The eight-city cluster on the Shandong peninsula should position itself as a regional advanced manufacturing base and take advantage of its close proximity to Japan and South Korea, acting Shandong Governor Jiang Daming said.

The cluster comprises Jinan, Qingdao, Yantai, Zibo, Weihai, Weifang, Dongying, and Rizhao.

As a whole, they generate two-thirds of the province's gross domestic product, which hit 2.6 trillion yuan ($359 billion) last year.

The province is the country's second-largest economic powerhouse after Guangdong and plans to grow its GDP from the cluster by 15 percent and foreign direct investment by 40 percent annually until 2010.

A blueprint for the cluster for 2006-20, calls for six industrial zones to be developed on the Shandong peninsula.

These will cover the petrochemical and medicine industries in Dongying-Zibo, the electronic and IT industries in Jinan, home appliances in Qingdao-Rizhao, the automotive industry in Yantai-Weihai, textiles in Weifang and the marine industry in Rizhao-Qingdao-Weihai-Yantai.

"About 70 percent of listed companies, 70 percent of foreign-funded firms and 80 percent of exported products in Shandong are from the city group," Jiang said.

He said to better exploit the economic potential of the cluster, Shandong will speed up building a base for Japanese and South Korean manufacturing companies on the peninsula centered on Qingdao, Yantai and Weihai.

There are more than 6,000 South Korean and 1,500 Japanese companies on the Shandong peninsula. About 70 percent of all South Korean firms in China have a presence in Shandong.

Xia Geng, mayor of Qingdao, said there are 5,000 South Korean companies in the city and the number is expected to double in five years.

The coastal city is promoting the establishment of a bonded zone to attract more foreign and domestic investors to set up manufacturing bases.

Qingdao will try to facilitate the construction of a railway ferry project between China and South Korea, so goods can be moved cheaply, Xia said.

The Layout of the City Group in Shandong Peninsula (2006-20) shows the urbanization level of the cities will reach 70 percent by 2020.

The population will grow to 5 million in Qingdao and 4.3 million in Yantai.

(China Daily January 24, 2008)