to -40°C in the coldest months.

GRADUATES’ WORRIES

At the same, Harbin locals are questioning the government’s ability to provide enough jobs for the graduates pouring out of the universities each year.

Said university student Song Mingyue, 23: “We have heard about graduates who can’t find jobs that match their qualifications, and they end up in jobs where they do very simple things. We worry that our education may not match the job market.”

Liu Yuqiang, board member of Harbin Electric Machinery Company — a power manufacturing giant that built some of the turbines used in the Three Gorges Dam — believes local industries must innovate in order to lay the foundation for Harbin’s next stage of economic development.

Taking the media on a tour of the company’s sprawling facilities, he takes evident pride in the company’s emphasis on R&D, pointing out products unique to the company.

“We are growing fast as a company because we have invested in developing our own technology and products,” he says. That’s another lesson the rest of China can take from Harbin. — Today

* Lin Yanqin is an assistant news editor at Today. Her trip was arranged by China Daily and the CPC Harbin Municipal Committee.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.