CHONGQING  MUNICIPALITY

General Background

Chongqing - abbreviated as Yu - is located at the upper reaches of the Yangtze River and crossed by the Jialing River in southwest China.

Chongqing was selected by the central government as one of the first batch of independent cities to carry out comprehensive economic reforms in 1983.  In March 1997, it was upgraded to become the fourth Municipality that directly reports to the central government.  The administrative jurisdiction of the Chongqing government was enlarged to include its neighboring Fuling city, Wanxian city and the Qianjiang region.

The development of Chongqing municipality is hoped to help resettle more than one million people whose hometowns are swamped by the "Three Gorges Dam" project on the Yangtze River. About Rmb70 billion will be needed in the to build towns, factories, irrigation facilities, roads and orchards for the relocation programme in both Chongqing and Hubei province. The establishment of Chongqing municipality represents a major breakthrough of China's initiatives to speed up economic development of the central and western regions.

Chongqing is rich in natural resources. It has more than 40 kinds of minerals. Its coal reserve reaches  4.8 billion tons. The Chuandong Natural Gas Field in Chongqing is China's largest inland production base of natural gas, with deposits of 270 billion cubic meters, accounting for more than one-fifth of China's total. Chongqing also contains Chinaˇs largest reserve of strontium, which is also the 2^nd largest in the world. 

Chongqing's hot summer is favorable for agriculture including the production of jute.  Chongqing is also aiming to become the biggest spice producers in China by 2005.

Infrastructure

Water Transport ⌒ Chongqing is a major trading port on the upper Yangtze River. The Jialing River and Minjiang River are the two major rivers converging into the Yangtze River.  Upon completion of the Three Gorges Dam project, vessels up to 10,000 tons can ship directly to the Chaotianmen Port at high tide. Besides, the municipality is planning to develop its biggest deep-water berths at the Changshou Port.

Railways ⌒ Chongqing is a major transportation hub in southwest China. Three major railways, Chengyu LinesChengdu-Chongqing, Chuanqian LinesChengdu-Guiyangand Xiangyu LinesXiangfang-Chongqinggo through the city to connect with the national network, and connect the municipality to China's major cities and ports.  

Besides, the municipality plans to construct a railway running along the Yangtze River to Shanghai in the next 5 years.  The new railway will cross various provinces and municipalities including Sichuan, Hubei, Jiangxi, Anhui, and Jiangsu  so as to bolster economic development along the Yangtze River.

Chongqing is also aiming to improve its city transports. One of the ten key projects in the Great Western Development is the construction of Chongqing Metropolitan Transportation Railways and its construction is underway.

Highways ⌒ One of the major highways include the Chengdu-Chongqing Expressway which connects Chongqing with the national highway network.  Chongqing Lijiatuo Yangtze Bridge, Fengjiang Yangtze Bridge and a 10 km ring-road encircling Chongqing have eased traffic bottleneck within the city.  Other major highways include Yuchang Expressway, linking Chongqing and Changshou, and an 53.5 km-long expressway from Changshou to Fuling, and the Yuqian Expressway from Chongqing to Guiyang. 

Two key projects in the tenth Five-Year Plan are the Chongqing- Beihai Expressway and Chongqing- Zhanjiang Expressway. These two highways are key components of the Southwest Sea Passage which is expected to complete before 2005.

 Air Transport ⌒ The Chongqing Jiangbei International Airport has been expanded in terms of capacity.  The first direct air route between Chongqing and Seoul, capital of the Republic of Korea, has been opened in June 2000.  Currently, Chongqing has direct air routes to about 50 domestic cities and countries including Hong Kong, Macao, Bangkok, Munich, Nagoya.

Telecommunications ⌒Chongqing has direct-dial telephone and telegram links with most major overseas countries and regions.  There were over 1.7 million installed telephone lines by end-June 2000, linking the city with other domestic and overseas cities. The telephone penetration rate reached 7.8% while the number of mobile telephones subscribers reached 540,000 till end-June 2000.

Gas Supply ⌒ Construction of a new gas pipeline will start by end-2000.  The gas pipeline will link the provinces of Sichuan and Hubei.  Main part of the pipeline starts at Zhongxian County in Chongqing and ends in Wuhan.  The whole project is expected to complete by early 2003.

Oil Supply ⌒ Construction of Lanzhou-Chengdu-Chongqing oil pipeline is almost completed.  It would pass through 30 counties and cities in Gansu, Shaanxi and Chongqing with an annual oil delivering capacity of more than 5 million tons.  The long oil pipeline will provide a major passage to deliver oil products from the northwest region to the southwest region upon completion in 2002.

Industries

Chongqing has a strong industrial base.  In 2000, the municipalityˇs industrial output totalled Rmb95.7 billion, an increase of 13.0% over 1999. 

Chongqing is one of the four major automobiles and one of the main military production bases of China. Car outputs grew strongly by nearly 40% to 219,000 in 1999.  Changan Automotive Corp and China Jialing Industrial Corporation Group - a joint venture between Japan's Honda and Jialing Motorcycle take important roles in the industry. Other major automobile producers include the Lifan Hongda Enterprise, Chongqing Longqin Industrial Group.  By 2001, Chongqing has become the ¨Motorcycle Capital〃 of China.

The municipality is also one of the 9 biggest iron & steel production centres and one of the 3 major aluminum production bases of China. It produces more than 120 kinds of steel products and 13,000 kinds of specifications of aluminum goods. It is also one of the most important chemical and pharmaceutical production bases in China.  Automobiles, metallurgical and chemicals will continue to be the pillar industries of the municipality. Other major industries include textiles, machinery, electronics, building materials and food processing.

Tourism

The Three Gorges on the Yangtze River in the most famous tourist attraction in Chongqing. Beside the Three Gorges, famous tourist attractions include: Jinyun Mountain, Fishing Fortress, Gold Buddha Mountain, Fengdu Ghost City, Dazu Rock Carving, Hongyan Revolution Memorial Museum, and 5 national forest parks. In 1999, Chongqing received 266 thousand tourists (+43.4%), including 193 thousand foreigners (+44.4%) and generated revenue of US$138 million (+42.3%).

Consumer Market

Retail sales of consumer goods rose by 7.9% to Rmb64.3 billion in 2000.

 Jiafangbei Commercial District, locating in the Yuzhong District, is Chongqing's traditional commercial centre.  Most major state-owned and foreign-owned department stores are situated in this district.  Major department stores and shopping centers include Chongqing Department Store, Chongqing New Century Department Store, the Metropolis Plaza, Chongqing Qunying Shopping Center, Chongqing Pacific Department Store, Chongqing Fu'an Department Store,  Chongqing Wanyou Parkson Shopping Arcade, Chongqing Yangguang Department Store, Jiafangbei Central Shopping Center and Jialefu Direct-sale Department Store.

Foreign Trade

Chongqing's exports doubled from US$530 million to US$1.1 billion in 2000. The strong increase in export continues to the first quarter of 2001 to reach US$254.7 million, an increase of 39.7% comparing to the first quarter of 2000. This increase is largely attributed to Chongqingˇs burgeoning motorcycle industry. The Lifan Hongda Enterprise, had exported US$25.7 million in the first quarter of 2001, an increase of 101% comparing to the same period in 2000. Other   major export goods included textiles and garment, chemicals and pharmaceuticals, foodstuff, machinery and complete plant, hand tools and other light products. 

Hong Kong was the largest export market, accounting for 31% of the total.  Other export markets were Japan, the US, Germany, Republic of Korea and the Netherlands.

Imports remained basically unchanged in 2000.  Imports of automobiles and parts accounted for 34% of the total while other major categories were electronic equipment, chemical materials, steel & iron, and light industrial products.  Major import sources were Japan, Hong Kong, Germany, the US and Australia.

Foreign Investment

In 2000, Chongqing approved 190 foreign-invested projects (+12.4%) with contracted foreign investment of US$357.2 million (-29.5%). The actually utilized foreign investment remained at about US$244.4 million (+2.3%) in the year. About 85% of the city's cumulative foreign-invested projects are involved in the manufacturing sector.

An increasingly number of multinationals has set up operation in Chongqing.  These include Nokia, ABB, Ericsson, American Standard, Rockwell, Honda, Suzuki, Isuzu, and Yamaha from Japan, Mobil from the US, China Bank Group, Hutchison Whampao and Watson's Group from Hong Kong, Gold Lion Group from Malaysia, and Samsung from South Korea.

Hong Kong is the largest source of investment. By end-1999, there were 1,367 HK-invested projects with contracted and utilized foreign investment of US$2.06 billion and US$1.16 billion, accounting for 48.0%, 47.4% and 45.6% of the city's total respectively. In 1999 alone, Hong Kong signed 59 investment contracts with US$250 million. Utilized capital from Hong Kong in the year amounted to US$68.2 million. Other major investors included Japan, the US, Taiwan, South Korea and Thailand.

Foreign investment in tertiary industries grew rapidly in the past two years. Major investment areas include tourism, commerce, finance, telecommunications, property, transportation and infrastructure development.  Many Hong Kong firms have signed joint venture contracts to develop shopping centers, as well as commercial and residential complexes in Chongqing. The Cheung Kong Group invested about Rmb1.2 billion to build the Metropolis Plaza and Yanghe Garden, and is interested in investing in other infrastructure projects. Other Hong Kong corporations, including Wharf Holdings, Henderson Land, New World, and Lai Sun Group have also increased their investment in the municipality to expand market shares. Other multinationals, including Sumitomo Bank, Mitsui Bussan, Sanwa Bank, Mitsubishi Shoji from Japan; Hyosung from South Korea; Standard Chartered Bank from the UK; and Mercedes & BMWs from Germany.

Priority areas for foreign investment will be on the modernization of old enterprises and hi-tech industries, as well as the development of the tertiary sector, including such areas as export promotion, infrastructure development, finance, tourism, education, and land development.  However, projects involving high-energy consumption, heavy pollution, high transport cost, heavy industrial activi­ties and hotel development are restricted.

To boost the development of the central and western regions in China, the State Council has granted further tax incentives to foreign-invested enterprises (FIEs) in China.  Under the existing policy, FIEs are entitled to a three-year tax reduction and exemption. The new policy allows foreign-invested enterprises in the central and western regions to enjoy another three years of preferential tax rate when the current preferential term expires.  The tax rate can be further reduced to 10% if an enterprise is proved to export more than 70% of its annual output in terms of value.

 Major Economic & Technological Development Zones (ETDZs)

In order to attract foreign investments and speed up economic development, the State Council approved to establish the Chongqing Economic & Technological Development Zone and the Chongqing Hi & New Technological Development Zone.

The Chongqing Economic & Technological Development Zone

Covering an area of 9.6 sq km, it was established in 1990 with the approval of the State Council. By end-1999, more than 260 foreign-invested projects were approved with total investment of US$1.3 billion.  Foreign investments mainly came from Japan, Hong Kong, the US, Taiwan, etc.  Most foreign-invested projects were involved in automobiles, motorcycle and other hi-tech manufacturing industries. The zone has become Chongqing's important base for attracting overseas investment and developing its export-oriented industries. In the first half of 2001, the GDP of the zone is 126% more than that of the same period in 2000. 

The Chongqing New & Hi-Technological Development Zone

The zone, covering an area of 30 sq.km., was developed to attract both overseas and domestic investment in high-tech industries, such as photoelectric, microelectronics, automation instruments and computer software.  In 1999, the GDP of the Development Zone was RMB8.5 billion. The average growth of GDP in the Zone since its establishment in 1991 had been 77.48%.

Economic Indicators

Note:  * In Renminbi real terms 

^{^} Latest full population census figure, 1999 figure was estimation based on previous census.

Sources:     China Statistical Abstract, CEIC database

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