Chengdu to Become a Municipality?

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If true, Sichuan will need a new capital city

Op-Ed Commentary: Chris Devonshire-Ellis

Aug. 22 – Rumors have been persistent in Sichuan recently that the capital city, Chengdu, may be re-designated as a municipality, just as Chongqing was in 1997. If enacted, the move would see Chengdu’s elevation to municipal status reporting directly to Beijing, rather than to the provincial government. Aside from Chongqing, three other Chinese cities have municipal status; Beijing, Shanghai and Tianjin. Such moves strengthen direct control by Beijing over key strategic locations in China, and one potential reason for the change to occur may lie with Chengdu’s geographic position as an effective gateway to Tibet. Beijing finances a large garrison in Chengdu to support problems in Tibet should they arise.

The status of Chongqing to becoming a municipal level entity meant that the actual city, which has a population of about 7 million, had its controlling area expanded to include rural areas and a total population of some 29 million, a figure sometimes misused to justify a claim to Chongqing as being the world’s largest city. In the 1997 change, Chongqing city was merged with the neighboring Fulin, Wanxian, and Qianjiang prefecture-level districts. The move was seen by many at the time to spearhead China’s efforts to develop its western regions and to centrally coordinate the resettlement of residents from the reservoir areas of the Three Gorges Dam project.

Chengdu itself has a total population of some 7 million in the urban areas, plus a further 7 million in the outlying rural areas that fall under its administrative authority. The city has long been a preferred destination for foreign investment, due to its attractive climate, position in the heartland of a massive consumer base, and well developed infrastructure. Apart from the Tibet issue, another reason for Chengdu to be upgraded to Municipal status may lie in the fact that it is not directly connected to the Yangtze River, with goods having to travel through several other administratively controlled regions to reach the port cities of Yibin and Luzhou, neither of which currently fall under Chengdu’s jurisdiction. The possibility of bringing them under Chengdu’s management may pave the way for improved transportation and port infrastructure developments. If so, these ports would likely see significant development. Should Chengdu be upgraded to municipal status, Sichuan itself will need to appoint a new capital city as an administration center for the province. The primary candidate city for that is likely to be Leshan, which is centrally located in the province, already has its own airport and extensive national highway and rail connections, possessing a population of just above 3 million.

Chris Devonshire-Ellis is the Founding Partner of Dezan Shira & Associates, which he established in 1992. He is about to leave China and take up a new position with the practice to head up their North American practice. Dezan Shira & Associates provide investment advice into Sichuan Province and will be establishing a fully operational office in Chengdu next year. For further details or for information concerning foreign investment into Chengdu, Chongqing or Sichuan, please email china@dezshira.com, visit www.dezshira.com, or download the company brochure.

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