Huang is one of the few things Chongqing and Shanghai have in common. The coastal metropolis was one of the richest cities in Asia before the communists came to power in 1949, and today it boasts an eclectic mix of spectacular colonial-era architecture and boomtown skyscrapers. Chongqing was the capital of a minor kingdom 3,000 years ago, but its only recent brush with fame came in the late 1930s, when it served as the wartime capital of the Nationalist government. Many industries retrenched here during the war, when the city was known as Chungking, and the communists added more later. Today Chinese know Chongqing as the Furnace City, both for blinding industrial pollution and searing summer heat. A planned 98-story office tower, unveiled in February, would dwarf the rest of the city.
It will be hard, to say the least, for Huang to repeat in Chongqing his success in Shanghai. Ever since the then President Jiang Zemin announced his Go West campaign to develop China’s hinterlands in 1997, Beijing has poured billions into the region, in which more than half the country’s poorest citizens live. The landscape is now being crisscrossed by a network of spanking-new long-haul highways and other infrastructure projects. But investors continue to direct the bulk of their money to coastal provinces like Guangdong and Fujian. The question is whether, with enough money, the Shanghai model can be replicated among China’s secondary cities. Much rides on Chongqing’s success.
Efforts to transform the Furnace City into the gateway to China’s west began in 1997, when Beijing proclaimed it a municipality, answering not to provincial leaders but to the federal government. Only Beijing, Shanghai and Tianjin enjoy similar status. But while those others are free to chart their own destiny with little oversight, Chongqing’s development has been deemed a national priority and has been directed from on high. Besides Huang, Beijing has sent top officials like a former Transportation minister to help remake the backwater.
By some measures it is already the world’s largest city, with 32 million people, though most are peasants who live within newly redrawn municipal limits. Huang says airport capacity will quintuple by 2010. Nearly $2 billion is budgeted for a port to handle Yangtze River shipping from Shanghai and beyond. Eight is a lucky number in China, so consider Chongqing mightily blessed. Eight bridges will span its rivers, while eight new rail lines and eight major highways will link it to every part of the country by the end of the decade. But analysts are still not convinced investors will follow. “Adding infrastructure cannot be endless,” notes Morgan Stanley economist Andy Xie. “At some point real commerce needs to sprout.”
So far Chongqing is still seen as a remote town of pioneers, even by Western manufacturers who already have plants there. The city hopes to serve a market of 350 million consumers, yet most of them are still too poor to be plum customers. Nonetheless, Coke recently announced plans for a Chongqing bottling plant. The first cars rolled out of Ford’s Chongqing plant early last year. Ron Tyack, president of Changan Ford Automobile Co., Ltd., says Ford plans to boost its investment from $100 million to $1 billion within a few years. The auto giant got tax breaks, a great site and confidence inspired by Beijing’s support for Chongqing, says Tyack. “If you talk about big international players, then there aren’t a lot here. But I’m sure they will come,” he says.
Chongqing may fall short of Shanghai as an international city, but should succeed as a regional trade and manufacturing center, predicts Prof. Michael J. Enright of the University of Hong Kong, who specializes in competitiveness studies of cities. He says first-movers there are benefiting from existing industries. Ford draws on Chongqing’s dominant role in China’s motorcycle industry. The other big player, British Petroleum, has taken advantage of the city’s chemical-industry know-how. “If anything,” says Gordon Wilson, president of BP Acetyls China, “we underestimated how fast the Chongqing market would develop. We really should have built a bigger plant.”
The multinationals remain exceptions. Most participants at a recent business conference were small firms from Hong Kong, which accounts for more than half of Chongqing’s investment. There was a veterinarian scouting locations for a stud farm and a real-estate agent from a one-person office in Hong Kong. To bring in bigger players, Huang has tapped old pals. He met both Tyack and Hong Kong developer Vincent Lo in Shanghai, where Tyack ran the Shanghai Yanfeng Automotive Trim Co., a former Ford operation, and Lo developed Xintiandi, a neighborhood of yuppie restaurants and boutiques. Last fall Lo announced plans to invest $1.2 billion in a huge suburb of Chongqing, including more manufacturing capacity. “Because it’s so backward now, it may be hard to believe, but I have no doubt this place will boom,” says Lo.
The government’s efforts may eventually make Chongqing more attractive to investors, says Patrick Powers, director of China operations for the U.S.-China Business Council in Beijing. The council recently did an independent, anonymous survey of all Chinese cities, in which it sent out teams pretending to be potential investors in order to learn how accessible each place was for obtaining information, meeting with officials and learning procedures. Chongqing ranked in the upper 20 percent. “They are really eager, very responsive,” says Powers, who also believes that the next decade could be Chongqing’s chance to flourish. While China’s development in the 1980s and 1990s belonged to Shenzhen and Shanghai, respectively, the first decade of the 21st century could be Chongqing’s turn to shine.
The city’s ultimate allure is the same as China’s: a vast pool of low-cost labor in an increasingly vibrant capitalist economy. As costs on the coast rise, development is already moving west. “The only question was where it would go,” says Enright. “Beijing has just simplified matters by adding all this infrastructure.” Enright compares Chongqing to Chicago, where developers built some of America’s first skyscrapers and won the race to become the gateway to America’s West. Just as Chicago never matched New York, Chongqing may never match Shanghai. But it could still be something special.
