Developing the Yangtze River

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The second tier cities that line the Yangtze River are seeing increased foreign investment as international companies look to move out of the Yangtze River Delta with its high rent and labor costs. As China Briefing pointed out in our November 2006 issue, for export-based businesses in central China, the burden of increased transportation costs and existing monopolies in the region make moving inland less feasible for all but a few major international businesses. However, the Yangtze port cities of Nanjing and Wuhan, as well as the lesser known ports cities of Taicang, Zhangjiagang and Changzhou are showing rapid growth and expansion and, based on FDI figures, look to be encouraging increased foreign investment.

The gross domestic product of the 16 cities in the Yangtze River Delta grew by 16.4 percent last year to nearly 4 trillion yuan, according to the Yangtze River delta research center under the Jiangsu provincial bureau of statistics. The GDP of the 16 cities stood at 3.9526 trillion yuan accounting for 18.9 percent of China’s total. The YRD and the greater Yangtze River region should continue to see strong growth with FDI increasingly moving up river towards the second tier cities along its banks.

The GDP growth for both Nanjing and Wuhan from 2005 to 2006 was above 15 percent with both cities showing increased foreign direct investment. While the overall amount of FDI in 2006 may seem low – US$2.85 billion in contracted FDI, US$ 1.62 billion in used FDI for Nanjing and US$2.64 billion in contracted FDI, US$ 2 billion in used FDI for Wuhan – when compared to the coastal engines of Shanghai or Guangzhou, the growth rates reveal an interesting trend. While Shanghai has seen its growth of FDI drop to 3.8 percent year on year, Nanjing is nearly double that at 7 percent while Wuhan posted 14.9 percent growth for 2006.

To encourage growth along the waterway, the Chinese authorities are stepping up efforts to dredge the waterway and improve the shipping infrastructure of the river. All Roads Lead to China investigates the state of the governments continuing efforts to dredge the Yangtze in their most recent post:

Nanjing to Anqing Finish the “reef destruction” work for Taiziji and Lanjiangji. At the same time, renovate Heishazhou and Tuqiao channel and deepen it 6 meters. China Communications Ministry gave 36 million RMB investment to destruct the reef in 2006 for Taiziji, and the project start in March 2007 (dry season). This is a very dangerous area for the river ships. Every year, there are nearly one hundred ships bump into those reefs, and cause all kinds of problems.

Anqing to Wuhan: The aim is that make the channel to 4.5 meters depth. Specifically, to work in the areas of Dongliu, Luohuzhou, Wuxue, Zhangnan where shallow channels exists.

Wuhan to Yichang: Recently finished the Majiazui first-stage renovation project, and will start the second stage of Zhijiang channel and Jiangkou channel. This area has a lot sand and mud, which often impedes the navigation.

Yichang to Chongqing Part. Begin the “reef destruction” project for “Kuweilouxigou to Tongluoxia” part which is a difficult part for shipping.

 As All Roads points out, there is still a lot of work needed for Post Panamax sized container ships to start calling on Chongqing.