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September 25, 2015

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Home » City specials » Chengdu

Chengdu: engine for new round of development

By Cherry Cao | September 25, 2015, Friday | Print Edition

CHINESE President Xi Jinping’s ongoing state visit to the United States, the first since he took office in 2013, is widely expected to push forward the bilateral relationship between the two countries in various fields. The visit will in particular bring huge opportunities in economy and trade since the high-level dialogue is going to promote a deeper and more comprehensive understanding between the world’s two largest economies. While a number of Chinese cities have placed high hopes on Xi’s visit for further economic and trade cooperations with their US counterparts, Chengdu, capital of Sichuan Province, is somewhat well positioned to grasp those opportunities, mainly fuelled by the city’s rapidly growing competency in various aspects.

In a recently released inaugural Best-Performing Cities China report by the Milken Institute, Chengdu tops the list mainly with its human capital, established industries in high-end aerospace and aircraft design, and a more recently developed electronics manufacturing sector, which all jointly drive the city’s success.

Unrivaled performance

The report sorts 266 Chinese cities into two groups — the largest-cities group with 34 first- and second-tier cities, and the small- and medium-sized group, with recognition of the distinctive characteristics of China’s administrative structure as well as other key factors in Chinese urban development. Delivering a comprehensive and effective data-driven framework for highlighting the economic performance of Chinese cities at prefecture level and above, the report provides separate ranking based on the economic performance of those cities.

Chengdu is located in the intersection of the Silk Road Economic Belt and Yangtze River Economic Belt. Over the years, with its geographic advantages and industrial base, Chengdu has served as a growth engine driving the economic development of its neighboring regions. And on a global scale, it has also become a gateway for countries seeking a foothold in Chinese markets. These factors make Chengdu likely to remain an economic powerhouse in the next wave of China’s economic development.

In recent years, Chengdu has been recognized as one of the China’s, and even the world’s, fastest-growing cities. The city’s rapid pace of growth and exceptional performance are reflected in the indicators mentioned in the report by the Milken Institute. Out of the nine components of the index measuring all 266 cities, Chengdu placed in the top 10 in seven of the variables: one-year job growth, five-year job growth, one-year wage growth, five-year wage growth, five-year GRP per-capita growth, three-year FDI growth, and FDI/GRP.

Chengdu is known as one of the four main “science and education” bases in China. Most of Sichuan Province’s colleges and universities are concentrated in Chengdu, providing local industries with a talented labor pool. In addition, government policies have provided key support. The Go West campaign, launched in 2000, seeks to bring development to the country’s interior and bridge the economic gap between the coastal and western regions of China. By providing tax and investment incentives to both foreign and domestic firms, this policy equips Chengdu with a lower-cost advantage over its coastal counterparts.

Under this strategy, Chengdu has become a center of science and technology, high-end manufacturing, commerce, and finance in the Greater Western region of China. As planned, the city will continue to broaden its current industry base to include automobiles, biopharmaceuticals, information technology, logistics, new energy, new material, and petrochemicals.

Industrial parks

Chengdu’s economic ascent is built on decades of consistent planning and implementation, establishing a number of industrial parks to house diverse industries. For example, the Chengdu Economic and Technological Development Zone — a national development zone — features industries including automobiles and auto parts, machinery, electronic information, new building materials, pharmaceuticals, and food processing.

To further nurture the science and technology industry, Chengdu government built the Tianfu Software Park after setting up the Chengdu Hi-Tech Industrial Development Zone, which is among the first batch of pilot first-class development zones in China. They offer a number of preferential tax rates and policies to attract more high-tech companies to Chengdu. In recent years, the State Council approved the creation of Tianfu New Area, which focuses on the advanced manufacturing industry, the high-end service industry and modern urban agriculture.

Chengdu has also benefited from the inflow of foreign investment. Currently, 268 Fortune 500 companies, which include IBM, Intel and Microsoft, had a presence in Chengdu. In addition, driven by incentives such as the preferential lending and tax treatment, relatively lower labor cost and the high growth market in China’s west, auto companies such as Volvo have in recent years built factories in Chengdu. By the end of 2014, Chengdu was home to 21 automakers and 246 auto-parts companies.

The expansion of transportation infrastructure also reflects Chengdu’s ambition to accelerate international ization process.

Chengdu also has got approval by central government to build a second airport, making it the third city nationwide to have two airports. Lastly, under the new One Belt, One Road strategy, Chengdu has also opened a railway line that connects the city to Lodz, Poland and carries freight to Europe in just 12 days.

Chengdu


 

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