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UPDATED: August-16-2009 NO. 33 AUGUST 20, 2009
Chongqing Reviving
Chongqing's economy has withstood the global financial chill and looks to growth

GROWING CITY: Chongqing has undergone dramatic changes in its appearance since it became a municipality directly under the Central Government on June 18, 1997 (ZHOU HENGYI) 

Thousands of cargo ships are busy loading and unloading goods in front of Chaotianmen Square Dock, where the Yangtze and Jialingjiang rivers meet. It is a scene of thriving business.

In 2008, Chongqing Municipality achieved 14.3 percent GDP growth. The region yielded 12.6 percent growth from January to June of this year, and is set to see an estimated 14 percent GDP increase for the whole year.

"Though we're still faced with many difficulties, Chongqing's economy has pulled itself through a mild winter and a warm spring, and has come into the height of summer," said Yang Qingyu, Director of the Development and Reform Commission of Chongqing.

Standing up

Chongqing, despite its insulated location in China and less dependence on export, was no safe haven against the global financial crisis and could not escape from being affected as a longtime heavily industrial city. Industrial giants Chongqing Iron and Steel Group and Chongqing Machinery and Electronics Group, both state-owned enterprises (SOE) with more than 10 billion yuan ($1.47 billion) of yearly sales revenue, have seen their operating revenues and profits plunge.

Motorcycle exports nosedived to 93,000 per month in February, the lowest single month of sales since February 2006. "The first quarter of this year has been the most difficult for Chongqing's industrial and economic development than any other time in the past 10 years," said Wu Bing, Director of Chongqing Economic and Information Technology Commission.

Shortly after the Spring Festival, the Chinese lunar new year that fell on January 26, the speed of the fall slowed in the added value of Chongqing's large-scale enterprises, and growth returned in the ensuing months. In January, the figure decreased by 3.7 percent compared with the same period last year, and increased by 6 percent in February, followed by 8.8 percent growth in March, 11.2 percent in April, 12.3 percent in May and 13.7 percent in June.

On December 31, 2008, an executive meeting of the State Council was held to launch measures to spur coordinated urban and rural reform and development in Chongqing. Soon after, the General Office of the State Council issued a document including 13 important plans designed for Chongqing, such as creating a modern manufacturing base in the municipality, turning it into financial center of the upper reaches of the Yangtze River, a comprehensive transportation hub, an inland export commodities processing base and a pilot opening region.

According to Huang Qifan, Executive Vice Mayor, the Central Government's macroeconomic policies such as the 4 trillion yuan ($586 billion) stimulus package and the 10 major industrial adjustment and revitalization plans have worked exceptionally well, and each of the measures fuels Chongqing's economy.

So far, more than 7 billion yuan ($1.02 billion) of national investment has been put in Chongqing, which has been met by new investment worth 50 billion yuan ($7.35 billion) from other sectors. Eight out of the 10 major revitalized industries can be found in Chongqing.

The economy's rapid rebound is also attributed to precautions put in place in Chongqing before the crisis and a vigorous response once the trouble started.

In March 2008, Chongqing issued seven measures to stimulate economic growth after a fact-finding trip to the coastal areas of Guangdong, Shanghai and Zhejiang. In September, officials introduced five policies to thwart economic decline and in November, they unveiled a three-year investment plan worth 1.5 trillion yuan ($220 billion). In December, the municipality also adopted 12 special measures to stimulate economic growth.

"The financial storm has taken a heavy toll on many enterprises in our industrial parks and they were feeling lost," said Wu Daofan, Director of the Jianqiao Industrial Park Administrative Committee. He said the financial crisis has impacted the park more than anything else since its establishment six years ago.

In the face of the crisis, his committee has decided to spend 1 billion yuan ($147 million) in three years on corporate restructuring and technology updates within the park. The timely measures to resist the crisis have not only provided a cushion for the enterprises, but have also spurred a new round of business startups. From January to April 2009, fixed asset investment in the park amounted to 1 billion yuan ($148 million), a 97 percent year-on-year increase.

Industrial transformation and upgrading

On the slipway of the Dongfeng Shipyard of Chongqing, the biggest slipway in southwest China, four 5,500-ton asphalt tankers and one 5,700-ton chemical tanker are being built. They will hit the water in about a month.

Avoiding direct competition with the main shipyards and reinforcing niche-market exploration of special-type ships have won Dongfeng Shipyard a solid foothold, even during the international financial crisis.

"Special-type ships refer to oil, chemical and ocean-engineering vessels, which usually have relatively small tonnage but high added value. Compared with ordinary bulk cargo and container carriers, special-type ships suffer less from market fluctuations," said He Xiyun, General Manager of Dongfeng Shipyard. "The financial crisis has given us an opportunity—our enterprise is just in time to adjust the product structure, and firmly head for the orientation of high added value and hi-tech ship products."

The international financial crisis has also prompted Chana Auto Co. Ltd., which features auto products under the name Chang'an and is one of the most renowned carmakers in China, to quicken its pace on adjusting its product structure. Construction of a new Chang'an mini-car and engine plant with 2.5 billion yuan ($367,000) investment has commenced in Chongqing's Yuzui Industrial Park.

The new Chang'an mini-van production plant will lay emphasis on energy-saving and alternative energy cars. And it will incorporate solar energy and water recycling to conduct production. After completion of the two-phase project, it will become the largest manufacturing facility of mini cars and power trains, with a production capacity of 600,000 cars and 2 million engines. "Crisis means both challenges and opportunities. For Chana Auto, this is an opportunity to develop mini cars and small-engine cars," said Xu Liuping, President of Chana Group.

Last December, construction of the Hewlett-Packard PC Production Base, which takes up 60,000 square km, began in Chongqing Xiyong Microelectronics Industrial Park. It is estimated that 4 million laptops will be able to be produced after the base becomes operational in 2010, which will also bring a support industry cluster worth 50 billion yuan ($7.3 billion).

Driven by companies like Hewlett-Packard, the electronics industry in Chongqing is expected to become a new pillar of the economy. Statistics show fast growth this year, with sales revenues expected to jump to 80 billion yuan ($11.7 billion) from 60 billion ($8.8 billion) last year.

Livelihood first

The declining economy and increasing unemployment, millions of returned migrant workers, more than 100,000 graduating university students, newly added urban and rural labor and the transfer and settlement of new immigrants have created a complicated picture. It has become extraordinarily difficult to improve people's lives.

Wang Hongju, Mayor of Chongqing, promised earlier this year that improving people's lives would be highlighted in efforts to expand domestic demand. He also said 150 government-led construction projects will be started within the year, each benefiting people directly.

The Chongqing Municipal Government has decided to inject 1 billion yuan ($147 million) to guarantee employment, of which 600 million ($88 million) will be used to either keep or create jobs, 200 million ($ 29 million) will be directed to help university and vocational school graduates find jobs and the rest will go to returned migrant workers.

SOEs of large and medium-size in Chongqing have announced that they will employ no less than 13,000 university graduates this year, doubling the number employed last year. This, they say, will ensure a year-end employment rate of university graduates of about 85 percent.

Within four years since 2008, officials plan to invest 1 trillion yuan ($147 billion) building the municipality into a greener and more livable place.

(This article is based on a news report from People's Daily, originally written by Yu Jijun, Cui Jia and Hou Lulu)

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