DATE=3/9/2000 TYPE=BACKGROUND REPORT TITLE=CHINA-HINTERLAND NUMBER=5-45601 BYLINE=ROGER WILKISON DATELINE=BEIJING CONTENT= VOICED AT: INTRO: Twenty years after China's late leader Deng Xiaoping launched economic reforms that have greatly improved living standards in the country's coastal areas, his successors say it is time to spread the prosperity to China's vast and impoverished western region. VOA correspondent Roger Wilkison reports the Chinese government says developing the west is important for national economic growth, poverty eradication and social stability, but it has so far been vague about how it plans to attract the billions of dollars needed to make the project succeed. TEXT: The plan to boost growth in the hinterland is one of the main issues before the annual session of the National People's Congress -- China's legislature. Many of the nearly three thousand legislators come from landlocked provinces that have not benefited from China's dynamic growth over the past twenty years. The income gap between the hinterland and the coast is growing, and this is breeding resentment in poorer areas. Luciano Bay, who heads the Italy-China Chamber of Commerce in Beijing, says investment -- both foreign and domestic -- has been concentrated for too long in the prosperous coastal areas and big cities. //BAY ACTUALITY// It is essential that investments be redirected to the western provinces. First of all to sustain the growth of the economy, but most importantly to reduce the gap between the individual income of people living in Shanghai or Beijing and people living in Chengdu or in a small town in Gansu province. //END ACTUALITY// In 1998, per capita gross domestic product for Shanghai -- China's richest area -- was 34-hundred dollars, whereas in arid Gansu province it was just four hundred dollars. Though Mr. Bay and other foreign business leaders say they have so far not been pressured by the government to invest in the hinterland, China's top economic planner -- Zeng Peiyan -- says the government plans to rely on what he calls market forces to speed up development there. Mr. Zeng -- speaking through an interpreter -- says western China has several advantages over the East. //INTERPRETER ACTUALITY// The advantage of the west is that the population is huge and the land is cheap and the resources are abundant. The eastern part of China, especially the coastal areas, are very crowded, and the land price there is more and more expensive. And also the labor cost is getting higher and higher. And the markets there are getting saturated. //END ACTUALITY// Foreign investors have largely shunned China's landlocked western and central provinces. And despite Mr. Zeng's upbeat touting of the region as a good place to do business, Jeanne-Marie Gescher -- the head of the British Chamber of Commerce in China -- says she still has doubts about the feasibility of investing there. //GESCHER ACTUALITY// We are supportive of expanding into the hinterland. The difficulty is that, from a commercial perspective, the fundamentals have got to be there. And I'm not sure that a commercial case has been made up for investment in the hinterland as a whole. //END ACTUALITY// Ms. Gescher says some local governments in the hinterland are offering tax preferences for foreign investors. But she says the central government has not yet explained whether investments in the west will get a reasonable return. Ernst Behrens, the head of the German Chamber of Commerce in China says the prime requirement for investors is infrastructure, which is virtually non- existent in the 10 interior provinces targeted by the government plan. //BEHRENS ACTUALITY// The government has to install a proper infrastructure because business is following infrastructure. So we need to have transportation. We need to have energy. We need to have communication in those areas. And this may spur investment in these regions. If the market is difficult to access because of non-existing infrastructure, it will be very difficult. //END ACTUALITY// The government says it will invest up to 400 billion dollars in building or improving airports, highways and railroads in the hinterland. It also pledges to reverse the environmental destruction in the region and says priority will be given to water conservation projects. And it says it will build pipelines to transport the west's abundant natural gas to the energy-guzzling coast. Still, potential investors express wariness about what one calls a "build it and they will come" approach to infrastructure development. Even Mr. Zeng -- the top government planner -- admits it will take a long time before the hinterland can catch up with the rest of China. //INTERPRETER ACTUALITY// The development of the west is a very tough job, and also it is a long-term job. It cannot be completed just within one five-year plan or several five-year plan periods. It will be completed through the great efforts of several generations. //END ACTUALITY// The targeted region encompasses more than half of China's landmass and one quarter of its one-point- three billion people. Improving the living standards of the poorest of China's poor and turning them into consumers is one of the biggest challenges the government faces in this century. (signed) NEB/RW/GC/FC 09-Mar-2000 03:50 AM EDT (09-Mar-2000 0850 UTC) NNNN Source: Voice of America .