Top: The man-made lake in Lanzhou New Area is under construction. Above: The new Gansu JOY Agricultural Technology Co Ltd factory goes up. Photos by Lin Jing / China Daily

 

Lanzhou plans massive infrastructure expansion drive to attract more foreign direct investment

Extensive transport and logistics networks, a slew of investor-friendly policies and new-energy industries are expected to be the tipping points for Lanzhou, as the capital city of Gansu province in Northwest China slowly inches up in the foreign direct investment rankings. The city was already a key distribution center on the ancient Silk Road trade route and a well-known transportation hub, but not a major destination for FDI.

In August, the government gave new impetus to Lanzhou's growth by making it the fifth national-level development zone in China after Shanghai's Pudong New Area, Tianjin's Binhai New Area, Chongqing's Liangjiang New Area and the Zhoushan Islands New Area in Zhejiang province.

"The Lanzhou New Area marks China's latest effort to accelerate development of the western regions," Qin Yucai, director of the Western Development Department in the National Development and Reform Commission, said during a news conference in Beijing.

Yuan Zhanting, the mayor of Lanzhou, says that, "the new area will be the catalyst that will boost China's trade with the central and western Asian nations". The 800-square-kilometer new area is located 38 km to the north of the city center.

Lanzhou is already an important production base for petrochemicals, energy and raw materials in China, and has more than 40 industries covering 20,000 varieties of products. But the new area will essentially serve as a hub for the logistics and transportation industries. Lanzhou is one of the nine major comprehensive transportation hubs, and one of the 10 regional passenger railway transportation centers on China, apart from being the aviation transport hub and logistics center for northwestern China.

"The new area will be a crucial spot for companies looking to expand into the western regions of China," says Xie Weiguo, director of the general office at China Railway Construction Heavy Industry Co. According to Xie, the CRCHI unit in the New Area will be the company's first high-end equipment manufacturing center in the region and key to its future expansion in western China.

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"As more companies expand into western China, there will also be an exponential increase in the demand for high-end equipment from the surrounding provinces and regions," he says.

CRCHI is specialized in research, design and manufacturing and construction of rail equipment and heavy machinery. Its parent company, China Railway Construction Corporation, is a large integrated construction group and a Fortune 500 company.

But CRCHI also was one of the first movers into Lanzhou New Area in 2010 and has since seen its fortunes climb rapidly.

"When we first came to this area, there was not enough tap water or any roads, only small hills. But after 10 months, the infrastructure of this area has grown fully," Xie says.

The company also plans to ramp up its workforce in the new area and will soon have 300 to 400 employees in Lanzhou, comprising technicians from its headquarters in Hunan province and blue-collar workers from the local labor market.

Apart from wooing domestic investors, the city is also exploring options to attract more foreign companies.

Yuan says that the city is trying to revitalize its position in the old Silk Road and working to export more products from East China through its railway network. It will also play a key role in connecting the Xinjiang Uygur autonomous region and other countries in the Central Asian region.

With an eye on long-term and sustained foreign investment, the city has embarked on a massive infrastructure expansion program.

Liu Weiping, governor of Gansu, says that Lanzhou will look to extend its role as a logistics center linking central and western Asia by building more railways and highways. The province already has three major arterial railway lines intersecting at Lanzhou, to create the largest railway hub in western China.

"Infrastructure spending in the Lanzhou New Area, till date, has been around 24.6 billion yuan ($3.95 billion; 3.07 billion euros)," he says.

The new area has so far attracted 90 investment projects, with an investment volume of 70.7 billion yuan. Eight of those projects are up and running.