In the 1980s and early 1990s, Guangzhou was the envy of all, but once the country's open-door policy swung northward, its bigger brethren reclaimed the international spotlight. This despite the fact that Guangzhou is richer than both, with a per capita gross domestic product of US$5,793, and continues to grow at a faster pace - 16.5 per cent in the first quarter of this year.

The city's commercial advantage is obvious. Its hinterland, Guangdong province, is the best place in the world to site a manufacturing business. Its myriad factories crank out most of the world's bras, shoes and toys, and keep moving up the value chain. Located in the centre of the Pearl River Delta, geographically and officially, Guangzhou has profited like no other.

But despite its wealth, the city displays few of the attributes usually associated with the hub of an economically vibrant region. Air and noise pollution pervade the walkways and highways; prostitutes, beggars and vagabonds wander the downtown sidewalks after dusk, and the nightlife offers little by way of razzmatazz, consisting mostly of second-rate bars and karaoke joints that have undergone several name changes and refits under the same owners.

Cultural offerings do not extend far beyond the late-night dai pai dongs serving up Cantonese cuisine, arguably the best in the world.

Nor is Guangzhou user-friendly. The main train station teems with dazed waidi ren, or people from outside the city and province who have come to Guangzhou in search of a job and a better life. While buses remain the main mode of transport, few of the city's bus stops contain maps showing passengers their location in relation to the rest of the city. Getting hold of a pocket-sized city subway map for easy reference is next to impossible.

Yet for all its faults and foibles, Guangzhou is a mesmerising work in progress. Elevated highways have sprung up in the past five years to alleviate traffic congestion. Colour-coded taxis launched last year mean passengers can choose between cab companies (the yellow ones are the best). Long-promised infrastructure projects are finished or under way, paving a brighter future for long-frustrated citizens.

Guangzhou may not have the glamour of an international city, but it has something the rest of China needs more of - realism. Its people are not known for putting on airs. What you see is what you get. And what you get is built on solid foundations: 60 per cent of the economy is in the hands of private business.

The provincial capital also has the longest history of dealing with the outside world. The 48-year-old bi-annual trade extravaganza, the Canton Fair, last year attracted more than 150,000 buyers from over 200 countries. They met about 15,000 mainland suppliers, generating US$250 billion in deals. Every April and October the city is transformed as 'the fair' comes to town.

Sometimes the foreigners stick around. The expatriate population, estimated at 25,000, now comprises a large number of Africans and Middle Easterners who say that establishing trading companies here is much easier than it is elsewhere in China.

'It's not a tourist place, but once you get used to the culture and learn how to do things yourself, it's okay here,' says Iranian Ali Khosravinia, who runs Farsian, a trading company in Guangzhou.

The key word, as Mr Ali suggests, is flexibility. This can be seen in the way entrepreneurs approach business, and in how rules of the road are obeyed. For example, at the bottom of Huanshi Road there is a traffic roundabout with a single lane offering the option of turning left. Why? Because drivers would otherwise have to go on for kilometres before they can do a U-turn. If it works, Guangzhou has a way of getting it done.

Flexible policy-making explains sustained growth not only in foreign investment but also in domestic investment. Big corporations such as the Kingold Group and Fuli Real Estate Development have chosen Guangzhou as their home base for a reason. There is less red tape, and it is easier to find customised regulatory solutions to the challenges of doing business in a rapidly changing country. Indeed, local wags say that if foreign investment were to vanish tomorrow, life would go on uninterrupted, 'unlike up north'.

Proximity to Hong Kong and its investors - who share not only a distinct language but a sub-culture, too - have naturally been vital to Guangzhou's success.

'I think the Cantonese have a certain genius when it comes to doing business,' says Henry Zeng, a Guangzhou native working for That's Guangzhou, an English monthly magazine. 'Practicality is the basic qualification for doing business, and a natural sensitivity to money helps them to control business costs. This enables the Cantonese to win business battles and creates an indefectible image all over the world.'

Until recently, however, this pragmatism has also served to suppress many of the city's collective ambitions. Only in the past few years has an awareness emerged of the need for Guangzhou to claim its rightful place in the sun.

Under the leadership of Party Secretary Lin Shusen, and his predecessor Huang Huahua, who is now provincial governor, the city government has been pushing through infrastructure and construction projects that have gained national and international attention.

Once the second and third phases are completed, the massive new international exhibition centre will be Asia's largest. The 20 billion-yuan Baiyun International Airport, opened earlier this month, is the mainland's biggest. The extension of the MTR, which has escaped the central government's recent clampdown on major projects, will by 2010 add a mammoth 30 per cent capacity to the city's frenzied public transport. Then there is the more controversial creation of a massive car-manufacturing industry, which will supposedly rival Shanghai's.

All of these mega-projects are just a taste of what is to come in 2010: the Asian Games. The sporting spectacle may not mean much to outsiders, but in Guangzhou it is being hailed as the city's equivalent of the Olympics.

It is hoped the games will both put Guangzhou on the world map as a major metropolis that can accommodate international sporting events, and wash away its reputation as the place where Sars began.

How much energy the games will inject into Guangzhou's socio-economic landscape remains to be seen, but the initial signs are positive.

The way the city has reacted so far to what was dropped into its lap - after Kuala Lumpur pulled out of the bidding process - exemplifies its people's ability to go with the flow and make the best of whatever comes their way.

Even a pandemic like Sars, which just 18 months ago brought Guangzhou to a standstill, seems today to have been all but forgotten, and business is booming at the city's hotels.

The truth is, Guangzhou is not glitzy because it does not have to be. It has more than enough money. Now all it wants is a bit of respect.