The 2023 China Industrial Transfer and Development Matchmaking Activities (Yunnan) just concluded in central Yunnan’s Kunming city, highlighting the southwestern province’s role in pioneering industrial migration among Chinese regions and in boosting wider regional cooperation and development between China and south-southeast Asia.

Industrial transfer means that under the backdrop of market economy, certain enterprises in developed regions adapt to the changes of regional comparative strengths and thus transfer part(s) of their industrial production to developing regions through cross-regional direct investment. 

By adjusting the spatial layout of industries, industrial transfer optimizes regional economic structure and inter-regional economic relations.

Under the present Chinese economic landscape of “dual circulation” that takes domestic development as the mainstay, Yunnan province needs to accommodate more industries transferred from developed provinces to help optimize the industrial spatial layout in China and spur stronger economic flows among Chinese regions.

Yunnan governor Wang Yubo said that as a major province to undertake industrial transfer, Yunnan will focus on industrial parks, policy coordination and port economy, and in creating a first-class business environment, the province will step up construction of the international land-sea trade corridor to the Indian Ocean.

Back in the early 1990s, when the Chinese focus of reform and opening-up was largely on coastal areas like Shanghai and Shenzhen, Yunnan took the lead in hosting the China Kunming export commodities fair, and by joining hands with its neighbouring provinces of Sichuan, Guizhou, Guangxi and Xizang/Tibet in initiating the event, the province began to invite in investment and industries from the relatively-developed cities like Chengdu and Chongqing. The Yunnan move triggered industrial migration and economic integration in southwest China.

As more enterprises of hydro-power generation settled in Yunnan, provincial development in clean energy contributed a lot to the "West-to-East Power Transmission" project, making the western and eastern Chinese regions interdependent in a way: West China needs industries and technologies from east China that is in turn powered by the clean energy from west China.

China has a relatively complete system of industries. However, given the development gaps among different Chinese regions, industrial transfer remains necessary to balance economic development. 

Based on its geographical location and natural resources, Yunnan invited investments and industries that are involved in clean energy, rare metals, e-commerce, bio-medicine and smart manufacturing.

To usher in more industries, Yunnan has issued diverse action plans and preferential policies to improve its business environment and create the “lowland effect”, where investors are fascinated by favourable policies, cheaper labour and cheaper raw materials.

Biomedical enterprises are safeguarding the health of the public, while e-commerce is triggering a new round of industrialization in the province. Thanks to the energy-sufficient production, they are contributing to the Chinese carbon goals of reaching peak carbon emissions before 2030 and achieving carbon neutrality before 2060. For instance, the Shandong-based Weiqiao Pioneering Group cooperated with east Yunnan’s Luxi county in building up a brand-new 600kA electrolyzer that reduces energy consumption by 500 kWh in making each ton of aluminium.

The growing new-energy battery production in Yunnan has made related material providers feel at home, allowing them to develop at an unprecedented pace. The Shanghai-based Shanshan Technology set up a battery-material-producing base in central Yunnan’s Anning city. The project was put into operation after 247 days of construction, and it now provides 300,000 tons of anode materials yearly. Meanwhile, Fengyuan Lithium Energy Technology had its project in central Yunnan’s Yuxi city signed and put into production within a year. 

At the matchmaking, Yunnan signed 382 industrial projects with diverse parties, with a planned total investment of 396.6 billion yuan. Industries will come to the province in bulk.

During a fact-finding trip to Yunnan in late April, Chinese Premier Li Qiang asked the provincial border regions to amplify their comparative strengths, upgrade their industrial gardens, synergize their policies, quicken steps to attract high-quality projects and lead the nation in opening up.

When it comes to Yunnan’s development, thinkers and academicians would utter something quite similar -- to the effect that the province’s unique strength lies in its geographical location, and opening up is the right way for Yunnan to make a difference.

So, what does this really mean? Does it make any sense? Well, strategically, YES. If you unfold a world map and focus on the Euro-Asian continent, you will see Yunnan is located right among China, South Asia and Southeast Asia. And if you look into the regions in detail and draw a triangle by linking up the three points of Beijing, New Delhi and Singapore – dubbed as the brain of ASEAN, you will notice that Yunnan’s provincial capital of Kunming lies largely at the trijunction of the three regions.

Now that Yunnan has been positioned as the Chinese pivot of opening up to South Asia and Southeast Asia, why not make a big difference by serving as an incubator for regional integration? First, invite bulk industries from South China, East China and North China on the basis of provincial endowment in biodiversity resources and others. Second, encourage the invited businesses at their maturity to tap the huge market in south-southeast Asia.

Driven by the China-South Asia Expo, with its permanent venue set in central Yunnan’s Kunming city, the volume of goods traded between China and South Asian countries has increased from less than 100 billion U.S. dollars in 2013 to nearly 200 billion U.S. dollars. “While investing in Kunming, we hope to invite more upstream and downstream industries to the city for a complete chain and join hands with them in doing business in South Asia, Southeast Asia and beyond,” said Chen Yong, vice president of Sugon Information Industry Co., Ltd during the matchmaking.

Wang Xin, deputy director of strategic investment at GLP New Energy (Shanghai), said GLP has a presence in southwest Yunnan’s Lincang for its natural resources and decisive role in the China-Myanmar new trade corridor to the Indian Ocean.