Here’s how the Chongqing-Chengdu partnership pushes China forward

10/02/2018

A double-digit GDP and future prospects abroad

Chongqing and Chengdu represent the new frontier of a China in continuous transformation. As a dynamic production cluster, they are China’s gateway to the West – the privileged corridor of the “Belt and Road Initiative”. It’s imperative to talk about these great cities in relation to each other.

Their history, as well as their development and culture, is linked by a thin red thread that is lost in time and goes back to the mythical Shu dynasty. Home to Sichuan pepper and spicy hot pots, Chongqing and Chengdu form the image of the new emerging markets of a self-administrating China establishing itself in the world. Sichuan and Chongqing together boast over 120 million inhabitants.

Chongqing: the city of Yangtze with double-digit growth

Chongqing is one of the main ports of the Yangtze River in southwest China. It’s quickly becoming one of the fastest developing areas of the country. Chongqing is driving the economic growth of central China, with a double-digit expansion in the first half of 2017. Last year, it also recorded 14% growth in the tourism sector, both entry and exit. On Oct 20 and Oct 26, 2017, Hainan Airlines launched direct flights between Chongqing and New York and Chengdu and New York, respectively.

Chongqing was the capital of the Republic of China for a short period during the 40s, and together with Beijing, Shanghai, and Tianjin, it is one of the Four Autonomous Municipalities of the country. The Chinese leadership plan for the city was clear from then on: to transform the city into the economic heart of central China.

These politics have born fruit twenty years later. During construction period of the Three Gorges Dam, the Municipality grew by over 10%, one of the highest rates in the whole country. In recent years, however, Chongqing has made headlines for its political travails. Former leader Bo Xilai suffered a dramatic fall from power in 2012 party leader Sun Zhengcai has recently been dismissed and investigated due to corruption charges.

Liu Yong, a researcher at the State Council Development Research Center, stated, “Chongqing has the advantage of political support from the central government.” He added that Huang Qifan, who retired from his post as Mayor of Chongqing at the end of 2016, did a good job of stimulating growth by promoting real estate investment and exports. “Huang’s policies have been very successful, like the freight train for Europe and local computer production,” said Liu.

Among the 27 regions at the provincial level that exceeded 6.7% growth in 2016, only three regions – Chongqing, Guizhou, and Tibet – achieved double-digit growth. Chongqing’s GDP grew 10.7% in 2016, reaching 1.76 billion yuan. The autonomous region of southwest China Guizhou and the autonomous region of Tibet recorded growth of 10.5% and 10% respectively.

Last year’s rapid economic growth of this metropolis was driven by increasing investment and improved consumption. The economic growth target for 2018 is 8.5 percent.

Not just for pandas: Chengdu is the economic and tech manufacturing heart of central China

The history of Chengdu, the capital of Sichuan, dates back at least to the 4th century BC when it served as the capital of the Kingdom of Shu. The artifacts of that dynasty are part of the story. The city is also home to Chengdu’s famous research base Giant Panda Breeding, a conservation center where visitors can see endangered giant pandas in a natural habitat.

Excluding the four Autonomous Municipalities, Chengdu is the fourth Chinese city for GDP and its international airport is one of the busiest in the People’s Republic. Famous world-over for its spicy cuisine, Sichuan, together with Chongqing, forms the productive cluster that guides the “Belt and Road Initiative”. A direct train to Europe departs from Chengdu, and in 2017 alone, a thousand trains have reached Europe.

Chengdu has the most successful economy of any city in mainland China, considering factors such as employment growth, foreign investment, and high value-added industries. According to Milken Institute rankings, Shanghai and Tianjin came in second and third place respectively, while Beijing ranked thirteenth.

Identified for its “human capital, central government support, established industries in the aerospace design and high-end aeronautics and a more recently developed manufacturing and electronics sector”, according to the institute, the city follows a new approach focused on technology, private investment, and consumption.

Chengdu and Chongqing are the only two inland cities that emerged as key economic growth engines in the southwest of mainland China. Both are experiencing a real economic boom, driven by the construction sector. Chengdu is a high-tech industrial center: half of Apple’s tablet computers and half of the world’s microchips used in laptop assembly are produced in Chengdu.

A one trillion yuan industrial cluster by 2022

The volume of Chengdu’s international trade exceeded USD 50 billion in 2013, an increase of 6.4%. In the same year, the per capita GDP of Chengdu exceeded the threshold of USD 10,000 for the first time, registering one of the highest values in all of southwest China.

As of December 2013, already 252 of the 500 companies classified by “Fortune” magazine had settled in Chengdu with production facilities and representative offices.

Chengdu expects it will welcome over 280 thousand tech entrepreneurs in the next five years. By 2022, an industrial cluster of 1 trillion yuan will be forged in the electronic information sector, and another six sectors will be targeted including biomedicine, automotive equipment, intelligent manufacturing, rail transport, energy saving, environmental protection and cultural creativity, each with an annual output value of 100 billion yuan.

Annual revenues from e-commerce transactions will amount to more than 2.2 trillion yuan by 2022, according to city forecasts, and all large companies in Chengdu will have e-commerce services in their business models.

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