BECAUSE … Chongqing sits at the centre of China, a land of 1.4 Billion People
Chongqing was elevated to the status of a ‘municipality directly under the central government’
Then came the inauguration in early 2000 of a policy to open up the western regions of China
-to encourage resources, investment, entrepreneurs and talent to ‘go west’; away from coastal regions
-to enhance connectivity to the outside world
-the Three Gorges Dam and the need to move 1 million people to build it; opened up a route for container ships
-global production of consumer electronics
–inauguration of freight train services northwest across China’s borders through the Eurasian land mass to markets in Europe; a precursor to the BRI
-emergence of rich and middle class consumers
-Chongqing has diversified from dependence on heavy industry; still largely dependent on car manufacturing and property and infrastructure development
BUT the old assumptions of globalization, which underpinned much of the city’s development, have been undermined by US China trade tensions disrupting supply chains
Chongqing’s ambitions to engage more with globalization and move its economy up the value chain will need to give way to a more domestic focus.
Rise of the megalopolis
Tim Summers profiles Chongqing, China’s economic powerhouse
They call it the foggy metropolis and the mountain city. At its heart lies the confluence of the Yangtze and the Jialing, their waters mixing at the peninsula’s tip. Only a few hundred metres away, the 1940s Liberation Monument, once the area’s tallest structure, is dwarfed by skyscrapers as Chongqing leaves behind its past as a wharf city to aspire to a global future.
Chongqing sits at the centre of China, with an administrative area similar in size to Wales but with a population almost ten times bigger. A combination of its historical inaccessibility up the Yangtze and the concentration of much of China’s population and wealth in its coastal regions has led its fortunes to be aligned with the less-developed western regions.
My first experience of this megalopolis was in 2004, when I was posted there as British consul-general.
Back then Chongqing was an emerging city within an emerging economy, a number of steps removed from the front line of the global economy. But ambition has not been in short supply, and much has changed over 15 years.
Crucial to this process were two important boosts given to Chongqing by national policy planners in the late 1990s. Together, they provided the platform for investment to flow in, leading to more substantial physical change in the city’s appearance than elsewhere in China.
The first policy boost for Chongqing was in 1997 when the main city area and a number of impoverished surrounding counties were carved out of Sichuan province and elevated to the status of a ‘municipality directly under the central government’. Administratively, this put Chongqing in the same basket as Beijing, Shanghai and the port city of Tianjin, though economically it remained a long way behind them.
The second came with the inauguration in early 2000 of a policy to develop or open up the western regions of China. This was not a radical shift, unlike Mao’s ‘third front’ in the 1960s when industry was literally transplanted into Chongqing and other remote central and western regions of the country.
It was more of a tilt, an effort to encourage resources, investment, entrepreneurs and talent to ‘go west’, rebalancing China’s economy away from the coastal regions which raced ahead in the 1990s.
What was missing from these plans was an easy way to engage with the global economy, seen by policymakers since ‘reform and opening’ began in 1978 as the key to China’s developmental success. This was an important task for Chongqing to address over the coming years.
*One individual was particularly influential in this regard. Huang Qifan was sent from Shanghai to be Chongqing’s executive (senior) vice mayor from 2001, and subsequently made mayor from 2010-16. The first item on the municipality’s agenda was to enhance connectivity to the outside world.
*The Three Gorges Dam to the east of Chongqing was already under construction, and the need to move a million people to build it had been one of the reasons for Chongqing’s political elevation in 1997. Commercially, the dam – which came into operation a decade ago – opened up a route for container ships to ply their trade between Chongqing and Shanghai.
In addition to logistics, Chongqing needed somehow to integrate into the transnational production networks of the early 21st-century global economy.
Huang lobbied Hewlett-Packard, the US technology company, and its contract manufacturers to come to Chongqing, inserting the city into global production of consumer electronics, though still not at the higher value-added points which it has long been the ambition of China’s policymakers to access – and which the controversial industrial strategy called Made in China 2025 was designed to reach.
Emergence of a middle class
*A further part of Chongqing’s engagement with the global economy came to fruition in 2011 with the inauguration of freight train services northwest across China’s borders through the Eurasian land mass to markets in Europe – a precursor to the Belt and Road Initiative announced by President Xi Jinping in 2013. For Chongqing’s consumer electronics exporters, this provided a faster route to market than by sea, but a cheaper option than air.
Of course, Chongqing’s economy has not just been about global connections. Like other cities in China it has seen the emergence of rich and middle-class consumers. The cityscape has been transformed, with tower blocks, shopping malls, restaurants and parks.
As in other cities in China, people’s concerns are with education and healthcare, leisure and family, travel and careers. Proud of their dialect and spicy cuisine, Chongqingers have a justified reputation for friendliness and straight talking, hard work and entrepreneurial energy.
Traditionally dependent on heavy industry, the city’s economy has diversified, though it is still largely dependent on car manufacturing and property and infrastructure development.
Within China, too, the competition is stiff. To the west sits Chengdu, the traditional commercial hub of western China, only usurped by Chongqing in the brief period from the end of 1930s to 1945 when Chiang Kai-shek set up his temporary capital in Chongqing as he fled the Japanese invasion of coastal China.
Other cities and provinces have sought greater global connectivity as well, with many, like Chongqing, claiming to be able to connect the two parts of the Belt and Road Initiative – the land routes of the Silk Road Economic Belt and the 21st-century Maritime Silk Road – which shape the geography of China’s thinking about the future of globalization.
*As the global interconnectedness of China’s economy wanes under the impact of strategic rivalry with the US, however, the domestic economy will become more important.
*The next few years could be challenging for Chongqing, as they will be for much of China. The old assumptions of globalization, which underpinned much of the city’s development, have been undermined.
*US China trade tensions are disrupting supply chains. Chongqing’s ambitions to engage more with globalization and move its economy up the value chain will need to give way to a more domestic focus.
In relative terms, Chongqing is still not that exposed to global economic headwinds, but neither is it at the cutting edge of China’s own technological innovation. It provides something of a microcosm both of China’s impressive development and the challenges facing the country.
If Chongqing continues to prosper, then we might conclude that China’s economy is pretty resilient. If Chongqing starts to face difficult times then this could be an indicator of wider risks across the national economy.
But the determination of Chongqing’s people is likely to remain, as will most of the mountains, though plenty were flattened to make way for the city’s spread. While the foggy weather still descends in winter, the accompanying smog of the heavy industry period has given way to bluer skies.
AUTHOR: Dr Tim Summers Senior Consulting Fellow, Asia-Pacific Programme (based in Hong Kong)
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