Henan - Economy

Economy

Henan has seen rapid development in its economy over the past two decades, and its economy has expanded at an even faster rate than the national average of 10%. This rapid growth has transformed Henan from one of the poorest provinces to one that matches other central provinces, though still relatively impoverished on a national scale. In 2011, Henan's nominal GDP was 3.20 trillion RMB (US$427 billion), making it the fifth largest economy in China, although it ranks nineteenth in terms of GDP per capita.

Henan is a semi-industrialized economy with an underdeveloped service sector. In 2009, Henan's primary, secondary, and tertiary industries were worth 277 billion RMB (US$40 billion), 1.097 trillion RMB (US$160 billion), and 563 billion RMB (US$82 billion), respectively. Agriculture has traditionally been a pillar of its economy, with the nation's highest wheat and sesame output and second highest rice output, earning its reputation as the breadbasket of China. Henan is also an important producer of beef, cotton, maize, pork, animal oil, and corn. Food production and processing makes up more than 14% of the output from the province's secondary industry, and it is said that 90% of Chinese McDonald's and KFC ingredients comes from Henan.

Although Henan's industry has traditionally been based on light textiles and food processing, recent developments have diversified the industry sector to metallurgy, petrol, cement, chemical industry, machinery and electronics. Henan has the second largest molybdenum reserves in the world. Coal, aluminum, alkaline metals and tungsten are also present in large amounts in western Henan. Export and processing of these materials is one of the main sources of revenues.

Henan is actively trying to build its economy around the provincial capital of Zhengzhou, and it is hoped that the province may become an important transportation and manufacturing hub in the years to come. In 2008, the total trade volume (import and export) was US$17.5 billion, including US$10.7 billion for exports. Since 2002, 7,111 foreign enterprises have been approved, and foreign funds (FDI) of US$10.64 billion have been used in contracts with a realized FDI of US$5.3 billion. Foreign exchanges are increasing continuously. Friendly provincial relationships have been established with 16 states (districts) in the United States, Japan, Russia, France, Germany, and others. Some cities of Henan have established friendly relationships (sister city) with thirty-two foreign cities.

Henan's service sector is rather small and underdeveloped. Finance and commerce are largely concentrated in urban centers such as Zhengzhou and Luoyang, where the economy is fueled by a large and relatively affluent consumer base. In order to make the economy more knowledge and technology based, the government established a number of development zones in all of the major cities, promoting industries such as software, information technologies, new materials, bio-pharmaceutical and photo-machinery-electronics. Henan is a major destination for tourists, with places such as Shaolin Temple and Longmen Grottoes attracting millions of tourists each year.