The impoverished and mountainous south-western province of Guizhou has become a laboratory for China’s future socio-economic priorities. Yet the likely failure of such policies could well serve as another example of the substantial capital misallocation within the country’s planned economy.
Big data experiment
Guizhou province is renowned throughout China for three products – tobacco, tea and moutai, the country’s most popular liquor. Despite these commodities, Guizhou remains one of the country’s poorest and most underdeveloped provinces, set apart from many other more ethnically homogenous regions of China by its large ethnic minority groups – notably the Miao, Buyi, and Dong.
Provincial leaders have attempted to capitalise on these natural resources [in Guizhou] to advance economic development plans
While the landlocked province is one of the poorest in China, its geographical location and climate are advantageous for energy-intensive industries. Guizhou occupies a plateau surrounded by mountain ranges, with a mild climate and a lower natural hazard risk profile than neighbouring Sichuan and Yunnan provinces, both of which face threats ranging from earthquakes to heatwaves. It is also rich in natural resources, including water and coal, allowing electricity to be generated cheaply and abundantly from locally-mined fossil fuels and hydro sources.
Provincial leaders have attempted to capitalise on these natural resources to advance economic development plans, notably to increase the role of higher value-added technology services in Guizhou’s economy. In 2016, the province became China’s first ‘Big Data Comprehensive Pilot Zone’, placing it at the forefront of the country’s growing big data industry. This sector collects and stores vast amounts of information for various purposes, including the improvement of business operations and practices. From a broader policy perspective, the Chinese government’s objective in locating this industry in Guizhou is to assess whether the sector can spur economic development in remote regions without compromising the environment.
Over the past three decades, China’s rapid industrialisation and modernisation has come at the expense of air, land and water pollution – a price the authorities were willing to pay in exchange for maintaining impressive double-digit growth rates. This formula for growth has now become increasing unsustainable due to rising economic, political and social costs.
One sign of this is the growing number of protests over China’s deteriorating physical environment and its impact on public health and the livelihoods of millions of its citizens. This trend has unsettled the Communist Party of China (CPC) due to its perennial fear that instability could undermine its legitimacy and, by extension, its grip on power. A successful transformation of rural Guizhou through ‘clean’ service-based industries could serve as a template for similar initiatives in inland and marginalised regions.
To date, the U.S. technology company Apple Inc. is the most notable foreign investor in Guizhou. It announced in July 2017 that it will build a USD1 billion data centre for its cloud services in partnership with state-linked Guizhou-Cloud Big Data Industry Co. Ltd data management firm. The investment is Apple’s first effort at localising its service to comply with Beijing’s cyber-security laws, which came into effect in October this year and require critical infrastructure network operators to store data collected in the country within China.