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Keeping the flame alive in paradise city for merchants

Updated: 2011-12-02 10:50

By Xiao Wen (China Daily)

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Economic transformation must be development-oriented now

Hangzhou - Yiwu is often considered a success story for rapid economic development. Over the 10 years since China entered the World Trade Organization, Yiwu has made several remarkable economic strides. The average daily passenger flow through the city in Zhejiang province has risen to more than 200,000 and the number of containers shipped from it to more than 200 foreign countries and regions is in excess of 1,000. The city is also home to more than 7,000 merchants from 100 countries and regions.

Along the way it has also earned several epithets that describe its economic transformation. It has been called "the sea of small commodities, paradise of consumers" and also the largest market in the world. But more important, it is now seen as an emerging global and specialized market for modernization and commercialization.

Yiwu's economic prowess comes largely from its close integration with the globalization process and stimulation of private enterprises. To some extent it also matches with the national interests, for since the reform and opening-up, China has been moving toward an international labor system by synchronizing its manufacturing process with the rest of the world.

But it is bulk exports of high quality and reasonably priced products that have helped Yiwu flourish and become a major trading center for commodities. Playing a key role in the economic transformation have been the city's entrepreneurs, with their sharp market intuition and keen eye for innovation.

Since the global financial crisis, the economic transformation has become more development-oriented, thus Yiwu also needs to make this its top priority in the coming years. What the city must do is readjust its existing pattern of foreign trade, especially the trade structure, and shift to a development mode.

By doing so, Yiwu, often called the foreign trade window of Zhejiang, will help transform the province's economic development mode and also optimize trade conditions. The "Yiwu effect" has an important strategic value in the overall transformation of Zhejiang's economic development mode.

Over the long term, Yiwu needs to take advantage of its specialized market to promote structural adjustment, reorganization, concentration, and market integration in the upstream industry.

It should also utilize the specialized market to fully integrate the industry chain, promote the development mode of transformation and use its specialized market to build regional, national and even international commodity distribution networks, purchase platforms and logistics centers. All of these will help in global resource allocation and internationalization.

In general, in order to promote the transformation of Yiwu's foreign trade development mode, measures should be taken to speed up the pace of market transformation and upgrade, to establish a modern service industrial cluster, to build an advanced manufacturing industrial cluster and to promote the comprehensive supplementary reform for foreign trade.

Specifically, attention should be paid to the basic role of the market in the allocation of resources and importance should be attached to privately-owned enterprises.

On the other hand, efforts should also be made to actively encourage enterprises' internationalization, such as "going global". Steps should also be taken to encourage the introduction of high-quality inward investment, explore new business operation modes and strengthen Yiwu's cluster advantage as an international small commodity trade center.

The author is a professor in the international economics department of Zhejiang University.

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