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