In recent years, the Yangtze River Delta and Pearl River Delta regions in the south of the country have enjoyed rapid economic growth. By contrast, the Beijing-Tianjin-Hebei region has lagged behind a situation that calls for new initiatives to help the northern region catch up.

The development gap is, some say, a result of the earlier opening up of the southern regions. On the other hand, regional segmentation and the failure to allow resources and production means to flow freely are an important root cause of the relative underdevelopment of the Beijing-Tianjin-Hebei bloc.

A trend of cross-border investment in China moving gradually to the north is emerging, and capital and technology are playing an increasingly crucial role in meeting market and export demand. Beijing and its surrounding regions are therefore presented with a precious development opportunity.

In the coming five years, or the 11th Five-Year Plan period (2006-10), the region needs to coordinate the flow of resources and abide by a synchronized development strategy to accelerate its development.

The establishment of mechanisms that can ensure resources are shared between the three regions, free flow of production factors, rational planning of industrial layout and commonly conformed to coordination rules will be pivotal for achieving that end.

The three regions should first establish a way of sharing infrastructure, water, minerals, land, air, marine and tourism resources, especially infrastructure that can be used by all of the three regions. Priority should be given to the building of transportation, water diverting, energy supply, telecommunications and tourism networks, which will support overall development. Research on the utility of energy, such as coal, nuclear, wind and sea tide power should be strengthened to optimize the power supply.

The transportation system in the Beijing-Tianjin-Hebei region should be updated. In some cities, the crowded ports, airports, railways and roads cannot meet the demand of the market while in others the demand is inadequate to fully realize the potential of the transportation network.

To solve the common problem of inner city traffic congestion, the cost of private transportation should be raised so that public transport can partly replace private vehicles and ease congestion.

Energy production cooperation should be encouraged in the region. Enterprises should be urged to join hands with energy-abundant regions to alleviate the shortages in the major cities in the northern region.

The tourism market should be tapped in a synchronized way so returns are maximized in the three regions.

Cooperation in the management of land, water and other resources should also be strengthened so efficiency can be improved to benefit the regional economy as a whole.

Cross-border consumption and money transfers should be a focus of the three regions' financial services, so that cross-border business activities can be accelerated.

Compared to the sharing of resources, the establishment of an open, unified, transparent capital and production market is indispensable.

The outdated and irrational policies that hinder the free regional flow of resources must be phased out. An anti-monopoly policy should be adopted as the economy develops.

A cross-border corporate service system based on orderly corporate competition should be promoted. Labor flow restrictions must be eliminated. Farmers should be encouraged to move from rural to urban areas.

These policies, if implemented properly, will better prepare the regions for long-term development, which could also be accelerated by implementing proper industrial planning.

The traditional development mode that is focused on the Beijing-Tianjin-Tangshan city triangle should be continued while the new triangle city bloc - Langfang, Caofeidian and coastal areas of Tianjin, which have more growth potential because of their location - should be promoted so the overall development of the Beijing-Tianjin-Hebei area is better supported by coastal facilities.

The manufacturing zones in the three regions should also be better linked to lead to coordinated growth of industries in the region as a whole.

As market forces are yet to play a large role in China's immature market economy, the government remains crucial in directing the development of the region through drafting proper strategic plans.

To balance the development of the large number of cities, the government could consider adjusting the administrative distribution of the region. For example, Langfang, a rising Hebei city bordering Beijing, may be included in the administration of Beijing municipal government so that the capital city's abundant technology and education resources can be partially transferred to the city, which would benefit both settlements. Such an administrative adjustment could also stabilize the growth of Langfang and expand the development space available to Beijing.

While planning the development of the three regions in a coordinated way, their different advantages should be fully utilized to accelerate growth.

Beijing, as the capital, a metropolis and cultural site should give priority to the development of the electronics, new materials, auto, financial, information, technology and education and tourism industries. The Olympic Games will further speed up the development of its tertiary industries - the core of a modern economy.

Tianjin should focus its development on advanced technology-related manufacturing, transportation and resource-based industries, such as the petrochemicals sector, which will be supported by the rich reserves of salt, oil and natural gas in the areas around Tianjin.

As for Hebei, the most appropriate industries may be capital-intensive, such as iron and steel manufacturing, chemicals and building materials. Such industries, which produce heavy pollution and consume large amounts of energy, do not fit the long-term development plans of Beijing and Tianjin so should be transferred to Hebei, which boasts rich raw material supplies. In the process, of course, polluting equipment and manufacturing procedures must be updated to meet proper environmental standards.

Hebei could also strive to become a major manufacturing supplier for Beijing and Tianjin, which now purchase most of the components needed for industrial manufacturing from enterprises in the south of the country.

The governments of the three regions should standardize their behavior through establishing a co-ordination commission so they do not engage in irrational competition in regional development.

They must also establish a cross-border emergency response system to cope with abrupt social, economic and natural incidents.

The author is a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences

(China Daily October 19, 2005)