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Let’s all go green and explore its real economic benefits

Girls in traditional Chinese costumes enjoy a spring tour in Fantawild park in Wuhu, Anhui province. (Lai Xinlin / For China Daily)
Prose writer Liu Liangcheng wrote his book In Xinjiang with a tribute to the ancient town of Kuqa, claiming that “in this field, grass can grow old heartily without worries of being eradicated. A tree does not need to worry about choosing a wrong place for growth … Birds nest in the branches and catch insects in the wheat fields underneath.”

But, he laments, “in many places, people have been too diligent, changing the Earth to an unearthly state that only suits themselves for a living … There, except for the edible grain, the land no longer has any right to grow anything else.”

Much so in an era of industrialization and urbanization, so I tried to find an example which goes against this trend, and got one: Wuhu, a city in Anhui province sitting on both banks of the Yangtze River.

This past spring, I toured its God Mountain Park. Strolling around, I could hear birds chirping, see many people walking, playing or doing exercises, and encounter lakes dotted with lotuses and reeds, five mountain ridges flanked by trees, flowers and weeds, as well as small rivers abuzz with fish and insects.

I told the city’s information office chief Ma Tao, who accompanied me on the trip, that the city must have forgone a lot in preserving this 326-hectare parkland, as the area might have been packed with many cash-earning high-rises, as Wuhu is renowned for its Chery cars, Conch cement, Fantawild travel and booming industrial and high-tech zones.

He nodded, adding: “But you can see so many people enjoying themselves here. On weekends, there are more. Their enjoyment and ensuing improved health are our gains. We all know that for everything forgone, there’s a gain.”

So that’s their gain. By forgoing a trade-off of possible high-rises, they gained pleasure and better health.

Years ago, when I read Thomas Sowell’s A Citizen’s Guide to Economics, I was deeply impressed by its quotation from Ann Landers: “You can’t have it all. Where would you put it?”

Wuhu gave us an answer. And so do numerous other places. Nanjing’s Translations magazine reported recently that in the German city of Hanover, local residents have fought for more than 600 years to protect the Waldstation Eilenriede, a 600-hectare sea of forests from occupiers, logging thieves, builders, designers and even the city government. They eventually saved this forest sanctuary for them to seek enjoyment and peace.

The Christian Science Monitor reported the U.S. Fish and Wildlife Service on Oct 25 completed the establishment of the Great Thicket National Wildlife Refuge, including 15,000 acres of land mainly consisting of shrubland teeming with animals and insects. It will be the country’s 566th, joining a network of protected areas covering over 150 million acres of land.

But, are there real gains behind green economics?

Wuhu information office chief Ma pointed out residents’ enjoyment and their ensuing improved health, which I believe might lead to reduced medical bills.

The U.S. group Defenders of Wildlife said that the major benefit of the Great Thicket National Wildlife Refuge would be that it would attract birdwatchers and other visitors.

The U.S. Fish and Wildlife Service cited a 2013 national report, saying that spending by visitors to the refuge generated nearly $343 million in local, county, state, and federal tax revenue in 2011, while supporting more than 35,000 jobs.

In Guangdong province, seven villages at the foot of Luofu Mountain have transformed themselves into a “sea” of flowers-instead of planting crops-since 2015, attracting urban dwellers to take weekend tours there.

Nanfang Daily reported that the villagers’ gains are obvious. During the May Day holiday this year, they attracted around 80,000 visitors, netting 5.6 million yuan ($836,000) from fruit and vegetable sales, and catering.

So that’s real. Let’s all go green, and fully explore what it can bring.


Wuhu’s robotics rush shows how its debt can get out of control

Reuters  WUHU, CHINA – Wednesday, August 03, 2016 11:00

A robot is presented at Wuhu robotics center in Wuhu, Anhui Province, China, June 30, 2016. Picture taken June 30, 2016.

A robot is presented at Wuhu robotics center in Wuhu, Anhui Province, China, June 30, 2016. Picture taken June 30, 2016.


Down a side street bracketed by massage parlors and cheap hotels in this city on the banks of the Yangtze river, a humanoid food service robot trundles around the corner of a table in a cafe, red eyes flashing in tune with synthesized classical music.
The Wuhu Hands On Café’s waiter, named “Hero,” has no customers on a drizzly Friday morning. He is, though, a symbol of Wuhu city’s hopes of becoming a major center for robotics, and the local government’s ability to chase that dream through the debt markets, whether it makes commercial sense or not.
“Hero” was the result of six months research at a nearby robotics park that has cost 2.2 billion yuan ($332 million) to establish. For the park’s next stage, including a hotel, an exhibition center and a cultural plaza, Wuhu is raising another 1.2 billion yuan through a so-called local government finance vehicle (LGFV), and offering a raft of incentives for firms to set up there.
The problem is it is not alone. Dozens of other medium-sized Chinese cities like Wuhu, which is west of Shanghai in Anhui province and has a population of around four million, have similar robotics park plans.
And the ease with which municipalities can use off balance companies like LGFVs to finance infrastructure – some needed, some not – is rapidly boosting China’s already high debt burden. Meanwhile, investors gambling that Beijing will not allow the debt to default while infrastructure remains a critical support for growth, have bid up LGFV bonds to new highs.
Beijing’s drive to make the nation a leader in robotics through its “Made in China 2025” initiative launched last year has set off a rush as municipalities up and down the country vie to become China’s robotics center.
The investment boom comes as the industry is already showing warning signs of overcapacity, despite increasing demand for robots in auto manufacturing and electronics.
Growth in demand for industrial robots in China fell by more than two-thirds to 17 percent in 2015 – and yet more than 40 robotics parks have sprouted throughout the country in the last two years, according to industry data. In June, the National Business Daily reported Vice Minister of Industry and Information Technology Xin Guobin warning that China’s robotics industry is showing signs of over investment and of “a high-end sector becoming low-end.”
China’s Ministry of Industry and Information Technology had no immediate comment when contacted by Reuters.
Shoring up growth
LGFVs first gained popularity in China in the 1990s as a way to fund municipal projects without running afoul of new restrictions on cities’ official borrowing.
Fireworks explode over a tourist resort in Wuhu, Anhui province, China April 30, 2016.


They played a key role in shoring up economic growth in the global financial crisis but also became a major source of China’s debt burden. Outstanding debt was $26.56 trillion, or 255 percent of gross domestic product at the end of 2015, up from 220 percent just two years before, according to the Bank for International Settlements.
A short-lived crackdown by Beijing on LGFV financing in late 2014 was quickly watered down as growth sputtered to a twenty-five year low last year.
In China as a whole, LGFV bond financing climbed 72 percent in the first five months of 2016 from the same period last year to 740 billion yuan, while the vehicles’ total outstanding bond debt now stands at around five trillion yuan, according to Everbright Securities data sourced from the Chinese information provider WIND.
“Loads of infrastructure-investing companies are exhausting every means they can get to get money,” says Li Yujian at Bohai Trust, which offers high-interest loans to companies who cannot get all the financing they need in mainstream debt markets.
Commanded not controlled
For a command economy, China has a very decentralized fiscal system with local governments responsible for about 85 percent of fiscal spending but receiving only 50 percent of tax revenues. Officials turn to debt to fill the gap.
As a result, Beijing often lacks a clear picture of what local governments are doing, and cities have little reliable data on their neighbors, leading to a dangerous tendency for duplication – especially when Beijing throws its weight behind a given sector, like robotics.
The convoluted work-arounds to funnel cash to oftentimes risky local projects also tend to muddy the question of who is actually responsible should matters go awry.
“We are just a financing platform. We raise money and we lend it out,” says Yang Bin of the Wuhu city-owned Jiujiang Area Construction Investment Corporation, which sold the bonds for the robotic center’s expansion.
The money will be spent by building contractors for the robotics park. There are also local and central government subsidies to attract firms to use the facilities.
The lynchpin of this elaborate edifice remains government backing, implicit and sometimes explicit. Market participants say investing in LGFV debt is essentially a bet on Beijing’s interest in keeping credit flowing smoothly to local governments.
“All of those companies have very weak standard credit metrics. The reason they can borrow is because of local government support, which depends on central government policy,” says Jie Peng of Western Asset Management in Singapore, which invests in some LGFV debt in large Chinese cities.
The support, including a 3.2 trillion yuan Beijing-backed local government debt swap last year, means LGFVs can offer relatively high interest rates while allowing bondholders to feel they are not likely to be heavily exposed to the consequences if investments sour.
The yield to maturity on the Jiujiang Area Construction Investment Corporation’s 1.2 billion yuan bond is 3.8 percent, about 0.5 of a percentage point higher than official local government debt in the same part of China.
To many investors, that looks like a good deal – LGFV debt has outperformed most other corporate debt over the past year as defaults in other sectors have risen.

A participant operates a robot during a competition in Wuhu, Anhui Province, China, June 22, 2013.


The local debt boom, though, has raised fears of a new round of wasted investment. Elsewhere in China, cities are building gargantuan sports stadiums, far bigger than they need; hundreds of amusement parks, many of which do not have the attractions to compete against rivals in neighboring towns; and innovation centers without enough entrepreneurs.
Aspirational start-ups
It is unclear whether the National Wuhu Robotics Park, which currently produces around 1,000 industrial robots a year but plans to boost output to 10,000, will be a success.
Firms are eligible for subsidized rent, subsidized loans, debt guarantees, and monetary awards to attract top talent.
But despite such support, the park contains only a handful of large established enterprises – including Anhui Effort Intelligent Equipment Co Ltd, a major manufacturer of automotive and industrial robots.
Most of the approximately 20 robot manufacturers are aspirational start-ups, or equipment firms hoping to find a new niche. The latter include firms like Anhui Goodluck Science and Technology Co Ltd – which also makes agricultural equipment, chainsaws, and lawn mowers.
Robotics park officials and the Wuhu City Jiujiang Economic Development Zone Committee declined to be interviewed for this article, while a park spokesperson did not respond to an emailed request for comment.
Some of the items under development border on novelties, like “Hero” made by a company called Okayrobot. Besides waiters and military grade segways, Okayrobot is also investing in items as diverse as air conditioned helmets, horizontal showering pods for hospitals and robotic exoskeletons that allow the very old and the disabled to walk.
“Allowing 75-year-old mothers and fathers to live like young people, that is what Okayrobot wants to do,” says general manager Wang Lipeng, gesturing to a PowerPoint showing an exoskeleton-clad man hoisting a woman in his arms, next to another emerging from a fireball.
“The policies here are very good,” added Wang. “And that has drawn the interest of a lot of firms to invest and produce.”

Property backlog allows cheap deals for the poor in Wuhu

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Chinese property market saw faster de-stocking in May. Over 7 million square metres of residential properties in stock was cleared last month. But smaller cities seem to have more trouble getting rid of what they’ve built.

This offers a chance to the country’s underprivileged to own properties in smaller cities. Wu Hu in central China’s Anhui Province is one such city that came up with incentive policies to help the poor. 

China still has 455 million square meters of unsold housing space as of April.  Despite calls to reduce properties stock, the backlog still increased by over 12 million square meters in the first four months of this year, compared with the end of 2015.

While the highly-sought-after big cities have attracted most of the cash-ready customers, properties in third and fourth tier cities are mainly left for farmers and migrant workers. Demand for a home of their own is strong, but so is their financing pressure.

“It is impossible for a migrant worker to apply for a loan in a commercial bank,” said Dong Hongwu, migrant worker from Wuhu, Anhui.

Wuhu in Anhui Province was the first in China to set up a property financing company for migrant workers. Farmers who come to work in cities can apply for housing loans with a small downpayment.

“It only took about three days for the loan to come through. Normal mortgage rate is over 5 percent, I got it for 3 percent from the property financing firm. The government subsidized for 10,000 yuan. This has saved us a total 30,000 yuan which would be enough to renovate our new 100-square-metre-apartment,” Dong also said.

Local Wuhu government statistics show that migrant workers have bought 1,400 units of apartments in the first five months of this year, accounting for 80 percent of the total sales. Government incentives have also helped high skilled talents with moderate incomes.

“We subsidize maximum 500,000 yuan for high skill talents who wish to buy a property here. We have analysed the demographic breakdown of our city, and about 60 percent of the population hold at least some kind of diploma,” said Luo Hongqi, deputy director of Housing & Urban Construction, Wuhu Gov’t.

Experts say these subsidizing policies are so far proving effective in terms of reducing property backlog, but long-term effect on local economy is still subject to debate.

Hefei-Wuhu-Bengbu Aims to Evolve into an Industrial Innovation Hub

The Chinese government said on Monday that it gave the nod to the establishment of two national innovation demonstration zones in Anhui and Fujian provinces, respectively.

One of the zones, consisting of high tech zones in Hefei, capital of Anhui province, as well as in Wuhu and Bengbu cities, is intended as an influential hub of industrial innovation, according to the written approval.

The Hefei-Wuhu-Bengbu innovation demonstration zone will take the lead in reforming sci-tech systems and implementing innovation-related policies, the government said in the statement.

In addition, the zone will strive to grow into a template for commercialization of research findings, a driving force behind industrial innovation and upgrading, and an ecological quarter for mass entrepreneurship and innovation.

The three cities will enhance their core competitiveness largely concerning independent innovation and innovation-driven development, Zhou Yunfeng, a local economist, said in an interview with the

Hefei, Wuhu and Bengbu will be given priority in acquiring innovation resources, Zhou added.

The annual output of Anhui’s strategic emerging industries has risen by roughly 30 percent in recent years, official statistics showed. Standing out among them were electronic information, high-end equipment manufacturing, modern medicine and new energy.

Regionally, Hefei is competitive in information technology, while Wuhu and Bengbu are renowned for robot-making and green energy, respectively.

The zone should work together with its counterparts across the country, including Shanghai’s Zhangjiang, Hubei province’s Donghu and Sichuan province’s Chengdu high tech zones, in a bid to ‘form a complete regional chain for innovation,’ an official with the Anhui Provincial Development and Reform Commission said on condition of anonymity.

The central government has approved the establishment of 16 national innovation demonstration zones, according to the

Baidu Plans to Test Driverless Vehicles in the City of Wuhu

Chinese Internet company Baidu Inc. is going head to head against U.S. search engine giant Google in the autonomous vehicle industry. The Chinese company recently unveiled plans to launch a trial area for autonomous vehicles in the city of Wuhu located in the southeastern province of Anhui, China.

Baidu, which has great ambition in driverless vehicles, signed a cooperation agreement on Monday with Wuhu municipal government to jointly build a trial operation zone for fully autonomous driving vehicles.

The trial zone, the first of its kind in China, will allow Baidu to become the only company to test autonomous driving in public transportation in Wuhu.

If the technology is proven to be workable, the local authorities in Wuhu are even considering repla­cing all of the city’s buses and part of its taxi fleet with driverless vehicles in another five years.

“Autonomous vehicles are the future of the auto industry. Instead of being defined by traditional technologies and performance, automobiles in the future will be defined by software,” said Wang Jin, head of Baidu’s autonomous driving business unit.

The establishment of the trial zone is seen as an important step for Baidu to meet its goal of “commercialising driverless technology in three years and achieving mass production in five years”.

The Beijing-based company, which runs China’s largest search engine, has placed great emphasis on artificial intelligence and auto­nomous driving, as it is keen to diversify its business.

Baidu’s autonomous car, which successfully completed road tests last December on combined road conditions – city roads, ring roads and highways – can run at a maximum speed of 100kph.

Qian Wenying, director of automobile research at Beijing-based consultancy Analysys International, said that the trial zone could provide Baidu a safer place to test its autonomous driving technology in all kind of weather and road conditions.

It will also help the cars “speed up their learning process”, therefore pushing the development of the technology
Earlier this week, Baidu and the municipal government of Wuhu have both signed a five-year cooperation agreement that will allow the company’s autonomous vehicles – including cars, vans and buses – to move about freely around the entire city.
During the first three years of the trial, the driverless vehicles will be exposed to limited areas only, and will not carry any passengers on board. In due course, however, the areas will be extended to include public highways, and “the service will be commercialized to allow some of the three million inhabitants of Wuhu to use it.”, according to a report by BBC.
According to Wang Jing, Vice President of Baidu and head of the company’s autonomous driving business division, the driverless vehicles will then be exposed to the entire city after the five-year period, in which they will blend in with human drivers and “human-driven” vehicles. The Star reported that the local officials of Wuhu “are even considering repla­cing all of the city’s buses and part of its taxi fleet with driverless vehicles”, if the technology is proven to be successful.
Self-driving technologies seems to be the future of the automotive industry. Major automobile manufacturers such as Toyota, BMW and Volvo have all jumped into the autonomous vehicle bandwagon. During BMW’s 100th year celebration, the company announced plans to launch an autonomous electric car called “iNext” by the year 2021.
During the 2016 Beijing Auto Show, which kicked off in April 25, Chinese Internet company LeEco unveiled its first ever four-door electric sedan called LeSEE EV, which uses a semi-autonomous technology. The electric sedan was designed for the Chinese market and could take on the likes of Tesla.

BBC: Chinese city Wuhu embraces driverless vehicles

Chinese hi-tech firm Baidu has unveiled a plan to let driverless vehicles range freely around an entire city.

The five-year plan will see the autonomous cars, vans and buses slowly introduced to the eastern city of Wuhu.

Initially no passengers will be carried by the vehicles as the technology to control them is refined via journeys along designated test zones.
Eventually the test areas will be expanded and passengers will be able to use the vehicles.
“They want to be the first city in the world to embrace autonomous driving,” said Wang Jing, Baidu’s head of driverless cars, in an interview with the BBC’s Click programme.
“This is the first city that is brave enough, daring enough and innovative enough to test autonomous driving,” he said.

Efficiency drive
Mr Jing said the first phase of the trial would last about three years and would involve restricted areas in the city where buses, mid-size vans and cars would be tested.
After three years, the areas of the city in which the autonomous cars can drive will be expanded and the service will be commercialised to allow some of the three million inhabitants of Wuhu to use it.

After five years, he said, the whole city will be open to the driverless vehicles which will mix with human-driven cars, trucks and buses.
Mr Jing said the city was keen to use robot vehicles because they were a much more efficient way to transport people and goods.
The current model in which many households own a car was a “great waste” of resources, he said, because most of the time private cars stood idle. By contrast, he said, robot cars would be much more heavily used.

A study released this week suggested that greater use of driverless cars could promote congestion. The study by accounting group KPMG suggested the robot cars could be used widely by groups, such as the young and old, who do not usually drive thereby increasing the numbers of vehicles on the road.

Mr Jing said he hoped the Wuhu trial would lead to projects elsewhere.
“We are trying to give the experience and data to the central government so they can see the benefit and that will make it easier for us to push to other cities in China,” he said. “We hope it will be a starting point that lets us take it to other countries.”

Baidu is known to be working closely with German car maker BMW on the development of control systems for autonomous vehicles. The cars emerging from that partnership as well as others made by Chinese car maker Chery will be used in the Wuhu trial.

Many tech firms, including Google, and car manufacturers are also working on control systems for robot cars.

Wuhu sticks to new-energy drive

As one of the early birds researching and developing NEV products, Chery launched its first electric minicar eQ at the end of 2014. The company sold 15,000 electric cars last year, and plans to sell 35,000 this year. In 2020, it aims to reach 200,000 units in annual sales.

Chery also set foot into e-car rental services. It teamed with rental firm Eakay and provided 1,164 eQ cars in Wuhu, Anhui province, priced at 15 yuan ($2.29) per hour and 65 yuan per day.

Although believing in the potential of NEV market, Ni said his company still faced challenges such as battery technology and a subsidy policy, which favors battery makers.

“Battery technology is the biggest problem,” Ni said.

He said as a result Chery’s long-term strategy on NEV is to make pure electric cars for short ranges. As for long range cars, electric plus range extenders (powered by petrol or fuel cell) will be used.

Ni said that his concerns on batteries were underscored in speeches by industry experts in a number of panel discussions last week during the Sino-American technology and engineering conference, held from May 16-18.

An auto rental service that uses only electric cars is now ready for nationwide expansion after what the company called a two-year successful trial in Wuhu, East China”s Anhui province.

The business model was launched in 2014 by the Wuhu-based Eakay Electric Automobile Rental Co Ltd.

Eakay customers can rent cars via an app and the drivers and rental agency operators do not need to meet in person, avoiding lengthy paperwork and other inconveniences of the traditional auto rental business.

The customers can drop off the vehicles at any of the 55 spots in Wuhu”s 110-square-kilometer downtown area.

Eakay now has a fleet of more than 1,100 electric cars,all made by Chery Automobile Co, which is also based in the city.

Eakay has begun an aggressive expansion plan that will see the number of cars increasing to 3,100 by the end of the year and the company opening branches in 50 cities in two years, said President Yan Daoyuan.

Initially, the new branches will be in third- and fourth-tier cities.

“During the two years of trial in the city, our cars have been used more than 20,000 times,” said Yan.

“Though the government wants very much to promote electric cars, many people still don”t want to buy them because of multiple concerns. The rental will be a good opportunity for them to try such a new-energy car.”

To rent a car, customers need to pay only 15 yuan ($2.32) an hour and 65 yuan for a day.

China”s car rental sector has been on the fast track in recent years, while Eakay executives said they believe that the battle for the domestic car-sharing market has only just begun.

“Competition comes from not only the domestic players, but also the global competitors,” said Tan Yi, cofounder and chief operating officer of Eakay.

German carmaker Daimler AG last Friday launched its car2go rental service in Southwest China”s Chongqing municipality, allowing users to park their Mercedes-Benz Smart cars, some 400 in total, anywhere in an area of 60 sq km in the city after use.

“The Chinese car-sharing market is still developing, but it bears high potential. It is expected to grow around 80 percent per year until 2018,” said a 2014 report by Roland Berger Strategy Consultants GmbH, a global consulting firm.

“In the near future, only station-based business models with closed community consumer groups will suit the Chinese market conditions,” said Andreas Maennel, principal at Roland Berger Greater China.

“This approach will reduce the number of required vehicles and amount of initial investment. Only when general awareness and network density increase might a free-floating model become feasible,” the report added.

Yan said Eakay is now “very close to a free-floating model since an easy-to-reach network is already in place and the service spots will be increased to about 200 by the end of this year.”

The company has also built more than 1,000 charging stations, each allowing two cars to charge at the same time. Another 2,500 will be built this year.

The charging stations are also open to private electric-car owners.

“Lack of charging facilities has always been one of the most important factors hindering the promotion of electric cars in China,” said Tan.

“Such a market-oriented practice will be more effective in tackling the problem than government regulations stipulating certain number of recharging posts in the neighborhood,” Tan added.