Shanxi eyes service sector for growth

Shanxi province wants to prove that it is no mere coal producer, as it expands its economy into new areas to tap its economic potential.

"We will develop the modern service sector as the new growth engine," said Wang Yixin, vice-governor of the province.

A fresh GDP ranking listed Shanxi 30th out of 31 provinces, autonomous regions and municipalities with a 3.1 percent growth rate, less than half the nation's average.

Many attribute that to low prices of coal, the main product of the province, and are rather pessimistic about the province's goal of hitting a 6 percent GDP growth rate in 2016.

However, Wang believes that financial services, aviation, exhibitions and e-commerce will help develop the province's economy.

"We hope finance can not only support the real economy, but also be a new growth point," Wang told China Daily in an exclusive interview. "Shanxi has the tradition - in the early 1900s, Shanxi businesspeople opened the earliest domestic banks all over the nation."

More local financial institutions are springing up, while more nationwide institutions, such as those involved in import and export, will open their branches in Shanxi within the year, he said.

His words echo Premier Li Keqiang, who during an inspection tour to Shanxi earlier this month encouraged them to resort to the traditional Shanxi business spirit, the earliest version of finance in modern China.

"Many renowned modern businesspeople, like Li Yanhong of Baidu, come from our province," Wang said.

"Yet unlike Ma Yun, who founded Alibaba in his home province of Zhejiang, they established firms somewhere else. We need to improve our business environment."

One of the keys to that is the e-commerce sector, Wang said, and in the last two years the province has seen immense progress in that area.

For example, lecuntao.com serves as a trading platform for rural regions where most online shops do not provide service because of difficulties in transportation. It covers over 60,000 villages in 10 provinces.

Another is gongtianxia.com, which began by selling local agricultural products from Shanxi and gradually enlarged its business to other agricultural provinces. It saw sales of 465 million yuan ($70.7 million) in 2014.

"We need to pay as much attention to the new sector as to the coal industry," Wang said.

In early 2015, local supermarket giant Meetall founded quanqiuwa.com to sell goods purchased from overseas via local third-party agents. Currently, over 2,000 shops employing 20,000 people have joined the website, serving consumers within and out of the province.

"Even as the No 1 retailer in the province, we felt the challenge from online retailing," Meetall board chairman Chu Dequn said. "Last year we decided to go online, too."

Zhang Zhouping, a senior researcher at independent think tank China E-Commerce Research Center, visited Taiyuan two months ago at the invitation of a local coal company that wished to found an online trading website.

"It is more urgent for Shanxi to improve the soft rather than hard environment for e-commerce," Zhang said.

"It must give up the idea of selling resources and focus on promoting interconnectivity. That's a change of philosophy, not only behavior," Zhang said.