Local governments' hopes for funds pie in the sky

Graphic by chinadaily.com.cn. [Source: cntv.cn]

A senior official of the National Development and Reform Commission said at a recent news conference in Beijing on the Belt and Road Initiative that some local governments' concerns that they are not on the proposed Silk Road Economic Belt or the 21st Century Maritime Silk Road are groundless, because it is wrong to suppose the central government will give money to the provinces directly involved.

This is a timely clarification of the central authority's position that should dispel local governments' worries that they are missing out on a lucrative pay out, as the commission the official leads is the decision-making department that is responsible for approving government projects.

As China transforms the Belt and Road from an initiative to foster common development into action plans for greater regional interconnectivity, the provinces and autonomous regions named in the plans released last month will have a lot of work to do.

And they should be aware the central authority has never pledged any funds. In fact, every province has its role to play in the strategy, and the local governments will need to find their own position in the project, instead of looking to the central government for support.

The initiative actually provides a grand platform for local governments. They should conduct more intensive studies on the targeted countries and coordinate their enterprises to take the initiative to enter foreign markets.

It is the same for regional developments at home. The central authority has approved the plans for Beijing-Tianjin-Hebei regional integration, the Yangtze River economic belt and the Pearl River economic belt as national strategies, to inspire the local governments concerned to strengthen their collaboration with each other.

These projects pose higher requirements for government reform, so that it changes from a monopoly controller of all kinds of resources to a responsible defender of the market order and the provider of public services and public products.

With the Chinese economy entering a "new normal", local officials should adapt their mentality to the new reality that economic growth cannot rely on government investment any more. Creating a healthy business environment to let the market play a decisive role in allocating resources is what the government needs to do.

After the China (Shanghai) Pilot Free Trade Zone was founded in September 2013, the first in China, dozens of places applied to become the country's second FTZ. But after they saw how difficult it has been for the Shanghai FTZ to make breakthroughs in some key areas, the FTZ application craze has gradually cooled down, and the applicants have become more reasonable.

Every new national strategy involving local authorities means new responsibilities for them. Yet, almost all local governments celebrate once a local economic development initiative is upgraded into a national strategy. They seldom mention the new duties and responsibilities that come along with a new project. They should remember there are no gains without pain.