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China Business Weekly

Chongqing's fast-growing economy

Last week, I wrote about the many physical attractions of Chongqing and its fascinating history. This megacity of 32 million people in China's dynamic southwest is an understandable magnet for tourists, but it is also one of China's economic powerhouses, with GDP growth last year of 12.3 per cent, one of the highest rates in the country and 4.6 per cent above the national average.

Total foreign direct investment in the municipality reached an impressive US$10 billion, generated from more than 5,000 foreign investors.

Chongqing is an important base for factories producing locally-oriented consumer goods such as processed food, chemicals, textiles, machinery and electronics.

It is also China's third-largest center for motor-vehicle production, the largest producer of motorcycles, one of the largest iron and steel centers, and one of the top-three aluminum producers. Natural resources are abundant, with large deposits of coal, natural gas, manganese and other minerals. Around 10,000 large manufacturing factories with high production capacity are based there, offering great business opportunities, while the local government promotes favourable economic policies for the electronics and information technology sectors. These policies have been successful - for example, Chongqing is renowned as the world's largest assembler of notebook computers.

In addition to its massive and growing industrial base, Chongqing province also covers a vast rural area. The unique landscape and sub-tropical climate provide favourable agricultural conditions which can provide employment for the local farmers and affordable food for the workers, both important factors in reducing wealth discrepancies. Of the estimated 32 million residents of Chongqing municipality, more than 20 million are farmers and the government's development strategy includes protecting good agricultural land and encouraging efficiencies and scale of production.

Adding to its attractiveness for business, Chongqing has joined with its regional neighbours Chengdu (the principal capital of Sichuan province) and Xi'an (the capital of Shaanxi province) to form a city cluster for the economic development of western China. This has huge potential, with some likening it to the development of Shanghai in the 1990s, but on a much grander scale: the Yangtze River Delta, where Shanghai Pudong sits, covers 210,000 square kilometres and has a population of 90 million; the "West Triangle Area" where Chongqing is located, covers 6.8 million square kilometres with a population of 400 million.

Probably the single most important factor in the recent rapid growth of Chongqing has been the development of extensive transport networks. These include a non-stop container service to Shanghai on the Three Gorges Dam (previously the gorges were only accessible by small vessels), the building of the Chongqing-Xinjiang-Europe international railway (a high-speed train service to Shanghai), and the development of new road and air networks.

With such buoyant growth opportunities and accessibility, it's easy to see why Thai companies would be interested in doing business in Chongqing, and why Bangkok Bank (China) recently opened a branch there, its fifth overall. Thailand and China have long enjoyed a special relationship, described last year by China’s foreign minister as "a treasure that ought to be nurtured by both countries", and Chongqing is certain to become an increasingly significant part of this.



For more columns in this series please see www.bangkokbank.com


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