In the first quarter, China’s GDP growth dropped to 6.1%, the lowest record since the set up of such index. Meanwhile, its export and import decreased by 24.9% to US$428.7 billion. China has an export-oriented economy. When the external demand remains low, it is unwise to say that China’s economy will recover soon.
Affected by the export, most of the Chinese cities, especially the costal cities, all experienced remarkable decline of their economies. Shanghai, China’s largest city by export volume, saw its GDP growth drop to 3.1% in the first quarter, 8.4 percentage points lower than previous year. Some of the cities, which rely very much on the export, even had a negative GDP growth, such as Donguan.
Nevertheless, not all the Chinese cities were in the same situation. Chengdu, a provincial capital city in China’s southwest Sichuan Province, had a GDP growth of 12.3% in the first quarter. Meanwhile, its total foreign trade grew by 37.7% to US$3.6 billion. The growth rate is 62 percentage points higher than the national average level, and ranks the 1st among all the 15 sub-provincial cities of China.
It is a wonder for Chengdu to achieve such growth, since Chengdu was not only hit by the global recession, but also the earthquake.
After the quake, Chengdu showed its speed in the reconstruction work. To date, the construction works for over 80% of the damaged rural houses have been launched, and 36.8% of them (53,998 houses) have been completed.
The great speed also emerged in Chengdu’s industrial sector. Just one month after the quake, 98.2% of the industrial enterprises above designated size resumed their production, with their production capacity reaching 101.4% of the level before the quake. In the first quarter of 2009, Chengdu’s value-added industrial output grew by 17.3% from previous year to RMB 31.7 billion. The growth rate is 12.2 percentage points higher than the national average level.
While the impact from quake getting less and less notable, Chengdu shifts some of its attention to confront the global recession. Automobile, software and outsourcing, financial sector are the major industries encouraged by this city.
Automobile is one of Chengdu’s pillar industries. At present, there are 168 companies in this industry, including 16 auto manufacturers. In 2008, Chengdu produced 71,000 autos, up 22.5% year on year. Chengdu also has a large market for the auto manufacturers, with its reserve of private cars ranking 3rd in China. Several big players have made their presence in Chengdu Economic and Technological Development, including Germany’s Volkswagen, Japan’s Toyota, and domestic FAW, China’s major auto producer. Although the global auto industry is experiencing downturn, these players are raising their investment in Chengdu. In May, the FAW-Volkswagen will launch the construction of its new plant in Chengdu, which can realize annual output of 350,000 cars and involves an investment of EUR 700 million. In June, the new plant of FAW-Toyota, which involves an investment of RMB 2.6 billion, will complete construction and commence operations next year, producing 30,000 cars annually. It is estimated that the Chengdu’s industrial output in auto-related industries will reach RMB 100 billion by 2012.
Software and service outsourcing is another weapon for Chengdu to confront the global crisis. In recent years, Chengdu has shown stable growth in the software and outsourcing industry. In 2008, despite of the quake, revenue from Chengdu’s software industry rose 37.7% year on year to reach RMB 42.7 billion, accounting for 5.6% of the nation’s total, and the growth rate was 7.9 percentage points higher than the national level. Accenture is the most recent investor in Chengdu. In Feb 2009, it declared the launch of its global service outsourcing center in this city. In April, IBM, which invested in Chengdu in1996, upgraded its branch in Chengdu to be the headquarters in Southwest and Northwest China, an area that includes nine provinces and one municipality.
Apart from software and outsourcing, financial sector is the other focus for Chengdu’s service industry. Its transaction volume of financial business tops among all the cities in the region, and its securities trading volume ranks the 3rd in China after Shanghai and Shenzhen, making it the financial hub in West China. By the end of 2007, there are 15 overseas financial institutes setting up branches in Chengdu, such as Citigroup, Standard Chartered and Banque Nationale de Paris, ranking first among all western Chinese cities. After the quake in 2008, the investor didn’t hang up their expansion plan into Chengdu. Three more foreign banks decided to set up their branch in this city, including Tokyo-Mitsubishi, JPMorgan Chase and Nanyang Commercial Bank.
Chengdu’s situation is just an epitome of many Chinese cities in the vast hinter land, which have retained a significant growth in the first quarter. These cities have strong domestic consumption, and rely less on the export than the costal cities. The cities in the central and western China, such as Chongqing, Wuhan, Changsha, Xi’an, Kunming, all had a GDP growth around 10% in the first quarter. Among them, Chengdu is the best choice for investors, due to its excellent investment environment. Just like Intel, which shifted its business from Shanghai to Chengdu under the recession, Chengdu will surely selected by more and more investors in future.
Leave Your Comments