Once an old industrial base, Chongqing has rapidly emerged as one of the fastest growing and fastest urbanising cities in China and, according to some reports, the world. Located in China’s west, the municipality of Chongqing boasts a population of over 30 million (one of the largest in China) and a GDP growth rate of 11% year on year (also one of the fastest of China). It is also the centre of China’s ‘Go West’ Strategy which has created a unique business and investment environment for foreign companies. Despite its profile, Chongqing still remains largely unknown to the West who often look to Beijing and Shanghai when entering the China market. For Australian companies wanting to launch into the China market, we believe that Chongqing should be there next destination.
Besides from being one of China’s fastest growing cities, it was made a provincial-level municipality in 1997 (the highest rank for a city in China) and is directly controlled by the Central Government in Beijing. This was extremely significant as it highlighted the Central Government’s plans to speed up economic and social development in the country’s western regions. Since 1997, Chongqing has evolved from an old heavy industrial base into the region’s international financial, logistics and commercial hub. Its growth has also been supported by China’s ‘Go West’ Strategy (as part of the 12th Five Year Plan) which aims to shift China’s economic activity away from the eastern seaboard into the inner-western regions. Chongqing was identified the centre of this strategy and since then, millions of RMB has been spent to transform the city into the region’s international finance hub and logistics centre. The Chongqing Government also introduced a number of strategies including corporate tax breaks, incentives for investing in the high-tech and green industries, reforms to encourage urbanisation and pursuing and attracting foreign investment to further support its development under the ‘Go West’ Strategy.
Chongqing has also committed to invest up to RMB1.2 trillion in infrastructure construction as part of the ‘One Belt, One Road’ Initiative – China’s new foreign policy to expand its ‘Going Out’ Strategy by building trade routes stretching all the way to Africa and Western Europe. As the Initiative gains momentum, we can expect to hear more from this city.
What makes Chongqing unique is that despite its breakneck economic growth, wealth of business and investment opportunities (created by the ‘Go West’ Strategy and ‘One Belt, One Road Initiative’) and array of Government incentives, it has been largely overlooked by Western companies and businesses who feel more comfortable in entering the well-established and familiar markets of Beijing and Shanghai. Currently, Hong Kong is the largest source of foreign direct investment (FDI) in Chongqing – in 2014 it accounted for 78% of the total utilised FDI (this was followed by Singapore and South Korea). This is good news for Australians as there is less competition from Western companies, more unique and lucrative business opportunities and the potential for local Government support in the form of subsidies, incentives and concessions. Is this the next destination in China for foreign business and investment? We certainly think so.