Shaanxi Economic Outlook: 2020-2022

Cilitech

Shaanxi GDP increased only 5.4% in the first half of 2019, which is the slowest growth rate since 1990s. With GDP per capita near to $ 10,000, 5.4% real GDP growth rate is like dream growth rate for many other countries, but not good enough for a China’s province.

While the growth rate is not good, I am not pessimistic about the province’s economic performance in the next two years.

In the past, two major drivers of the Shaanxi’s economy are energy industry + fixed investment. All two drivers, unfortunately coincidently,  had all put their feet on the brakes. Energy industry, especially coal mining industry, is declining because China is shifting away from high energy consumption model to sustainable growth model. The fixed investment, on the other hand, is shrinking because of the investment cycle.

So, will there be new drivers?

The answer is NO, at least not in the next few years.  Although I do think Xi’an will become a Denver like city, where technology companies from the West Coast choose to setup their second headquarters,I am not expecting these will happen any time soon.

So, why you are not pessimistic?

Because I am confident that FIXED INVESTMENT will be once again empowers Shaanxi economy. Mega projects, like the Ten Major Construction Projects during the 1970s in Taiwan, will upgrade the provinces key utilities such as airports, metro and intercity railway. I am going to list two mega projects as examples.

Xi’an Metro: In 2020, Xi’an will construct 9 metro lines at same time. By 2024, total length of Xi’an metro lines will exceed 500 kilometers,  of which 350 kilometers will be built in the next five years.

Xi‘an Xianyang Airport Terminal 5: Xianyang Airport is currently the 8th busiest airports in China.With Terminal 5, Xianyang’s capacity will be doubled.

Mega projects themselves can create enormous value and job opportunities, and once completed these world class infrastructures, with a large number of Xi’an based universities, will for sure attracts investments to come.

So, be patient about the 5.4% and ready for the boom.

(This is a brief version of Shaanxi Economy Outlook, please contact us for the full version)