An Overview of the Major Regions in China

Beijing

Beijing is the capital of the People's Republic of China, and the country's political and cultural center. It has a long history that dates back more than 3000 years, and has served as the center of power for more than 500 of those years. Beijing is not only China's political center, but also its cultural one. The Chinese language dialect spoken in Beijing, putonghua, serves as the model for the rest of the country to follow, and is the language of instruction taught in schools across the country. All of China, ranging from the Western portions of the country to the Southern reaches, sets their clocks to Beijing time. Beijing is the model for a distinctively Chinese development, and is a city that has undergone drastic changes over the past 20 years; an example for the rest of China to emulate. These changes continue to keep pace today, and present a wide range of opportunities for foreign investment.

Beijing is also home to 475 research centers, and more than 60 institutions of higher learning, including Peking University and Qinghua University. Beijingers are perhaps the most well-educated in all of China, and are at the forefront of technological change and advancement in the country. Beijing is a city of more than 12.5 million inhabitants, a municipal area occupying 16,808 square kilometers. Together with Shanghai, Tianjin and Chongqing, Beijing is classified as a separate municipality with the same status and responsibilities as a province. This special status enables the Beijing municipal government to approve independent foreign investment projects up to a value of $30 million, making it an attractive location for foreign investment in China. The major industries in Beijing include tourism, electronics, chemicals, automobile, machinery, metallurgy, textiles, garments, and household appliances.

Shanghai

Shanghai covers the Consular District of Jiangsu, Anhui and Zhejiang provinces and the City of Shanghai. The region's GDP was over US$ 400 billion in 2004, accounting for roughly 25 percent of China's total GDP. The economy of this region, known as East China, is roughly equivalent to that of the Philippines. The GDP of Shanghai alone grew 11.1 percent to over US$ 109 billion in 2005, accounting for over five percent of China's total output. GDP per capita in Shanghai is over US$ 6,200.

Shanghai is the industrial, financial, and commercial center of China. It hosts a concentration of manufacturing activity in such key industries as automotive, electronics, telecommunications, machinery, textiles, iron and steel, and petrochemicals. Shanghai has a population of some 17.5 million, not including up to three million visitors who are in the city on any given day.

In 2005, exports from Shanghai to other parts of the world were US$ 90.7 billion, an increase of 23% over 2004, and constituting about 16% of China's total. About 25 percent of China's total exports pass through Shanghai's ports. Two-way trade between Shanghai and the U.S. was more than US$ 31 billion in 2005, a 19% increase over 2004. Foreign direct investment (FDI) in East China has been increasing steadily for several years. In Shanghai, contracted FDI in 2005 was US$ 14 billion, and actual realized investment was US$ 6.9 billion.

The U.S. is one of the top investors in Shanghai. The U.S. share of Shanghai’s cumulative FDI, at approx. US$ 9.5 billion, is roughly 10% of Shanghai's total. There are some 4,700 U.S.-invested projects in Shanghai. The American Chamber of Commerce in Shanghai is the largest in Asia, with over 3,000 members, and some 80 new members per month. Some 15,000 Americans are long-term residents of Shanghai, and many more work on short-term visas. The City of Shanghai has the status of a province and receives preferential treatment from the central government, particularly as an incubator for reforms and pilot projects. Costs tend to be somewhat higher in Shanghai than in nearby cities, but the business environment is generally more transparent. Sectors to watch in the region are IT, telecommunications services, transportation infrastructure (ports, metro and light rail), distribution services, environmental technologies, construction materials, architectural and engineering services, industrial equipment, machine tools and manufacturing process controls.

Guangzhou

The area generally referred to as Southern China covers the provinces of Guangdong, Fujian, Guangxi Autonomous Region, and Hainan Island. These four provinces have a population in excess of 200 million, and contain China’s richest cities, as the South was the first area in China to be opened to the outside world. Much of that development, especially in Guangdong, has been fueled by the region’s proximity to the Hong Kong Special Administrative Region (HKSAR) and Taiwan. HKSAR has provided much of the capital, technology and business savvy that has made the Pearl River Delta China’s most prosperous region. Meanwhile, Taiwanese firms are the leading investors in Fujian, which is home to two of China’s wealthiest and most developed cities, Xiamen and Fuzhou.

Chengdu

Chengdu, the capital of Sichuan Province, is the most important commercial center in West China. This metropolis of 10.44 million lies 1,500 miles from China’s eastern seaboard. The city has a market reach of 200 million consumers and it is the distribution center for southwest China encompassing Sichuan, Yunnan and Guizhou Provinces, the Tibet Autonomous Region, and the Municipality of Chongqing. Sichuan Province boasts one of the most diversified industrial bases in the country and Chengdu is a key manufacturing center for the electronics, machinery, pharmaceuticals, chemicals, metallurgy and food processing industries. The IT industry has been designated as the Number One Project for growth in Sichuan Province. Sichuan is also the national headquarters for feed grain companies. In 2003, the city of Chengdu had a GDP of RMB 187.08 billion ($22.6 billion), a 13% increase over 2002.

Chongqing, the most recently established municipality directly under the Central Government since 1997, is the largest administrative municipality in China with a population of 30.9 million. Chongqing is strategically located in the upper reaches of the Yangzi River. According to current patterns of Chinese economic development, there are three economic belts: the eastern, western, and central belts. Chongqing has been identified as the connecting point between the eastern and western belts. Chongqing has received a great deal of financial and policy support from the Central Government, enabling its economy to grow rapidly and increasingly compete with Chengdu. Chongqing is famous for the scenic Three Gorges and the Three Gorges Reservoir. Once the construction of the Three Gorges Dam is competed, river navigation between Chongqing and Shanghai will become more reliable. Pillar industries in Chongqing are machine building, metallurgy, chemicals and pharmaceuticals. Since the early 1980’s, many companies in the national defense industry have shifted to manufacturing civilian products, playing an important role in the automobile and motorcycle industries in the city. With its strong heavy industry foundation, Chongqing is expected to become the automotive capital of western China. In 2002, Chongqing had a GDP of RMB 197.1 billion ($23.7 billion), a 10.3% increase over 2001. Southwest China’s economy has enjoyed relatively sustained growth in recent years and will continue to grow at 9 to 10% over the next few years.

Shengyang

Northeast China, historically known as Manchuria, is comprised of three provinces: Liaoning, Jilin and Heilongjiang. With a population of over 107 million people, the region is rich in natural resources and is known as China’s center of state-owned heavy industrial manufacturing. While reform of public sector enterprises continues to lag behind schedule throughout the region, provincial governments are encouraging development of private sector businesses in several sectors including information technology, telecommunications, environmental technologies, automobile parts, and tourism.

Regional leaders would like to see the Northeast become the fourth great coastal area to increase trade and draw in foreign investment. While it is well known that the Chinese government strongly encourages the economic development of the Southwest through its Great Western Development Initiative, it is little known that the Northeast is also a top priority.

In October 2003, the 16th Communist Party Congress endorsed the Rejuvenate the Northeast Initiative. In November, the National Development and Reform Commission announced its approval of 100 projects that are expected to require an investment of USD 7.3 billion (61 billion RMB). The Chinese central government plans to cover only 20% of planned investment by allocation of funds from the State treasury. The financing tools are expecting to primarily include interest subsidies on commercial loans from State policy banks and market liberalization to attract foreign and domestic investment. The projects will be unevenly distributed throughout the Northeast, with Liaoning having secured approval for 52 project proposals, Jilin with 11 projects, and Heilongjiang with 37 projects. Liaoning is home to about 10 percent of China’s large and medium size state-owned enterprises.

Shenyang, the capital of Liaoning Province, is considered the industrial center and transportation hub for Northeast China. Shenyang’s comprehensive manufacturing base is divided into forty sectors, including nonferrous metals, chemicals, automobiles, aircraft, machine tools, building materials, electronics, textiles, pharmaceuticals and light industrial products. The city’s GDP reached $16.9 billion (140 billion RMB) in 2002. Industrial production accounted for 43.9% of city GDP, while agriculture accounted for 6% and services for 50.1%. Liaoning’s GDP reached $66 billion (545 billion RMB), among which industrial production accounted for 47.8% of provincial GDP, agriculture for 10.8% and services 41.4%.

In November 2003, the central government released statistics that clearly demonstrate the comparative strength of the Northeast over the Southwest in terms of international trade activity. In 2002, total trade value for the Northeast reached $ 29.79 billion, which represented 4.7 percent of China’s total trade. The Southwest accounted for $ 9.17 billion, which was 1.5 percent of China’s total trade in 2002. With regard to foreign direct investment, the Southwest utilized $1.08 billion, while the Northeast utilized $5.18 billion. Liaoning typically attracts about 75% the Northeast region’s foreign direct investment.

Source: http://www.buyusa.gov/china/en/introduction.html