With a population of more than 100 million, the eastern province of Shandong is known for its strong manufacturing sector and agriculture. The Port of Qingdao is ranked fifth in the world for handling capacity. The city has China's first national marine laboratory and the Pilot National Lab for Marine Science and Technology (Qingdao). Shandong also has many Red Tourism sites, including the Yimeng Revolution Memorial Hall and the East China Cemetery of Revolutionary Martyrs in Yimeng.

The province is looking to exploit its maritime resources to boost exports and trade and discover new sources of revenue

Liu Jiayi, Party chief of Shandong province, has compared the pursuit of high-quality development to a steady uphill trudge, saying that each step must be deliberate because a stop-start style is doomed to failure.

He said the eastern province has no option but to forge ahead in the face of difficulties because it has no opportunities to take a break, feel proud or slacken its efforts, nor any reasons to hesitate or look back.

Zibo city, a chemical industrial hub in the central area, is the epitome of the recent efforts the province has made to pursue quality development.

Jiang Duntao, Zibo's Party secretary, said that over the past three years, the number of chemical industry parks has fallen from 28 to six, while the number of related companies has declined from 1,135 to 524.

In the first half of 2019, Shandong's GDP growth dropped to 5.4 percent, the lowest level for more than 10 years.

However, the "sacrifice" has proved worthwhile because not only has pollution been controlled effectively and carbon emissions reduced, but more funds and supportive policies have been routed to 10 key industries in the province.

More importantly, local governments and the people have realized that while shutting down outdated production facilities temporarily affects economic growth, the move echoes current trends and is conducive to sustainable, long-term development.

In the past three years, the number of high-tech enterprises in Shandong has exceeded 14,000, or 3.5 times that in 2015.

Also, the production value of such businesses has accounted for 5.1 percent of the total production value of manufacturing enterprises in the province whose annual revenue is more than 20 million yuan ($3.12 million).

New growth drivers

Zhou Lianhua, director of the Shandong Development and Reform Commission, said the province has explored a path with Shandong characteristics to replace the old growth drivers with new ones while maintaining economic growth.

During the period of the 13th Five-Year Plan (2016-20), consumption of standard grade coal per 10,000 yuan of Shandong's GDP fell from 0.71 metric tons to 0.56 tons.

Moreover, the province contributed 6 percent of national GDP while accounting for just 1.2 percent of the country's total energy consumption.

Last year, despite the novel coronavirus outbreak, the added value of the 10 key industries grew by 6.6 percent year-on-year, and the provincial economy hit 7.3 trillion yuan－similar to that of the Netherlands－a rise of 3.6 percent from 2019.

Moreover, four of the 10 key industries－information technology, high-end chemical engineering, high-end equipment manufacturing, and new energy and new materials－saw annual net profits rise by 75.4 percent, 32 percent, 25.8 percent and 29.9 percent respectively last year.

Fei Hongping, a researcher of industrial and technological economies with the National Development and Reform Commission, said Shandong is promoting the development of its 10 competitive industrial clusters by cultivating entire industry chains and a rules-based business environment consisting of companies, institutes, financial bodies and other service agencies, rather than simply supporting several leading companies.

"This is an obvious characteristic of the path Shandong has explored to replace its old growth drivers with new ones," Fei said.

Shandong still has a long way to go to realize high-quality development, though.

Its work report for this year said the provincial economy remains unbalanced because the contribution of the new economy is still low and innovation has not yet become a robust growth driver. In addition, some institutional obstacles are still preventing the market from playing a decisive role in distribution of resources.

The provincial government has vowed to roll out more supportive policies to attract talent and prompt funding to flow into innovation and green businesses.

Fei said governments and businesses in the province need to further open their minds and there should be a thorough reform of the distribution system for land, talent and funds.

Last year, Shandong's foreign trade volume exceeded 2.2 trillion yuan. During the period of the 13th Five-Year Plan, its foreign trade grew by an average of 8.1 percent per annum.

In addition, the proportion of Shandong's foreign trade in the national total rose from 6.1 percent in 2015 to 6.8 percent last year, when overseas investment in the province was $17 billion. Meanwhile, its share in such investment nationally rose from 6.9 percent in 2015 to 12.2 percent last year.

Foreign investment

The provincial government said that during the period of the 14th Five-Year Plan (2021-25), Shandong will expand opening-up and try to drive foreign investment growth above the national average to become a magnet for foreign investment.

The provincial commerce department said it will try to make breakthroughs in intergovernmental and business cooperation with Japan and the Republic of Korea.

This activity will focus on areas such as high-end equipment, information technology, new energy cars, biomedicine, industrial design and financial services. Also, China-Japan-ROK economic and trade cooperation demonstration zones will be developed in the province.

Shandong will also take advantage of its free trade pilot zones to explore new reforms. It will deepen cooperation with members of the Shanghai Cooperation Organization in fields such as energy, resources, infrastructural facilities and production capacity, while building new international cooperation platforms for the Belt and Road Initiative and becoming a "gateway to the ocean" for SCO members.

It will also build international industrial and trade parks to facilitate cooperation and will launch more air and ocean routes to Japan and the ROK, while more freight trains will travel to central Asia and Europe.

It will also implement a six-hour customs clearance policy under the framework of the Regional Comprehensive Economic Partnership and strengthen coordination of ports, customs and logistics companies to form an efficient trade service system for Japan and the ROK.

The moves are part of Shandong's plan to become a "golden passage" connecting Japan and the ROK in the east, Central Asia and Europe in the west and Southeast Asia in the south.

In the next five years, Shandong will try to expand its cross-border e-commerce market sales and offshore trade.

The province aims to attract investment from the world's top 500 companies－so far, 219 of them have invested there. It is also encouraging multinational corporations to move their headquarters to the province to build economic growth through them.

The province has pledged to implement a pre-investment establishment national treatment system and a negative list administration system for foreign investment. It will also further expand market access for foreign investment in finance, telecommunications, education, medical care and culture.

It also plans to improve promotion of and services for foreign investors while protecting the legal rights and interests of foreign businesses in accordance with the law.