Western China, New Powerhouse for China’s Economy
Mar. 5 – With the introduction of China’s “Go West” policy in 1999, the country’s western region entered into period of consistently elevated economic development.
The ‘Go West’ policy covers 12 provinces and cities in the western part of China, namely:
- Inner Mongolia
The territories listed above together account for about 70 percent of the country’s land area and nearly 30 percent of its population. In 2011, imports and exports in the region amounted to US$184 billion (9.4 times that of 1999), meanwhile, foreign direct investment into the region reached US$11.57 billion the same year (10 times the levels seen in 1999).
Since 2007, the region has consistently recorded faster economic growth rates than its eastern counterparts. For the first three quarters of 2012, the region occupied seven spots in the country’s top 10 list of for GDP growth during that period, Chongqing and Guizhou came in tied for second place with 13.8 percent growth, followed by Gansu, Sichuan, Shaanxi, Yunnan and Qinghai.
Chengdu: Western China’s Rising Star
At the start of 2012, China’s State Council officially approved the 12th Five-Year Plan for Large-Scale Development of the West and proposed that Chengdu be turned into a strategic base for the inland economy.
Chengdu, the capital of Sichuan Province, is an important regional center for advanced manufacturing, financial services, and research & development. In recent years, the city’s annual GDP growth has outpaced many of the country’s first and second-tier cities. Its economy grew 15.2 percent in 2011, compared with 8.1 percent for Beijing, 8.2 percent for Shanghai, and 10 percent for Shenzhen.
The growing economic influence of Chengdu in the region has drawn international attention, and foreign investment has already begun flowing in. The city has been chosen as the site for the 2013 Fortune Global Forum, making it the first inland city to host the prestigious global event. Only three Chinese cities have held the event: Shanghai, Beijing and Hong Kong. This puts Chengdu in good company.
According to Fortune, Chengdu is the perfect city to host the forum as it represents so many of the key trends affecting the country today, such as the increasing economic influence of western China.
Moreover, FDI into the regions has reached a record high. In 2011, there were 236 FDI projects approved in the city, including 84 projects with investments above US$10 million, and the actual use of FDI amounted to US$6.65 billion, up by 34.9 percent. Similar to what the coastal cities have done in the past with proven success, Chengdu is offering tax breaks to qualified foreign firms, including two years of tax-free profits and a further three years at 50 percent of the corporate tax rate. Under such circumstances, foreign companies are understandably being drawn to Chengdu.
In 2012, over 40 percent of global Fortune 500 companies had offices in Chengdu, including the likes of Shell, Intel, Bosch and Foxconn.
Chengdu-Chongqing Economic Zone
The Chengdu-Chongqing Economic Zone, approved by China’s State Council in 2011, provides an economic engine for western China’s ongoing development. The zone is located along the upper reaches of the Yangtze River and Sichuan Basin, covering 31 districts and counties from Chongqing, and 15 cities from Sichuan. The goal of the zone is to radiate and drive forward the economy of western China while upgrading the economies in the two regions in particular.
The zone is planned to be an important economic center for western China by 2015, and to be one of the strongest comprehensive economic zones in the country by 2020, rivaling the country’s key economic hubs including the Yangtze River Delta, Pearl River Delta and Bohai Rim.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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