bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

BLUE skies are rare in the smoke-shrouded city of Chongqing.

  As one of China's largest industrial bases, this heavily populated city in southwestern Sichuan province pays a price for the booming industry that has spearheaded its strong economic growth.

  Its economy grew 12.8 per cent last year, faster than the national average of 11.8 per cent, and city officials expect it to increase 10.7 per cent this year.

  China's tight credit policy has played a part in slowing growth while cooling the city's unbridled retail price inflation, which is expected to fall to 18 per cent from last year's 26.5 per cent.

  'Chongqing had its fastest, longest and most stable economic growth during the eighth five-year period (1991 to 1995),' mayor Liu Zhizhong said.

  The economy received a significant boost in 1992, when the central government granted Chongqing the same preferential policies that coastal cities enjoy in their bid to attract foreign investment.

  Between 1992 and 1994, the city secured contracted foreign investment of US$1.6 billion and established 1,480 foreign-invested enterprises.

  For the first three quarters this year, contracted foreign investment amounted to $236 million, with 182 new foreign-invested enterprises formed.

  Proudly perched on the upper reaches of the Yangtze River, Chongqing, in China's most densely populated province, is an inland river port that served as the Nationalist government's capital in 1938.

  Towering gorges rising from the Yangtze and Jialing rivers, which flow through the city centre, served as a natural defence against the Japanese invasion during World War II.

  Factories built against the steep slopes belched smoke as they churned out military equipment, helping to give the Chongqing the title of 'foggy city'.

  The present huge consumption of coal fuel in city households has ensured that the name still applies.

  Compared with the provincial capital of Chengdu, a largely commercial city, Chongqing stands out as an old, polluted industrial base.

   The city, which has 15 million people, ranks as the most polluted in China.

  In response to an acid rain problem, Chongqing has joined Hiroshima in Japan in setting up a research centre and has tightened rules to curb pollution.

  'While expanding the economy, we hope to upgrade the quality of our environment,' Mr Liu said.

  Chongqing plans annual economic growth of 10 per cent over the next five years to meet the central government's goal under the Ninth Five-Year Plan (1996-2000) of doubling the GDP per capita, on the basis of 1980 prices.

  But achieving that pace hinges on reforming the moribund state sector, which accounts for 80 per cent of GDP, as well as reforming the overall economy.

  Mr Liu said the overarching principle was to 'strengthen the primary sector [agriculture], perfect the secondary sector [industry] and expand the tertiary sector [services].'   The city hopes the tertiary sector will account for 45 per cent of the GDP by the end of the century, up from 35 per cent today.

  Chongqing boasts China's largest motorcycle manufacturing base, led by China Jialing Industrial Company and Jianshe Industry Corp, both under the gigantic China North Industries Corp (Norinco), a former weapons maker.

  The city expects to churn out more than two million motorcycles this year and four million annually by 2000.

  Other so-called 'pillar' industries are chemicals, large-scale transmission and power generating equipment production, metallurgy and building materials.

  Last year, Chongqing's industrial output value soared 36 per cent, to be worth 77.1 billion yuan (about HK$71.7 billion).

  Chongqing also faces a Herculean task: how to re-invigorate its 8,000-plus state enterprises, of which one-third are bleeding red ink.

  'We will grapple with the big ones and dispense with the small ones,' Mr Liu said.

  The city government has agreed to lend its support to 100 key enterprises, leaving the rest to go bankrupt, to be merged with larger companies or to be sold off. Three will be allowed to go broke this year.

  Chongqing Steel Works and Jianshe Industry have established modern enterprise systems by hiving off their social welfare burdens, separating state ownership from management and reorganising their workforces. Jialing and Chongqing Beer are preparing to overhaul their practices.

  To make up for the city's geographical shortcomings, it is to invest more than 100 billion yuan on improving its infrastructure in the next five years. It already offers chartered flights to Hong Kong and Japan, and the city is in talks on starting flights to Singapore and Korea.

  When the Three Gorges hydro-electric project is completed in 2009, 10,000-tonne vessels will be able to navigate to the inland river port.

  A highway from Chongqing to Chengdu has been opened, and two others, to Wuhan and Guiyang, are under construction. The second phase of the Luohuang power plant, with an investment of more than four billion yuan, will also be built.

  Instead of aiming for export processing projects, which are better suited to coastal cities, Mr Liu said, Chongqing would focus on projects with high technology and high value-added products.

  'That way, transportation costs will only amount to a small portion of the total costs,' he reckoned.

  Chongqing also stands to benefit from a policy shift by the central government, which aims to direct more investment to the impoverished interior regions after nearly 17 years of focusing on the east coast.

  Hongkong Bank China Service research manager Benny Chiu said: 'Chongqing is one of a few big cities in southwest China, including Chengdu and Kunming, which have the potential to match the coastal cities.'   Its trump card is its rich resources in agriculture, raw materials and water, as well as its lower labour costs.

  'The question is whether foreign capital will flow to the city. It all depends on the success of the state's development plan for central and western China,' Mr Chiu said.

  Chongqing still has a lot to do to catch up, however. It does not have a five-star hotel, traffic congestion is a part of daily life and construction sites are ubiquitous.

  The city hopes to have one five-star hotel in a couple years with the help of Hong Kong's Cheung Kong Holdings.

  Chongqing also wants to gear up to become a financial, commercial and information hub. It is one of a handful of cities allowed to have foreign banks and to experiment with urban co-operative banks.

  Hong Kong's Po Sang Bank has set up a representative office there and Japan's Sumitomo Bank is applying for one.

  Foreign investors are already arriving to cater to the huge population. Pepsi Cola has founded a joint venture to bottle soft-drinks and Taiwan's Tingyi International, which makes the popular Master Kang instant noodles in Tianjin, is investing US$120 million to build a plant in the city's development zone.

  The plant, with four production lines, will be in operation next month and is expected to generate a production value of 500 million yuan next year.

  Chongqing provides a venue for foreign investors who want to leap into the enormous southwest market, which includes Tibet and the provinces of Sichuan, Yunnan and Guizhou, in all a population of more than 200 million.

  But the market is only for patient investors, because it will take years for consumers in the region to spend as much as those along the coast.

  So foreign investors might have to tolerate some smog before the city's smoke clears on a rich harvest.



Foggy city has a clear vision