In March, the COVID-19 situation across the country remained severe, causing economic growth in many regions to slow down or even come to a standstill. However, local governments did not ease their efforts in attracting investment and promoting industrial development; instead, they sought opportunities amid the shifting landscape and moved forward steadily.
Goals such as fostering specialized, refined, distinctive, and innovative “little giants” and achieving common prosperity remain the top priorities for local economic development. To this end, local governments continue to optimize the business environment and innovate investment promotion methods, striving to create a favorable environment for the mutual development of enterprises and cities.
01. Strict Control Over County-to-District Conversions: Are Cities’ Expansion Dreams Shattered?
On March 10, the National Development and Reform Commission issued a notice titled “Key Tasks for New-Type Urbanization and Integrated Urban-Rural Development in 2022.” The document emphasized the need to exercise caution and strict oversight regarding the conversion of counties (and cities) into districts, and to strictly control the expansion of provincial capital cities.
However, this is not the first time this year that strict control over the conversion of counties into districts has been mentioned; similar provisions were also included in the 2022 Government Work Report. This has undoubtedly had a significant impact on provincial capitals that have been guided by policies favoring strong provincial capitals.
According to statistics, compared to 10 years ago, the number of counties has decreased by 141, while the number of municipal districts has increased by 110. Consequently, some megacities and super-megacities have already transitioned to a "county-free" model.
Compared to county seats, while the administrative level of county-level cities and municipal districts remains unchanged, their management models can shift from agriculture to urbanization, with their economies primarily driven by the secondary and tertiary sectors. This signifies a further step toward urbanization.
Of course, once the population and land of county seats are consolidated into the city’s statistics, the urban population and the city’s tier status surge, serving as a shortcut for many cities to upgrade to the megacity category.
Given that the abolition of counties and establishment of cities offers such benefits, why does the state maintain strict control over this process?
In reality, for cities with weak industrial foundations, blindly abolishing counties to establish cities may result in the city being unable to quickly absorb the employment needs of the agricultural population, leading to a certain degree of hollowing out. Similarly, for county towns primarily reliant on an agricultural economy, significant differences in industrial structure could lead to their marginalization.
Caution does not mean a halt; many cities still have opportunities to expand. For cities with a large economic scale but a small urban footprint, converting counties into cities is a crucial solution to the conflict between population and land availability.
02. Will Hainan’s Development of “Enclave Economies” Trigger an Economic Takeoff?
On March 10, Hainan issued the “Implementation Opinions (Trial) on Implementing the ‘Enclave Economy’ Policy in Industrial Parks,” encouraging industrial parks across the province to attract superior resources and industries from advanced regions and parks, and to jointly build industrial parks in the form of “inter-provincial enclaves.”
The document classifies “enclave economies” into “intra-provincial enclaves” and “inter-provincial enclaves,” aiming not only to facilitate the role of advanced provincial parks as “transferring” and “receiving” entities but also to attract superior resources and industries from other provinces.
The key to the "enclave economy" is mutual consent. Developed regions themselves face industrial spillover and intense external competition, necessitating that neighboring "smaller regions" band together for mutual support. Therefore, the leading role and driving force of developed regions are crucial in terms of top-level design and industrial structure optimization.
Hainan will prioritize exploring the “enclave economy” model in industrial parks with solid foundations within the “Haichengwen-Ding” region, the “Greater Sanya” area, and the Danzhou-Yangpu region. Specific requirements will be established for inter-city and inter-county cooperative parks, relocated industries, and newly established industries, while simultaneously attracting private capital to drive the development of these enclaves.
Combining free trade port policies with the exclave economy serves as a perfect complement. In the future, Hainan will collaborate with more regions through joint development and other means to build “interprovincial exclave” parks, achieving mutual benefits and a synergistic effect.
03. Zhejiang’s Mountain-Sea Collaboration: Will the 26 Mountainous Counties Achieve Shared Prosperity?
On March 13, Zhejiang Province released the “Zhejiang Province Industrial Chain Mountain-Sea Collaboration Action Plan.” The plan aims to assist the 26 mountainous counties in attracting more than 200 key industrial chain projects by 2025, fostering 2,300 new enterprises that meet the scale criteria, ensuring that 10 counties achieve industrial added value exceeding 10 billion yuan, and ensuring that all 26 counties achieve industrial added value exceeding 800 million yuan.
For the 26 mountainous counties to achieve prosperity, industrial self-reliance is key. Zhejiang will use the extension and supplementation of industrial chains as a starting point, implementing a “one enterprise, one county” approach to guide 1–2 leading enterprises from developed regions to establish cooperative projects with enterprises in the 26 mountainous counties, thereby achieving coordinated industrial chain development.
Zhejiang and Hainan are in agreement, both mentioning “enclave economies.” By establishing a number of science and technology innovation and digital economy enclaves, they aim to ensure that provincial-level small and micro enterprise parks cover all 26 counties.
Everyone understands how crucial leading enterprises are to the development of regional industrial chains. In the past, Chongqing scored a major victory by partnering with HP, rapidly clustering the electronics industry and ultimately creating a “trillion-yuan industry.” If the impact on a municipality directly under the central government is this significant, the driving force for mountainous counties will be even stronger.
In fact, the Mountain-Sea Collaboration initiative began as early as the start of this century. Regions such as Lishui and Quzhou have collaborated with Hangzhou and Ningbo to build nine provincial-level Mountain-Sea Collaboration Industrial Parks. Currently, nine companies within these parks have been recognized as National High-Tech Enterprises, and 14 enterprises have achieved scale-up and upgrading.
This clearly demonstrates the significant achievements of the Mountain-Sea Collaboration initiative. The successful model of “the wealthy leading the less wealthy” has also positioned Zhejiang as a pioneer and demonstration zone for common prosperity.
04. Boosting the Private Economy: The Rise of Shandong’s “Little Giants”?
On March 24, Shandong Province released the “2022 Ten Special Action Plans for Promoting High-Quality Development of the Private Economy in Shandong Province.” The plan proposes that this year, Shandong will cultivate 150 new “Little Giants” among specialized, refined, distinctive, and innovative enterprises, 50 key “Little Giants,” and more than 25 privately-owned listed companies…
The concept of “Specialized, Refined, Unique, and Innovative” enterprises has been around for a decade. Why did these enterprises only gain traction last year?
In recent years, foreign targeting and sanctions have made us realize that the early approach of “trading market access for technology” is no longer viable. Developing core components and key materials through independent research is the key to breaking the deadlock, and a large number of “Specialized, Refined, Unique, and Innovative” private enterprises serve as the main force driving technological innovation into industrial implementation.
With the increased focus on small and medium-sized enterprises (SMEs), local governments across the country have rolled out policy documents to foster "Specialized, Refined, Unique, and Innovative" SMEs, and Shandong is no exception. Last November, Qingdao celebrated its first "Qingdao Entrepreneurs’ Day" to listen to entrepreneurs’ voices and pay tribute to them.
SMEs in China account for over 70% of technological innovation, over 80% of urban employment, and over 90% of all enterprises. Therefore, SMEs are inevitably the main force driving economic development and industrial upgrading in every region.
