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MARKET FOCUS

China: More Than Just Shanghai & Beijing

By Puay Yong Juay

China's amazing growth in the last two decades has marvelled the world. Responsible for over 24% of global trade, the country has earned the reputation of being the manufacturing hub of the world.

With the international spotlight often on megacities such as Beijing and Shanghai, it is not surprising that the economic dynamism and the contribution of second-tier cities, such as Tianjin, are sometimes overlooked.¹

Progressive Tianjin

Located just 75 miles southeast of Beijing, Tianjin is China's third largest city ², after Shanghai and Beijing. It is one of the only four municipalities directly administered by the central Chinese government.

Tianjin has shown itself to be progressive from early on. It was among the first coastal cities in China to open up, when the country adopted its market reform policies in 1978. The province was also responsible for China's first wristwatch, bicycle and television export to the world.

Tianjin continues to make strides in adopting forward-looking economic strategies. Tianjin authorities have begun a joint venture with Singapore's Keppel Corporation to develop a 30 square kilometer ecocity, which will be home to more than 350,000 people. Fifteen percent of its energy will come from renewable sources, such as wind and solar power.

Pulling In FDI Heavy Weights

With such futuristic economic development plans, it is little wonder that this coastal state has over the last five years, seen its GDP jump by 15 percent year on year and has been attracting some heavy-weight foreign investments. Airbus, for example, is expected to start its A320 assembly line in Tianjin, it's first non-European assembly line.³ In the first half of this year, Tianjin has attracted US$0.089 billion in foreign direct investment, registering a 58.6 percent year-on-year growth.⁴

The Olympics Ripple Effect

The importance of Tianjin has been further heightened as a result of this year's Beijing Olympics. Because of its proximity to Beijing, Tianjin has benefited from spillover effects from the country's preparation to get its capital state in tip-top shape for the international event.

In line with Beijing's bid to update its infrastructure in time for the 2008 Games, Tianjin launched the Harmony, China's first high-speed train, that connects the province with Beijing. It used to take two hours to commute from Tianjin to Beijing; now it takes only 30 minutes. With future plans to link Tianjin to other major cities, such as Shanghai, the economic integration of this province to China's key economic centres is poised to strengthen.

Beijing's efforts to improve air quality for the Olympics has also accelerated Tianjin's green policies and development of eco-friendly economic clusters.

Tianjin: The Rise of A Second-Tier City

Foreign investors now have greater choice beyond Shanghai and Beijing, thanks to the rapid growth of second-tier cities such as Tianjin.

One major advantage of Tianjin is cost. Tianjin officials estimate that the average manufacturing cost in the province is 20 to 30 percent lower than that of Shanghai. This, bolstered by the city's highly educated and skilled workforce, makes investment even more attractive especially in high-tech industries.

Tianjin's middle-income population is expected to grow in tandem with the province's connectivity to important economic centres in China, as analysts project that middle income families in Beijing may choose to relocate in Tianjin. Hence, Tianjin also offers the service industry an excellent opportunity to cater to a growing population with higher disposable incomes.

For more information, please visit IE Singapore website.

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