An inland highland for opening up to the outside world has in recent years basically taken shape in southwest China’s Chongqing Municipality as the municipality has made efforts to get involved in the major deployment of the “One belt, One road” initiative and the Yangtze River Economic Belt, open up toward the east and the west domestically and accelerate the building of a new open economic system. This has provided good conditions for overseas investors in Chongqing and even the whole of southwest China area, boosting their confidence in Chongqing. Despite all these, the municipality still faces three major knotty problems that cannot be ignored: investment conditions that lag far behind the eastern coastal areas, the fierce competition from neighboring provinces and the high logistics cost.
Optimized investment environment
First, an inland open platform has taken shape. The municipality boasts three major air, rail and Yangtze waterway communications hubs, three state open ports and three bonded areas. It is accelerating the open platform spearheaded by the Liangjiang New Area and boosting the diffusive and clustering power of the “1+2+8+36” inland open platform.
Second, the outgoing passage has been improving, with the Chongqing-Xinjiang-Europe railway serving as a main passage for trade with Europe and an important supporter of the silk road economic belt. The Jiangbei airport boasts a throughput capacity of 30 million passengers; the waterway container throughput capacity has broken the one million TEU mark. The railway, road, waterway and air communications network has been improving. A national class Internet backbone node has been opened.
Third, the level of customs declaration facilitation has been greatly upgraded, realizing all-in-one card for customs of all countries along the international through train of the Chongqing-Xinjiang-Europe railway. The municipality has become part of the national and regional integrated customs declaration and the integrated inspection and quarantine service and established regional customs cooperation mechanism.
Fourth, export-oriented industrial clusters are taking shape at an accelerated pace. An inland processing trade system has taken shape. The “5+6+860” laptop industrial cluster and the “1+10+1000” auto industry cluster both boast an output value topping one trillion yuan.
Fifth, the general climate for opening up has been further optimized. This includes “one-stop” service, “on record” management, holding of trade fairs, annual meeting of mayor’s advisory group, Chongqing-Taiwan Week and other economic and trading activities, 10 foreign consulates and more than 40 international air routes.
Sixth, the vehicles for foreign exchange and cooperation have been enriched. This includes the successful visit by French President Hollande, economic and trade cooperation with 16 central and eastern European countries, the economic and trade cooperation with countries along the routes of the “One Belt, One Road”, the opening of the Vietnam trade promotion office in Chongqing, the two new direct air routes to Rome and Kuala Lumpur, and more flights on the Chongqing-Chejiu route.
Rising Enthusiasm of overseas investors in Chongqing
Data from the Chongqing Municipal Economic and Trade Commission show that the amount of overseas investment actually used in Chongqing has stayed at 10 billion U.S. dollars for 5 years running, with 260 of the world’s top 500 settling in Chongqing. The foreign trade has grown by more than 5-fold, advancing its national ranking from 23th to 10th to become No. 1 in the central and western areas. Its service trade has grown by nearly 4-fold. The amount of overseas investment actually used has increased by 1.4 times. In the first quarter of this year, 158 foreign capital enterprises were set up in Chongqing, with total investment increasing by 2.118 billion U.S. dollars and the registered capital reaching 1.357 billion U.S. dollars, including 856 million paid in by overseas side.
In the first quarter of this year, the sources of overseas investment assumed the following features: one is that overseas investors mainly came from Asia, including Hong Kong, South Korea and Japan, with the number of new entities accounting for 69.6 percent; second is the overseas investment was concentrated in wholesale, retail sales, leasing, commercial service and manufacturing, accounting for 65.2 percent; third is overseas investment was concentrated in the city proper, with the Liangjiang New Area ranking first in terms of the number of new enterprises set up and the amount of registered capital; fourth is agricultural became a new hot spot for investment, with four new enterprises and 349 million in registered capital, accounting for 25.7 percent of the increased investment in the whole city.
On March 14, the qqbsmall.com and RGB of South Korea inked a cooperation agreement on bringing 25,000 kinds of commodities from South Korea to Chongqing, including cosmetics, food and small household electrical appliances. RGB is a well-known o2o e-commerce, having 25,000 kinds of commodities at its disposal. It has deployed experience outlets in all major cities in South Korea. According to RGB Group President Lee, the agreement will enable the RGB group and the qqbsmall.com to share the resources and Chongqing citizens may buy South Korean products at the website of qqbsmall.com.
Qqbsmall.com Board Chairman Niu Yaowei said the agreement will enable qqbsmall to become an exclusive agent for all the products of RGB group and the prices of sulwhasoo, whoo and other cosmetics would be similar to those in South Korea.
On April 27, China-Switzerland Low Carbon City Cooperation Project was unveiled at the Dadukou District. It was learned that 1,200 superior enterprises from Europe, including Switzerland, will provide support and services in technology, personnel, fund, industry lead-in and capital operation.
All these show that the overseas investment mix actually used by Chongqing has undergone further optimization, giving birth to a new pattern of 4:3:2:1, covering manufacturing, finance, financing leasing, real estate and modern services.
Three main challenges
The challenges to Chongqing as a municipality under the direct administration of the central government in attracting overseas capital mainly manifests themselves in the following aspects:
1. It still has a large gap to bridge with the eastern coastal areas in terms of investment environment. The infrastructure is yet to be improved; local laws and regulations are lacking; preferential policies remain to be put in place; the financing channels for enterprises are not varied; the capital market is in urgent need of improvement; the government lacks transparency and the service level needs to be raised.
2. It faces fierce competition from other places in the central and western parts of the country. All the provinces in these parts of the country are vying with one another to offer preferential policies to attract overseas investors, posing grave challenges to Chongqing. Sichuan province, in particular, boasts greater advantages than Chongqing in terms of scientific research, technology and personnel reserve and enjoys much better environment and industrial foundation.
3. It has high logistics cost. Situated deep in the inland, Chongqing has the nearest outlet to the sea 2,200 kilometers away. Such the long haul by either waterway, road or rail will entail high transport charges. Take Shanghai port as a destination, the cost is more than 3,000 yuan per TEU container by waterway, more than 10,000 yuan by road and more than 5,000 yuan by rail, 20 percent, 100 percent and 50 percent respectively higher than the city of Wuhan in the middle reaches of the Yangtze River. The high logistic cost is the tender spot of Chongqing in attracting overseas capital. But with the building of the “One belt, One road”, the transport costs between Chongqing and coastal areas may be narrowed and Chongqing enjoys much conveniences in terms of air transport to Southeast Asia and Europe.
All hands on desk to lure overseas capital
The Chongqing municipality must pull out all the stops to lure in overseas capital:
---- To carry out policy innovations. By making the China-Singapore Third Governmental Cooperation Project as a breakthrough point，the city should encourage trans-border investment in RMB and local enterprises to get a listing in Singapore, gradually expanding the degree of openness to Singaporean investors in medicine, education and old-age care to expand the areas for Singapore’s funds to flow into Chongqing;
---- To innovate overseas investment management model, providing national treatment to Singaporean investors and service providers prior to their access, plus the negative list within the framework of the China-Singapore Third Governmental Cooperation Project, improving the mechanism of protecting the rights and interests of Singaporean investors, improving the full-caliber overseas investment management system and departmental sharing system, introducing the direct reporting system for Singapore’s investment statistics and the regulation and monitoring system during and after investment is made;
---- To motivate financing leasing and other emerging industries to attract overseas capital, steer overseas investment into the new energy auto industry, the grapheme production, smart robots and other strategic emerging industries; give greater support to financing leasing, commercial insurance and finance and other emerging financial services in their efforts to attract overseas capital; try new measures of expanding the opening of the value-added telecom services, supporting overseas investment in involving in the mobile telecom service reselling, on-line data storage retransmission, Internet access and app stores.
----To take further steps to improve the conditions for overseas investment. This includes making more reforms in the overseas investment examination and approval system, introducing the management model of giving national treatment to overseas investors prior to their access plus negative list, to change the overseas investment statistical system, improve the full-caliber overseas investment management system and the departmental sharing mechanism so as to build a system for full-cycle monitoring of overseas investment; and to introduce paralleled examination and approval on major projects, special treatment for special cases, one-stop service and what is termed as “nanny service”. （by Li Hualing)
A single purchase
