By Li Hongmei, People's Daily Online

It has long been argued whether some resource-reliant regions in China are met with 'Resource Curse,' a phenomenon also known as the paradox of plenty; and it has also been assumed that the abundant deposits of natural resources are a real curse instead of a blessing posed to a country or a region's economic growth.

Now the argument has been settled by the positive findings accumulated throughout the years. And the assumption has been ascertained by the fact that the uneven distribution of natural resources does result in the uneven development of the regional economy, but not in the way as expected. The regions and places rich in natural resources have mysteriously lagged behind in economic growth and revenues. These regions are, as it were, tangled up in an economic curse of abundance.

The idea that natural resources might be more an economic curse than a blessing began to emerge in the 1980s. In this light, the term 'Resource Curse Thesis' was first used by Richard Auty in 1993 to describe how countries or regions with an abundance of natural resources, specifically non-renewable minerals and fuels, were unable to use that wealth to boost their economies and how, counter-intuitively, they tend to have lower economic growth and less development outcomes than those with fewer natural resources.

Since its emergence, the contention has been repeatedly illustrated by what various parts of the world have ever experienced in their development history, and has been proven correct. During the years of 1970-1998, only four out of the total 65 resource-rich countries worldwide saw an annual economic jump of 4%, which was then the average growth level of the developed nations. On the other hand, the economies notoriously poor in natural resources, like Japan, Singapore, South Korea and the Chinese Taiwan, also known as 'Asia's four little dragons,' made much headway and went well above the average for the duration, in terms of both size and speed in their economic growth.

Likewise, similar tendencies come about within China and, have thus far turned out to be very conspicuous as found in the country's regional development. The vast territory of China's West covers approximately 71.4% of the country's land area and enjoys abundant reserves of natural resources, in particular, richly endowed with fossil fuels like coal, petroleum and natural gas. However, the per capita GDP in the West has been much lower than that of the seaboard regions such as the Yangtze River and Pearl River Deltas, where the natural resources are relatively few and scanty.

As regards the intercity level, economic development varied from city to city in the period of 1989-2004: The annual economic growth in the resource-abundant cities averaged 6.92 %, lower compared to the 8.34 % generated by the cities with fewer resources. More over, the economic growth produced by the cities with exhausted resources is about 4.56 %, much less than that achieved by the cities with non-exhausted resources. All this has indicated that 'Resource Curse' literally emerges in the spheres of China's regional and township development.


To shake off the 'Curse,' we must bear in mind the following points: First and foremost, we must learn how to extract the underground treasures in a rational way, and meanwhile, avoid overexploiting the natural resources. For example, the old and romantic idea of gushing has proved catastrophic to petroleum reserves. Second, find an opportune time for economic transformation, including establishing at the initial stage an alarming system, laying down relevant policies for financial aid, job-transfer training, resettlement and job sharing guarantees; build up mechanisms to compensate for resource development and give assistance to declined industries; and promote local economic diversities.

On top of that, the effective measures taken to break the 'Resource Curse' might also be found in the resource fund, which is established in a bid to avoid ups and downs in local economies as a result of fluctuations in resource prices. Last but not the least, rules and regulations, if effective in practice, will act as the deterrent to corruption and misconduct like resources to rent-seeking. Besides, some resource-dependent economies have in these years tried to enhance the investment of human resources and encourage technological innovations in the resource-related industries, both of which are also already considered the prescription effective in beating the 'Resource Curse.'

Curse as it is, there must be right antidotes to its poison.