Jiangsu Is Growing and the Time to Invest Is Now

02/02/2018

Beijing fuels the second cities race investing in one of the Dragon’s most dynamic and productive regions

With an almost continental size, the ‘real’ People’s Republic of China lies in the diversity and richness of its regions. It’s a far more heterogeneous territory than Westerners often imagine. Official government statistics estimate a 56% increase in consumption in urban areas by 2022, with a new Chinese middle class constituting roughly half (54%) of the PRC’s urban population. But what is changing in less popularized regions of the country, and which regions make the best case for foreign investment?

The obvious answers – Beijing or Shanghai – are now close to saturation, so it’s best to look at China’s new economic centers, many of which remain unknown to outsiders. The race has just begun, and the Chinese government has already put significant infrastructure and manufacturing facilities in place. Investors must play ahead of competitors, and to do so, must watch out for the rising markets of Fujian.

The Fujian Clique: Chinese leadership has big plans for the province

Located in China’s Southeast – the Strait of Formosa in front of Taiwan, to be precise – this green, wooded province boasts an ancient and millenarian history. It’s a top choice tourist destination for Chinese citizens but remains off the map of their Western counterparts. Inside China, Fujian is referred to as ‘ 田’, meaning ‘eight parts mountain, one part water, and one part fields’, to summarize the region’s natural bounty.

But Fujian isn’t just forest. Its GDP currently ranks 10th among all China’s provinces with an annual growth rate of 8.4%, and Chinese leadership has big plans for the region. Xi Jinping was Governor of the province from 1999 until 2002. As such, the region’s path toward progress started under the watchful eye of Xi, who transformed the region into a lighthouse for foreign investment.

So why follow the economic development of Fujian? Look to who has power in Beijing. Many of the key posts in the country’s current leadership are held by those who were Xi’s comrades and colleagues during his Fujian tenure, thus forming the “Fujian clique”.

Xiamen: the Pearl of Fujian and gateway to southeastern China

The province perfectly embodies the production prototype of China 2.0. Few heavy industrial zones, wide open spaces for high-tech, respect for the environment, and R&D capacity for foreign investors. Furthermore, Fujian exists in a productive ‘cluster’ between Fuzhou and Xiamen, making it an exemplar of a second-class metropolis that is progressing, developing and looking abroad with curiosity. In short, Fujian is emerging as a potential market for many foreign brands.

So where to invest? Not only in infrastructure, but also in web and technology. Noteworthy is the “Digital Fujian” project started by Xi Jinping himself when he was Vice President of the Republic. This economic program is the emblem of a China that views e-commerce and the internet sphere as one in the same. Thanks to this initiative, Fujian is currently the sixth most digitized region in China and many of the country’s most successful start-ups have been born within its confines.

Although Fuzhou is the administrative capital of the region, Xiamen is the true pearl of this coastal province and leads to the southeast of the country. Positioned exactly in front of Taiwan and hosting one of the most prestigious universities in all of China, Xiamen has been labeled one of the best Chinese cities for quality of life. It’s headquarters for the country’s best-known sports brands such as Anta, 360 °, and Peak. Much of the economic success of this second-tier city comes from its nomination as one of the first four Special Economic Zones in China that engaged in trade with the outside world. This advantage, after thirty years, continues today.

Xiamen International Airport welcomes 38 million passengers per year, topping traffic for second-tier cities. Fujian’s flagship airline, Xiamen Airlines, which links the province with some of the best known international destinations such as Amsterdam, Los Angeles, and Singapore, was the first Chinese air carrier founded entirely with private capital. The company has also established 33 new international routes in the past two years.

International outlook continues today – now it’s time to invest

…But Zhongnanhai’s projects are long-term, and they’re directly related to the New Silk Road. Currently, Fujian ports have recorded a cargo traffic of 500 million tons, and Xiamen’s single port is one of the most important in the People’s Republic of China. According to Beijing’s calculations, the expansion of the city’s port will go hand in hand with the development of the Fujian Free Trade Zone (FTZ), a vast area inaugurated in 2015, which sees the Fuzhou, Pingtan, and Xiamen as central poles to the nervous system of the greater region. Through pointed taxation and investment in these areas, the government will achieve its aims.

Why look to Fujian? The answer is obvious. This province is the gateway to the entire southeast of China. A huge market with the highest growth rates in the People’s Republic. An arrival of goods via infrastructure based on rubberized and railway transport in Xiamen that facilitates influx into the greater region, such as Hunan province or the Low Zhejiang. All areas bordering Fujian.

So the Xiamen FTZ is a real opportunity for many players. This is why, since 2015, international brands with offices in Beijing or Shanghai have opened branches in Xiamen. This is China 2.0. In Fujian, an all-dimensional, multilevel and wide-ranging model of openness has emerged that has enabled the Province to trade globally, leading it to establish economic and commercial relations with 225 new markets that include entire nations.

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