Throughout history, Yunnan has looked to Indochina for trade, but today the province is seeking inward investment to drag its economy into the 21st century. 'Yunnan's major industries are unique. But they need to be structurally upgraded to place more added-value into the products they make. At the same time, we should avoid resources exploitation, but instead elongate the value chain,' said Yang Xianming , professor and head of the Institute of Industrial Economy at Yunnan University in Kunming . That is easier said then done, however. 'The problem Yunnan faces is how to carry out reforming its industrial structures,' Professor Yang said. At the top of the list of needs is inward investment. 'Investment, especially foreign direct investment (FDI), is the key to development, because this kind of investment will also bring advanced technology and marketing and management skills. These will benefit less-developed regions most,' he said. The new mayor of the provincial capital Kunming, Zhang Zulin , made it clear from his first day in office that attracting investment would be strongly encouraged - and it is working. In the first quarter of this year, the city lured 39 new foreign-invested companies - up 56 per cent on the same period last year. Many projects - including large-scale infrastructure works such as airports and business parks - are on the agenda. The satellite town of Chenggong on the outskirts of Kunming is a shining example of the drive which helped Kunming absorb US$300 million in foreign investment last year, up 43.5 per cent from 2006. The new town has a flourishing flower trade - it is a massive hub for growers, retailers and related, secondary services such as transport. The location was chosen to take advantage of existing and new infrastructure. A university complex is among the planned large construction and investment projects, and this has already attracted municipal administrative organisations and higher education institutions. 'The government is taking big and bold moves to improve the cities in aspects of infrastructure and traffic,' said Professor Yang 'which is a necessary move to upgrade our regional competitiveness. 'Improvements in infrastructure and communications are complementary to industrial development, and moreover can help consolidate Yunnan's importance in the wider China-Asean relationship.' The province is China's gateway to South and Southeast Asia - 2,000 years ago the southern Silk Road ran through the province to Myanmar, India and the Arabian peninsula. Then, it served as the trade route, primarily for the export of the mainstay industry, tea. The road was established before the northern route of the same name. In 1903, Yunnan established a rail link from Kunming to Hanoi in Vietnam, and more than 100 years later similar large-scale track-laying is planned. Though the train is still a busy and vital link, today Yunnan also is served by direct flights to 11 surrounding countries and centres, including Cambodia, India, Bangladesh, Thailand, Myanmar, Laos, Vietnam, Singapore, Malaysia, Japan, South Korea and Hong Kong. A road connecting Kunming and Bangkok was recently completed, cutting overland transport times to Thailand to just 20 hours. Also, the 'pan-Asia railway' will connect Yunnan to Singapore, Kuala Lumpur, Bangkok and Vietnam on completion in 2015. In addition, the Yunnan government recently announced an ambitious strategic programme called the Third Europe-Asia Continental Bridge, which aims to connect China's roads and railways to Europe, starting from the province and linking to Myanmar, Bangladesh, India, Pakistan, Iran and Turkey. 'When the latest phase of infrastructure construction is finished, Yunnan's importance in the grand Mekong subregion will be greatly magnified,' Professor Yang said. 'And this improvement will greatly contribute to development of logistics.' Neighbouring Guangxi province also offers Yunnan access to the sea, and thus boosts the transport logistics chain. 'Sea transport is far cheaper than land transport. However, land transportation can offer greater effectiveness for a given period of time, and can avoid such disadvantages as port-side transshipment that you see on sea routes,' Professor Yang said. 'With good infrastructure polices as a foundation, the logistics sector will become an important industry in Yunnan. This will hopefully become another pillar industry. And as the logistics industry develops, many industries such as processing and manufacture will benefit.'
