“Practice has proven the ‘per mu yield’ reform is a significant mechanism to boost high-quality growth,” Zhang Geng told ChinaReport. Zhang is a National People’s Congress deputy and the secretary of the Party leadership group of the Zhejiang Economic and Information Technology Committee.
“The design of the ‘per mu yield’ model fully respects the market’s decisive function in resource allocation. Meanwhile, the model also helps the government transform from a management-oriented government to a public service-oriented one, helps the government improve systems and policies and create a more positive environment for development,” Zhang added.
An industry insider who asked for anonymity told our reporter that the “per mu yield” reform had shifted the criteria of companies from a focus on scale and growth rate to one based on “benefits per mu.”
From Hu’s perspective, “per mu yield” reform, essentially, is a carrot-and-stick method, also referred to as “vacating the cage to change the bird.”
It puts pressure on outdated, low-end, land-and-resource-consuming companies, forcing them to transform themselves or close down. Meanwhile, high-end, high-tech companies with high added value will gain strong support from the government. The vacated land will be reserved for these industries and enterprises.
Feng Liguo, deputy researcher at the China Association of Enterprises, says Zhejiang’s per unit of output-oriented reform is consistent with the newly established national economic target to transition from fast growth to high-quality growth.
In an interview with Yicai.com, Feng said Zhejiang would in the future focus on industries such as the digital economy, Internet economy and high-end manufacturing. Thus it has to solve the current land shortage problem to create space.
But the scholar also argued that, in terms of the mechanism itself, there are improvements still to be made. If the government cannot handle issues such as fairness and objectivity in the process of evaluation and resource allocation very well, it might spark an exodus of companies or a decline in traditional industries.
“It might not be good news for industrial firms that occupy very large areas, because if they are large but have limited output, they may not gain much support from government. If so, large-scale firms might relocate to other provinces, which might adversely affect the economic growth of Zhejiang,” Feng said.
Hu Haifeng, deputy secretary of the CPC Jiaxing Municipal Committee and mayor of Jiaxing, shared with ChinaReport his thoughts on the “per mu yield” evaluation model.
ChinaReport: What are your thoughts on the “per mu yield” evaluation model?
Hu Haifeng: The model helps create a survival-of-the-fittest environment for companies in Jiaxing, propelling them to take more initiative in seeking change, self-improvement and transformation. They need to have a sense of crisis to be more proactive. Also outdated industrial capacity will be further reduced.
CR: When evaluating enterprises with this model, how can we achieve objectivity and fairness since companies in different sectors have distinct characteristics?
HH: We use a classifying-evaluation system for different sectors. The machinery industry and the textiles industry, for example, can’t be compared horizontally with the same indicators. That’s surely not fair.
We constantly adjust and optimise evaluation indicators. For instance, we started an industry-classified “per mu yield” front-runner project, in which we made a list of frontrunner firms as a benchmark for other firms of the same industry so as to promote industrial transformation and advancement.
The government has also made efforts to design different policies for different industries.
CR: Has the government encountered any resistance in the process of implementing the “per mu yield” evaluation model?
HH: To be honest, there is resistance. The evaluation model puts pressure on companies and may result in pushback. For example, our differentiated resource allocation policy, will surely increase costs for some enterprises, and many felt it was hard to accept at the very beginning. But for the sake of high-quality growth, this must be done. After all, outdated production capacity will be eliminated or relocated eventually, and this model just moves the timeline forward.
CR: Do local officials feel pressured when they carry out the policy to eliminate outdated enterprises?
HH: They [officials] are certainly under pressure. They will get a poor job performance appraisal if they fail to do it well.
From my perspective, what we really need is to change our way of thinking, and this change should be put into specific and concrete practices. We can’t keep on saying ‘high-quality growth’ all day long and do nothing.
CR: Will the “per mu yield” evaluation model be widely copied and spread throughout the nation?
HH: The model is currently used throughout Zhejiang Province. But it is important for other provinces and regions to define their own indicators in accordance with local conditions. The idea of “per mu yield” can be borrowed, but it’s unwise to simply copy the entire system.