Deng Xiaoping, the pragmatic leader who orchestrated China’s ‘reform and opening-up’ 30 years ago, once said that “some areas must get rich before others.” Deng was alluding to his notion that, due to the country’s massive scale, economic development could not happen all at once across China. Planning and implementation of such an economy would take years, even decades, and some areas would inevitably be developed before others.
The logical place to start was the coastal regions of China, with the natural advantage of access to Asian and overseas markets via the South China Sea and Pacific Ocean. Not surprising then that the two areas that benefited most after initial economic reforms were the Yangtze River Delta region in the east and Pearl River Delta region in the south. Both places became international manufacturing centers with numerous factories and busy seaports.
Today, the prosperity of the Yangtze River Delta can be experienced in Shanghai, ‘the Pearl of the Orient’- undoubtedly China’s most modern and cosmopolitan city. Down south in the Pearl River Delta, the city of Shenzhen, chosen by the Central Government as a ‘Special Economic Zone’ in 1980, transformed from a small fishing village to a bustling metropolis of nearly 10 million people in a mere 30 years. Both places best represent China’s economic achievements of the recent past.
Although China’s coastal regions continue to develop, the initial boom has already slowed. Furthermore, foreign investors are beginning to grow weary by the increasing costs of doing business in cities like Shanghai and Shenzhen. Now both international and domestic businesses have their eyes looking towards the interior of the country, where overhead costs are lower and the cities are building the necessary infrastructure to support growth.
China’s vast western region will be perhaps the most exciting economic development story of the next decade. The country’s west includes 6 provinces, 5 autonomous regions and 1 municipality. Overall the entire region comprises a whopping 70% of China’s landmass and 28% of its population. It also currently accounts for 17% of the country’s GDP, but that is set to change for the better.
In 2001, the Chinese government implemented its Western Development Strategy also known as the ‘Go West’ campaign. The lagging economic progress of the region prompted the Central Government to offer incentives for business development, including a 10% corporate income tax reduction. The plan also calls for massive infrastructure development both in urban and rural areas.
Nearly 10 years after the beginning Western Development Strategy, the positive effects are evident in the region’s largest cities. The key cities that have benefitted most so far are Xi’an (capital of Shaanxi Province), Chengdu (capital of Sichuan Province), Kunming (capital of Yunnan Province) and Chongqing (a direct-controlled municipality). These cities form a tight bond, and despite each being within a less than 2 hour flight from one another, each is unique in character and culture.
At the center of this prosperity is the Chengdu-Chongqing Megaregion. About 200 miles apart from each other, the two cities form a combined urban population of about 10 million people. Chengdu and Chongqing are the principal economic, government, and cultural centers that serve a regional population of nearly 110 million (the combined population of Sichuan Province and Chongqing Municipality). Given these demographics, the potential for growth in these two cities is enormous.
In the past, like the ambitious living in our own heartland, those from China’s interior were forced to leave home for the far-off coastal regions to benefit from the country’s economic growth. Migrant workers from Sichuan had it especially difficult, facing employment discrimination due to their strong local accent (seen as low-class by the eastern cosmopolitans) and the misperception that they are lazy workers. Today, the rise of Chengdu-Chongqing Megaregion means that workers from Sichuan need not go far from home in order to find opportunity. This is a considerable departure from China’s migrant worker narrative of the past 30 years.
Increasingly what you see today is a reversal of past emigration trends, as not only young people from the Chengdu-Chongqing Megaregion opt to stay close to home but people from other regions relocate to the interior to take advantage of the growth.
There is a bit of a rivalry between the cities of Chengdu and Chongqing, with much talk about which of the two will become western China’s most important city. In reality they are more like ‘sisters’ as both cities stand to benefit. As my American friend who lived in the area for over 10 years described the relationship, “Chengdu is the fat provincial nobleman to Chongqing’s beer and hot pot steel worker.”
In the case of Chongqing, he is referring to the importance of the city as an industrial center, both in metal manufacturing and natural resource mining (the surrounding area is rich in coal and natural gas). In contrast, Chengdu is quickly becoming a major player in China’s information technology sector.
Much of this has to do with Chengdu’s advantageous geography. Whereas the surrounding terrain in Sichuan and Chongqing is mountainous and hilly, Chengdu lies in a flat, fertile basin, allowing the city to sprawl out. Dubbed the ‘Land of Abundance’ for its long history of agricultural prosperity, Chengdu is today abounding in domestic and foreign investment in high-tech.
The local government has set up the ‘Chengdu Hi-Tech Industrial Development Zone (CDHT)’ with 2 locations: the South Park and the West Park. Both areas lie outside the historical city center and are being built on previously undeveloped land. The character of the CDHT is not the dense urban forest of supertall skyscrapers that characterizes other Chinese cities. Rather, a series of modern low-rise office parks can be seen popping up in the CDHT, not dissimilar from what can be found close to where I grew up in Silicon Valley.
Already, international IT behemoths like Intel have established operations in the CDHT, having opened semiconductor assembly and testing facilities. Other American companies look to expand in the CDHT. Just a few days ago Dell Computer announced it would open an operations center in Chengdu, creating 3,000 new jobs. Cisco Systems has also been involved in Chengdu, collaborating with local institutions like the University of Electronic Science and Technology of China in research and development.
Chengdu attracts foreign investment not only because of its lower cost-value compared to other cities in China but because of its efficient infrastructure and logistics. Chengdu’s Shuangliu Airport is national airline Air China’s third major traffic hub after Beijing and Shanghai. The city is also undergoing the construction of a comprehensive subway system with the first line scheduled to open in on October 1st. This line, Line 1, will connect the historic center of the city with the South Park area of the CDHT- making commuting for IT workers who live in the city more reasonable.
Most interestingly, Chengdu is also promoting quality of life when courting business investment. The local government has established what is called a ‘Modern Garden City’ to keep in line with the city’s history as an agricultural base. The sense of the past is strong with locals, and Chengdu is doing everything to preserve this despite the development.
If Deng Xiaoping were still alive today, he would probably be proud to see Sichuan flourishing- after all it is the patient pragmatist’s native region.
Adam Nathaniel Mayer is an American architectural design professional currently living in China. In addition to his job designing buildings he writes the China Urban Development Blog.