CHENGDU, the provincial capital of Sichuan Province, is seeking foreign capital to build what is likely the largest subway in southwest China. A total of 17.76 billion yuan (about HK$16.72 billion) will be needed for the 20-kilometre underground traffic system aimed at solving the chronic traffic congestion. It will also serve as a cornerstone of Chengdu's real estate and commercial market development programs. According to an initial plan, phase one will be made up of a ''cross-shaped'' section covering the city hub and a ''circular'' line for peripheral transport. Second phase will include a surface light-rail system linking the subway with the industrial districts and the airport on the outskirts. It is estimated that at least 7.96 billion yuan will be needed for phase one. That does not include the development costs of properties on the subway lines. Officials are preparing a feasibility report for approval by the State Planning Commission. The project will be formally introduced next month at a large trade fair in Hongkong. In spite of the substantial amount of investment involved, Chengdu officials said they were optimistic that foreign developers would be interested. ''We will link property development and subway construction as one single project so as to raise the rate of return of investment for foreign investors,'' said Ms Zhou Lirong, vice-director of the Planning Commission of Chengdu. Mr He Shaohua, assistant mayor, added: ''We can assure investors that their investment will be profitable.'' Officials said a number of foreign companies have indicated an interest in investing in Chengdu. For example, Japanese retail conglomerate, Yaohan, is negotiating for a joint-venture shopping plaza and a Taiwanese company had secured a contract to re-develop a major section of the city's commercial district. To the end of 1992, Chengdu had approved more than 700 foreign investment projects and about a third have begun. However, the majority are small and medium-sized manufacturing businesses and only 68 are involved in real estate development. In order to compete with other Chinese cities, Chengdu has opened its domestic market to foreign investors who set up factories. ''There won't be any restrictions on domestic sales as long as they [foreign investors] can balance their own foreign exchange,'' said Mr He. ''We hope that by opening our local consumer market to foreign investors, we can get one or two large-scale projects established in Chengdu.'' He added: ''Let's not forget that our retail volume reached 13 billion yuan last year. We have a hugh market here.'' According to Ms Zhou, the April trade fair will feature about 300 projects, such as the auction of 15 pieces of land, dozens of industrial projects in five development districts, urban re-development, shopping plazas, food markets and hotels. ''We are also keen to talk to Hongkong and foreign bankers to see if they are interested to open branches in Chengdu,'' she said. A financial district is planned in the city's central area and one or two foreign banks will be established, joining mainland financial institutions.