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According to the latest figures released by Shandong Provincial Statistics Bureau, the total amount paid in salaries to workers in the province during the first half of this year rose by over 32 percent compared with the same period of 2005. The hefty increase takes Shandong to the No.1 spot on the national "speed of growth" listing. 

The fast paced growth of the total being paid in salaries annually is changing Shandong's image of being "the poorest province in east China."

Statistics show the total amount paid in salaries in the first half of 2006 was 75.72 billion yuan (US$9.5 billion), which is an 18.7 billion yuan (US$2.5 billion) increase over the same period last year. This is 3.1 percent ahead of the national average for salary rises. Of the increases 59.7 percent are a result of improved pay levels and the remaining 40.3 percent are accounted for by an increase in the total number of workers.

The per capita salary in Shandong is 8,644 yuan (US$1,086), which is a 1,274 yuan (US$160) increase over the same period of last year. However, it remains 618 yuan (US$77.6) less than the domestic average figure and takes only 11th place.

Although Shandong has enjoyed rapid economic development in recent years and surpassed Jiangsu Province as the second in China on GDP in 2005, the per capita revenue and income remain low because of the huge population.

Shandong provincial government has recognized the importance of per capita income growth along with the economic progress. "The treasury accumulation depends not only on the growth of GDP but also on the growth of per capita income, revenue, foreign exchange reserve and deposit," said governor Han Yuqun recently. "Only after achieving the growth on per capita GDP and income can we say we're developed."

Professor Cheng Guoyou with the School of the Communist Party of China (CPC) in Qingdao, a coastal city of the province, said that the direct cause for slow growth on per capita incomes in Shandong was the undeveloped tertiary industries.

The provincial government spokesman Zhang Dekuan agreed. His view is that the majority of local tax revenue comes from the profits in tertiary industries like cultural businesses, consumption and catering enterprises and conference and exhibition services.

Also the slow pace of urbanization obstructs the increase of per capita income. At the moment over 55 percent of Shandong's population resides in rural areas. And because of this the provincial government has focused on fostering the tertiary industries.

Zhang Gaoli, secretary of the CPC Shandong provincial committee, recently led a delegation of CPC municipal committee secretaries and deputy mayors of all 17 cities in Shandong to southern provinces to study the development of the local service industries. He hopes to boost consumption, employment, revenue and per capita income as well as retain sustainable development through speedy growth of tertiary enterprises. 

The provincial government has also decided to allocate one twenty-thousandth of annual GDP in Shandong to set up a fund for tertiary industry development from this year through to 2010.

This year's GDP in Shandong is estimated at 2,000 billion yuan (US$251.2 million), which means there will be more than 100 million yuan (US$12.6 million) for the new fund. The development of tertiary industries will be included in the assessment of local government from this year.

(China Business News translated by Li Shen, August 30, 2006)