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Chengdu

A Snapshot.

Big, bustling, and growing, Chengdu has emerged as one of the most dynamic cities in the Chinese hinterland and is an increasingly essential gear in the nation’s economic engine. As the capital of Sichuan Province—among the most populous in China—Chengdu has become a centre for both business and logistics in western China. The city, once a backwater lagging far behind its coastal counterparts, has now firmly arrived on the business scene.

 

 

The rise of Chengdu is due to the convergence of two distinct, but related, factors. One is the Western Development  Strategy,  in  which  Chengdu  figures  prominently  as  a  key  city.  In  an  effort  to  spread economic growth more equitably within the country, Beijing allowed cities like Chengdu to offer foreign firms extensive  investment  incentives,  spurring the interest of multinationals and small  to medium enterprises (SME) looking to lower costs.

 

The second factor attracting outside investment to Chengdu is its vast supply of cheap and talented labour.  As  the  city  turned  its  focus  toward  high-tech  industries,  local  universities  developed  well- regarded programmes in IT, churning out a pool of qualified workers. The low cost of living in Chengdu allowed producers to benefit from lower labour costs, with average salaries for skilled labour lower than cities like Beijing, Shanghai or Shenzhen. The ensuing cost-benefits have drawn major investors like Intel, Toyota,   and   Motorola,   reinvigorating   the   once  neglected backwater.

 

One factor that historically limited development of the city was the high transport cost for primary and secondary sectors. This has however in many ways become a blessing in disguise. Lacking adequate containerised rail infrastructure or the proximity to ports that cities like Shanghai enjoy, Chengdu was forced to focus on development of service industries and high- value manufacturing such as semi-conductors and pharmaceuticals. Industries which are less dependant upon cheap transport costs may insulate the city from the global downturn  –  in  stark  contrast  to  regions  heavily  dependant upon low cost manufacturing such as Guangdong.

 

With both the Central and Provincial governments working hard to improve the overall investment environment  of  the  city,  and  the  province  at  large,  huge  sums  are  being  invested  in  financing construction  of  several  major  intercity  highway  and  rail  networks.  Within  the  city  limits  itself, construction is underway on its metro system.

 

 

                                          Expanding rail capacity

 

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