Province Introduction of China: Gansu

Key Information 
 




















  Introduction
Gansu, often abbreviated to “Gan” or “Long”, is situated at the juncture of three highlands - the Qinghai Tibet Plateau, the Inner Mongolia Plateau and the Huangtu (Loess) Plateau. Lying along the middle and upper reaches of the Yellow River and Yangtze River, it borders Shanxi to the east, Sichuan to the south, Qinghai to the Southwest, Xinjiang Uygur Autonoumous Region to the Northwest, the Inner Mongolia Autonomous Region to the North and the Ningxia Hui Autonomous Region to the Northeast. Lanzhou, its capital city, lies in the southeastern part of Gansu.
 
Gansu is rich in mineral resources and 145 types of minerals have been discovered in the province. It also boasts 94 types of reserves including nickel, cobalt, platinum, selenium, gold and iridium. The province also has large deposits of petroleum, natural gas, chromite and zinc. Due to the 450 rivers in Gansu (78 of which have an annual runoff of over 100 million cubic meters each), water resources are abundant.  
 
Gansu Province is the cradle of Chinese culture. The Yangshao Culture can be traced back to about 6, 000 years ago. The Silk Road, linking China with the western countries in ancient times, was built during the reign of Emperor Wu in the Western Han Dynasty (206BC-8AD). It is also home to the Dunhuang Mogao Grottoes, the largest and best-preserved Buddhist art museum. Situated along the Silk Road, there are 492 grottoes in existence and 425 painted clay figures. It is also called the “Art Treasure House of China”.   

Economic Overview
Gansu’s economy has been growing at an average rate of 10.7% since 2000. In 2006, its GDP had risen 11.4% year-on-year to RMB227.7 billion (USD 29 billion), more than double the figure in 2000. Figure 12.2.1 shows the GDP breakdown by sectors. The industrial sector accounts for 45.8% of the GDP and the service sector accounts for another 39.5% of the province’s GDP. Agriculture remains the lowest contributing sector, with a 14.7% contribution to the GDP.   
 
In 2006, Gansu’s fixed asset investment soared 16.76% year-on-year to RMB 102.5 billion, of which 5% floated into the agricultural sector, 42.6% into the industrial sector and 52.5% into the service sector. Gansu’s consumption market is also expanding steadily.  
 
In 2006, retail sales of consumer goods hit RMB71.7 billion, up 13.4% from the previous year. The sales of durable goods witnessed a notable growth. RMB 2.4 billion worth of automobiles were sold in 2006, accounting for 11.9%, while sales of telecommunication equipment jumped 23.4% year-on-year to RMB260 million.   
  

 
Agriculture
Gansu was once an important agricultural base in China. However, due to ecological problems such as severe water and soil losses and water shortage, the value-added output of farming, forestry, and animal husbandry have been growing at a moderate pace, reaching RMB 39.5 billion, RMB 15 billion and RMB 13.5 billion respectively. 

The output of grains and oil crops were reduced 3.45% and 2.61% to 8.1 million tons and 489,900 tons respectively.  
  
 
Industry
Due to the rich resources, petrochemicals, non-ferrous metals, electricity, metallurgy, food and equipment have become Gansu’s six pillar industries. These industries gained RMB 68.2 billion of added-value output in 2006, contributing over 88% to the province’s total added-value industrial output.   
   
The profit of these industries also exceeded RMB 10 billion, accounting for 93.22% of the province’s total. Figure 12.2.2 shows the pillar industries and their share of the value-added industrial output in Gansu. 
 
Gansu has relatively rich oil reserves. By the end of 2006, the reserves of petroleum stood at 87.3 million tons. The two most important oilfields in Gansu are the Yumen Oilfield and Xifeng Oilfield. Yumen Oilfield, located along the Silk Road, was the first oilfield found in China. Xifeng Oilfield has more than 1 billion tons of oil and gas reserves. In 2006, 2.32 million tons of oil were produced, up 9.0% year-on-year.  
 
The value-added industrial output in the petrochemical industry increased 10.2% year-on-year to RMB20.8 billion in 2006, accounting for 26.9% of the total value-added industrial output. Profit in this sector amounted to RMB 745 million in 2006. Lanzhou Chemical Company, Yumen Oil Field and Qingyang Refinery and Petrochemical Co. Ltd, three units under the country’s largest oil firm, China National Petroleum Corp (CNPC), are the most important players in Gansu’s petrochemical industry.
 
In 2006, Gansu produced 637,700 tons of aluminum, 101,200 nickel, 281,900 tons of copper and 230,500 tons of zinc. The total production of the 10 major non-ferrous metals has amounted to 1.3 million tons, 11.1% higher than in 2005.  
 
Thanks to nonferrous metals clustered in Lanzhou, Jinchang and Baiyin, state-level nonferrous metal new material industrial bases were formed.  
 
They generated sales revenues of RMB 52.6 billion (four times the figure recorded in 2002), accounting for 23.1% of the province’s GDP. Major players in this industry include Jinchuan Group, Lanzhou Liancheng Aluminum Industrial Co. Ltd, Lanzhou Aluminum Co. Ltd and Baiyin Nonferrous Group. They achieved RMB 6.56 billion, RMB 337 million, 319 million and RMB 117 million worth of sales revenues respectively.
 
The booming nonferrous metal sector has driven up the development of metallurgy. In 2006, the industrial output in the metallurgy sector hit RMB26 billion, accounting for 33.9% of the province’s total, while the added-value output went up 45.0% year-on-year to RMB 7.58 billion - the fastest growth among all the pillar industries. In 2006, RMB 5.1 billion added-value industrial output was gained from the equipment manufacturing sector, with a rise of 22.7%, while the profit from this sector climbed up 3.12% to RMB 335 million. Lanzhou Lanshi Group and Spark Machine Tool Co. Ltd are two major equipment manufacturers in Gansu, realizing RMB 2 billion and RMB 400 million worth of sales revenues respectively. 
   
Services
With many diverse relics and places of interest, Gansu has become a hot spot for tourism. About 15.7 million tourists, including 303,254 overseas tourists, have visited Gansu in 2006, an increase of 30.32% year-on-year. US$62.9 million has been generated from the tourism sector, representing an increase of 7.085% over the previous year.   
  
Foreign Trade&Foreign Investment
The turnover of foreign trade hit a record high of US$3.8 billion in 2006, up 11.9% over the past year. Import and export value rose 38.34% year-on-year and 50.01% year-on-year separately to US$1.5 billion and US$2.3 billion.  
 
The main exported products included equipment (US$1.9 billion), chemicals (US$105 million) and base metals (US$931 million), while the main imported goods were minerals (US$12.3 billion), base metals (US$773 million) and equipment (US$201 million).  
 
Australia is Gansu’s largest foreign trade partner, with foreign trade totaling US$894 million, followed by South Korea (US$491 million), Chile (US$325 million), the U.S. (US$322 million) and Germany (US$160 million).  
 
Gansu has approved 38 FDI projects in 2006, 4 more than 2005. It attracted a total of US$ 86 million worth of foreign investments, down 36.13% from the previous year, while actualized FDI amounted to US$30 million, up 44.52% year-on-year.  
 
Foreign investors chose to set up ventures in the equipment and energy sectors. Total investments amounted to US$967 million and US$645 million in the respective sectors by the end of 2006, accounting for 57.8% of the total investments infused in foreign-funded firms. 

 Figure 12.4.3 shows the utilized FDI breakdown by industries in 2006. Much of the utilized FDI was channeled into the manufacturing industry. Other industries with high utilized FDIs were energy, logistics, real estate and mining.  
 

 
Hong Kong remained the major FDI source for Gansu. By the end of 2006, Hong Kong had invested in a total of 938 projects, with actualized FDI surpassing US$1 billion. Netzsch from Germany, Veolia from France, CIC Hightime Resources Limited from Hong Kong and Nuskin from the U.S have made their presence felt in Gansu.  
   
 
Major Development Zones
Gansu has two state-level development zones - National Lanzhou Economic-Technical Development Zone and Lanzhou National New and High Technology Industrial Development Zone. The province also boasts 30 province-level development zones that encourage investments in new materials, medicine, IT biotech, new pharmaceutics and state-of-the-art manufacturing industries.   
 
Education
There are 33 higher education colleges and universities with enrollment numbers growing 14.9% year-on-year. Additionally, the number of enrolled postgraduates has increased by 21.48% to 18,100 in 2006. Lanzhou University, founded in Lanzhou in 1909, is one of China’s premier universities.   
 
Major Cities in Gansu
There are 14 cities in the Gansu province. Table 12.2.1 shows the GDP, land area and population of the cities. 
 
 
Among these cities, the city of Lanzhou has shown the greatest economic growth, with a GDP of RMB 63.9 billion. The following section presents a brief overview of Lanzhou.











 
Lanzhou



















 
Introduction
Lanzhou is located in the central section of Gansu. Its name is derived from its geographic location, as the Gaolan Mountain Range lies to its south. It was once an important fortress for the Hexi Corridor (an eastern stretch of the Silk Road), which led to a long period of prosperity for the city.   
   
It was also called the “Golden City” in ancient times, as gold was found in the area. It has served as the regional communication and transportation hub for a long period of its history.  
 
Investment Climate
Lanzhou is the economic center for Gansu. Its economy has witnessed a rapid growth for years. In 2006, the city’s GDP grew by 12.0% to RMB 63.8 billion, accounting for 28% of Gansu’s GDP.  
 
Petrochemical and metal industries played an important role in Lanzhou’s economy. In 2006, they processed 9.5 million tons of crude oil and produced 1.7 million tons of gasoline. The outputs of steel, aluminum and ferroalloy reached 1 million tons, 462,780 tons and 357,400 tons respectively, up 20.99% year-on-year, 14.04% year-on-year and 7.23% year-on-year.  
 
Foreign Investment
In 2006, the city’s total foreign trade volume surged 10% to US$788 million, with import values totaling US$580 million - up 15.5% year-on-year. The export structure is improving, with rising export volumes of medicine, fibers, new packaging materials and other high-tech products.
 
Lanzhou approved 17 foreign-funded projects in 2006, with foreign investments hitting US$95.3 million. Carlsberg from Sweden, Geely, the domestic private car giant, Coca Cola from the U.S., China Tai Group from Thailand, Watson from Hong Kong and Lee Kum Kee from Taiwan have entered Lanzhou.  
 
Important Travel Information
Lanzhou Zhongchuan Airport is the largest airport in Gansu and also an important air hub in the western region. It has daily flights to major cities in China. Time taken to travel from Lanzhou to the following cities is as follows:  
 
- Beijing
- Hong Kong
- Shanghai
- Chongqing
- Wuhan
- Xiamen
- Haikou
- Chengdu
- Changsha
- Shenzhen
- Kunming
- Xian
- Guangzhou
- Tianjin  2 hours
3 hours
1 hour 15 min
1 hour 15 min
3 hours
3 hours
4 hours 15 min
1 hour 20 min
2 hours 15 min
4 hours 15 min
3 hours 35 min
2 hours
2 hours 55 min
3 hours 10 min