Go-West policy incentives lure big businesses to the city of 32m people
AFP 04 July 2011
After just a few years of explosive growth, China’s mega-city of Chongqing has emerged as a major industrial hub, thanks in part to a ‘Go West’ policy to open up China’s less developed inland.
The south-western municipality, home to more than 32 million people, has been transformed by rapid urbanisation and a construction boom, with ultra-modern factories and skyscrapers galore.
The province-sized city is also becoming a major transport centre at the border of China’s prosperous East and poorer West, luring major multinationals keen to expand.
The figures are mind-boggling - per capita income increased six-fold from 2002 to 2009; foreign direct investment multiplied by four from 2007 to 2009; and the region’s economic growth hit a staggering 17 per cent in 2010.
‘Chongqing is starting to get positive media buzz,’ Adam McWhirter, the local representative of the European Union Chamber of Commerce, told AFP.
From the cable car station jutting out over the Yangtze, China’s longest waterway, Mr McWhirter points to a cluster of new high-rise buildings that have sprung up in just three years.
‘It’s like building Manhattan across the water from Hong Kong,’ he says, listing the luxury hotels that are under construction - Sheraton, Shangri-La, Westin, to name a few - and all keen to cash in on the influx of foreigners.
Foreign trade jumped a massive 72 per cent on-year in the first quarter of 2011, according to official data.
So how did Chongqing transform from one of China’s notorious ‘furnaces’ - a nondescript mid-level industrial city with months of steamy, stifling weather each year - into a major business hub? A key reason is the government’s ‘Go West’ policy, which offers fiscal incentives to companies that set up shop in the country’s less developed inland provinces, rather than in the industrial heartland of the coast.
Another is the fact that labour is cheaper and factories built out west allow workers to stay closer to home, rather than migrate to far-flung manufacturing hubs.
In March, when the central government in Beijing unveiled its new five-year plan for the world’s second-largest economy, it featured the new Liangjiang economic development zone in Chongqing.
The zone hopes to succeed much as the southern boomtown of Shenzhen did in the 1980s, or Shanghai’s Pudong did in the 1990s.
‘Investors are flocking to Chongqing to take advantage of the markets in western China, which are showing strong growth,’ Huang Chengfeng, head of the school of finance and economics at Chongqing Jiaotong University, said. ‘They are coming not just from China, but from around the world.’
Automakers Ford and Honda, Finnish mobile phone maker Nokia, French retail giant Carrefour and German chemical group BASF are among the major foreign firms already in Chongqing.
‘As a location, it presents incredible strategic opportunities for us. We are connected to the north, to the south, to the east and now very much to the west,’ Marin Burela, president and CEO of Changan Ford Mazda, said.
Mr Burela said that Chongqing is already a major automotive centre. Ford will soon have three new factories there to meet auto sales that grew by over 56 per cent last year, he said.
‘We are seeing evidence that this is continuing. Chongqing will become to Ford the second largest automotive centre in the world outside of Detroit.’
The mega-city is also quickly becoming a high-tech hub, with Foxconn, the world’s biggest contract electronics supplier, Acer and Hewlett-Packard already in place. In just a few years, the area will produce one-third of all laptops sold worldwide.
For the shipment of such high-value goods, Chongqing is depending on a train link that will pass through China’s south-west, the far-western Xinjiang region, central Asia and Russia to reach western Europe.
The rail line would offer a major shortcut to the more traditional maritime trade routes from Shanghai, Hong Kong or Taipei, cutting travel time to Europe from about 40 days by container ship to just 15 days by freight train.
Cargo can also be sent out of Chongqing along the Yangtze or via air cargo - a new air freight carrier went into operation in May.
As for the daunting task of moving millions of people in and out of Chongqing, authorities are also making progress.
Airport passenger traffic rose more than 70 per cent on-year in the first half of 2010. A second runway and second terminal building were completed late last year, with a third of each set to open by 2015.
‘In 2035, there will be four runways with an annual volume of 70 million passengers,’ Mr Huang of Chongqing Jiaotong University said.
Such rapid growth has its social and environmental pitfalls. Pollution has contaminated the air and waterways, fuelling social unrest among people who have lost land or been sickened by toxic waste.
But Bo Xilai, Chongqing’s Communist party chief, says he is up to the task, pouring billions of yuan into real estate, public transport and the planting of thousands of trees along the river.
2 comments:
Chongqing emerges as a shining industrial hub
Go-West policy incentives lure big businesses to the city of 32m people
AFP
04 July 2011
After just a few years of explosive growth, China’s mega-city of Chongqing has emerged as a major industrial hub, thanks in part to a ‘Go West’ policy to open up China’s less developed inland.
The south-western municipality, home to more than 32 million people, has been transformed by rapid urbanisation and a construction boom, with ultra-modern factories and skyscrapers galore.
The province-sized city is also becoming a major transport centre at the border of China’s prosperous East and poorer West, luring major multinationals keen to expand.
The figures are mind-boggling - per capita income increased six-fold from 2002 to 2009; foreign direct investment multiplied by four from 2007 to 2009; and the region’s economic growth hit a staggering 17 per cent in 2010.
‘Chongqing is starting to get positive media buzz,’ Adam McWhirter, the local representative of the European Union Chamber of Commerce, told AFP.
From the cable car station jutting out over the Yangtze, China’s longest waterway, Mr McWhirter points to a cluster of new high-rise buildings that have sprung up in just three years.
‘It’s like building Manhattan across the water from Hong Kong,’ he says, listing the luxury hotels that are under construction - Sheraton, Shangri-La, Westin, to name a few - and all keen to cash in on the influx of foreigners.
Foreign trade jumped a massive 72 per cent on-year in the first quarter of 2011, according to official data.
So how did Chongqing transform from one of China’s notorious ‘furnaces’ - a nondescript mid-level industrial city with months of steamy, stifling weather each year - into a major business hub? A key reason is the government’s ‘Go West’ policy, which offers fiscal incentives to companies that set up shop in the country’s less developed inland provinces, rather than in the industrial heartland of the coast.
Another is the fact that labour is cheaper and factories built out west allow workers to stay closer to home, rather than migrate to far-flung manufacturing hubs.
In March, when the central government in Beijing unveiled its new five-year plan for the world’s second-largest economy, it featured the new Liangjiang economic development zone in Chongqing.
The zone hopes to succeed much as the southern boomtown of Shenzhen did in the 1980s, or Shanghai’s Pudong did in the 1990s.
‘Investors are flocking to Chongqing to take advantage of the markets in western China, which are showing strong growth,’ Huang Chengfeng, head of the school of finance and economics at Chongqing Jiaotong University, said. ‘They are coming not just from China, but from around the world.’
Automakers Ford and Honda, Finnish mobile phone maker Nokia, French retail giant Carrefour and German chemical group BASF are among the major foreign firms already in Chongqing.
‘As a location, it presents incredible strategic opportunities for us. We are connected to the north, to the south, to the east and now very much to the west,’ Marin Burela, president and CEO of Changan Ford Mazda, said.
Mr Burela said that Chongqing is already a major automotive centre. Ford will soon have three new factories there to meet auto sales that grew by over 56 per cent last year, he said.
‘We are seeing evidence that this is continuing. Chongqing will become to Ford the second largest automotive centre in the world outside of Detroit.’
The mega-city is also quickly becoming a high-tech hub, with Foxconn, the world’s biggest contract electronics supplier, Acer and Hewlett-Packard already in place. In just a few years, the area will produce one-third of all laptops sold worldwide.
For the shipment of such high-value goods, Chongqing is depending on a train link that will pass through China’s south-west, the far-western Xinjiang region, central Asia and Russia to reach western Europe.
The rail line would offer a major shortcut to the more traditional maritime trade routes from Shanghai, Hong Kong or Taipei, cutting travel time to Europe from about 40 days by container ship to just 15 days by freight train.
Cargo can also be sent out of Chongqing along the Yangtze or via air cargo - a new air freight carrier went into operation in May.
As for the daunting task of moving millions of people in and out of Chongqing, authorities are also making progress.
Airport passenger traffic rose more than 70 per cent on-year in the first half of 2010. A second runway and second terminal building were completed late last year, with a third of each set to open by 2015.
‘In 2035, there will be four runways with an annual volume of 70 million passengers,’ Mr Huang of Chongqing Jiaotong University said.
Such rapid growth has its social and environmental pitfalls. Pollution has contaminated the air and waterways, fuelling social unrest among people who have lost land or been sickened by toxic waste.
But Bo Xilai, Chongqing’s Communist party chief, says he is up to the task, pouring billions of yuan into real estate, public transport and the planting of thousands of trees along the river.
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