Province Introduction of China: Shanxi

Published: 01 Apr 2009 20:12:15 PST

Key Information 




















Introduction
Shanxi Province is situated in the middle of the Yellow River Valley. It is abundant in mineral resources and its reserves of coal, bauxite, pearlite, gallium and zeolite rank first in the nation. The province has been dubbed the “kingdom of coal”, with verified reserves amounting to 261.2 billion tons, accounting for one third of the nation’s total.
 
Economic Overview
In 2006, Shanxi’s GDP increased by 13.7% from 2005. The growth of the agriculture, industry and service sectors stood at 5.5%, 16.8% and 10.5% respectively year-on-year. Figure 11.6.1 shows the GDP breakdown by sector. Industry leads the economy, contributing a share of 57.8% of the province’s GDP. Service and agriculture contribute 36.3% and 5.8% respectively.
  

 
Fixed asset investments grew by 21.3% in 2006. Investments were made primarily in the manufacturing and mining sectors. Figure 11.6.2 shows the sectors in which the fixed asset investments occurred. 
  






 


In terms of consumer goods, Shanxi’s retail sales of consumer goods was ranked 17th in China in 2006. Major consumer goods included automobiles, fuel and electronic products. Key consumer centers are located in Taiyuan and Yuncheng.   

 







Industry
Shanxi’s industry’s share in total GDP has grown fast since 2001. By the end of 2006, its share of industry was the highest among all the provinces in China. Pillar industries in the province are coal mining, metallurgy, chemical and machinery. Table 11.6.1 shows the number of enterprises in each of these industries, and the industries’ gross industrial output, weight, and value-add of industrial outputs.








  

 
Shanxi has the highest coal production figures in China. The deposit volume and output of coal in this province account for 1/3 and 1/4 of the country’s total, respectively. In 2006, the output of coal and coke reached 581.42 and 84.7 million tons respectively, 4.9% and 24.7% higher than the previous year. Major coalfields are located near Taiyuan and Datong, and the Datong Coal Group Corp is one of the most renowned coal enterprises in the nation. A new resource policy encourages enterprises to enlarge their production scale in order to reduce waste. 
 
Benefiting from the abundant mineral resources as well as the electricity generated from the coal, a large and complete metallurgy system has been set up with ferrous and nonferrous metallurgy industries. Taiyuan Iron&Steel Group Corp is an extremely large iron and steel company in China, and is also a key stainless steel producer. Shanxi Aluminum Plant is one of the nation’s biggest alumina production bases.  
 
In Shanxi, the chemical industry’s current direction for the development is to utilize the coal resources. Besides the resource advantage, Shanxi also has a good industrial base and a high concentration of industrial groups for developing the coal chemical industry. Shanxi Fertilizer Plant has become the largest compound fertilizer production base that uses coal as raw material in Asia.  
 
The development of coal-related industries, however, brings with it heavy pollution and serious mining accidents. Many cities in Shanxi are rated as the most polluted cities in China and the death rate in coal mining is 100 times more than that of the U.S. In 2007, measures have been adopted to close the small scale coal mines for safety reasons.  
 
As one of the steel and aluminum production bases in China, Shanxi has cheap raw material as well as convenient transportation for machinery manufacturing. Types of machines produced here include trucks, coal machines, railway equipment, textile machinery, auto engines and parts. Taiyuan Heavy&Mining Machinery Works and Taiyuan First Machine Tool Works are among the more well-known companies in this field.   
   
Services
In the service sector, noteworthy industries include the finance, insurance, retail and logistics industries. By the end of 2006, the deposit balance of the financial institutions reached RMB 865.6 billion and the loan balance reached RMB 487.9 billion. Annual cash income was RMB 1.8 trillion. The gross premium of the insurance industry was RMB 14.1 billion in 2006, up 15.7% over 2005. Life insurance accounted for 72.3% and property insurance accounted for 27.7% of the total premiums.
 
The retail industry in Shanxi also experienced fast growth in 2006. Sales of consumer goods grew by 15.1% from 2005 and more and more foreign retail enterprises emerged in Taiyuan. Sams, Wal-Mart, Carrefour and Metro are examples of these enterprises. In recent years, due to the stimulation from foreign competition, domestic retail enterprises have also grown rapidly in numbers. Hualian and Meet All are among the more successful ones in the capital. Benefiting from the transport of coal and the development of the retail industry, Shanxi’s logistic industry grew rapidly, with total freight traffic in 2006 reaching 1.3 billion tons. Plans have also been made to set up four logistics parks in Taiyuan, Datong, Yuncheng and Houma.   
   
Foreign Trade and Foreign Investment
In 2006, the total imports and exports grew by 19.5% over 2005. The major export products were minerals, base metals, machinery, chemicals, gypsum and cement, while major import products were minerals, machinery, base metals, chemicals and optical products.   
 












Table 11.6.2 shows the major trading partners of the province. Main import sources are Australia, Germany, India, Japan and Cuba, while key export destinations are the U.S., South Korea, Japan, Belgium and Italy. 
  













 
Shanxi receives most of its FDI (63.3% of total FDI) from the Virgin Islands. The Bahamas, Hong Kong, U.K., and the U.S. are the province’s other investors. Figure 11.6.3 shows the share of FDI injected by these countries. 
 






 
Most of the FDI received is channeled into manufacturing (44.0% of total FDI) and mining (38.2%). Real estate, energy supply and logistics receives 10.6%, 1.6% and 1.4% respectively. Figure 11.6.4 illustrates this.  
   
  
 
In the coming years, Shanxi will continue to encourage foreign investors to participate in the technological improvement of traditionally advantageous industries, such as the coal and coke, metallurgy and electric power industries.
 
Major Development Zones
There are three major development zones in Shanxi. They are Taiyuan Economic and Technological Development Zone, Data Economic and Technological Development Zone and Taiyuan Hi-Tech Industrial Development Zone. Table 11.6.3 shows the area, pillar industries, gross industrial output and utilized FDI of the development zones.











  
 
Education
Shanxi has 56 universities and colleges with 446,428 students, including 14,435 graduates. One of the key universities is Taiyuan University of Technology. In addition to educational institutions, there are also 164 research institutes specializing in agriculture and manufacturing. 
 
Major Cities in Shanxi
There are a total of 11 cities in Shanxi province. Taiyuan is the city with the highest economic growth, with a GDP of RMB 101.4 billion. In terms of FDI, it is the second highest, with the city of Luliang receiving US$19 million more. Table 11.6.4 shows the cities’ GDP, land area, population and FDI. It also ranks the cities in terms of their GDP. 
 













   
 
Taiyuan



















 
Introduction
Taiyuan, the capital of Shanxi, is located in the centre of the province. It has a history spanning 2,500 years and is an important communication hub for North China.  
 
Investment Climate
Pillar industries in Taiyuan include energy, metallurgy, machinery and chemicals. In 2006, the gross and value-added industrial outputs reached RMB 109.6 and 33.6 billion respectively. Famous companies in the city are Taiyuan Iron&Steel Group Corp, Taiyuan Heavy Machinery Works, Taiyuan Mining Machinery Works and Taiyuan First Machine Tool Works. Due to its heavy industrial structure and pollution, Taiyuan has paid more attention to the environment in recent years. In 2006, pollution emission was reduced by 15% from the year 2000.  
 
Foreign Investment
Taiyuan is one of the major destinations of FDI in Shanxi, accounting for 29.3% of the province’s total. In 2006, the utilized FDI rose by 73.5% over 2005 and 38 foreign invested projects were signed with a total investment of US$3.9 billion. By the end of 2006, the city had established ties of friendship with 8 other cities overseas.  
 
Important Travel Information
Time taken to travel from Taiyuan Wusu Airport to:  
- Beijing
- Shanghai
- Guangzhou
- Chengdu
- Harbin
- Chongqing
- Xian
- Hong Kong  1 hour
1 hour 40 mins
2 hours 15 mins
1 hour 55 mins
2 hours
1 hour 50 mins
55 mins
2 hours 45 mins