April 10, 2006

Tianjin Shines in China's North

It is heartening to see such pro-active mayors working hard for their regions. Their counterparts in India are bloody looking after their own welfare. No wonder cities like bombay, delhi, bangalore and pretty much the rest of the country are in such a sorry state.
Mayor's Bank Ties
Help Rust-Belt Port
Gain Foreign Funds
April 10, 2006; Page A6

TIANJIN, China -- This northern port city has long been a sleepy neighbor to Beijing. But Tianjin's leaders, led by former central banker Dai Xianglong, have been shaking things up.

Since he took over as mayor in 2003, Mr. Dai has helped attract multinational companies to the city with favorable investment policies. He has tapped his banking connections to bring in hundreds of billions of yuan in loans to rejuvenate Tianjin. Just last month, the central government pledged to make development of the city's Binhai New Area, an investment zone that is already home to foreign companies like Motorola Inc. of the U.S., a priority over the next five years.

Tianjin's rise reflects the emphasis that President Hu Jintao's administration has put on rejuvenating northern China -- known as the country's rust belt for its ailing, huge state-run enterprises -- and narrowing the wealth gap with the prosperous south. Dynamic officials like Mr. Dai have been tapped by top leaders to help bring up those laggard areas.

Central leaders' focus on Binhai "is a historical breakthrough for Tianjin," says Zhang Lichang, the city's Communist Party secretary.

Traditionally seen as the economic center of northern China, Tianjin has long had a well-established industrial base and one of the country's finest ports. In 1984, the central government included the city among 14 coastal open cities enjoying more market-oriented policies. But Tianjin still lagged behind Beijing and other cities to the south, especially as central leaders focused on developing Shenzhen and other special economic zones in southern China in the 1980s, and then Shanghai and its Pudong New Area in the 1990s.

All that is changing. Utilized foreign investment in Tianjin has surged by an annual average of 32% over the past five years, totaling $10.3 billion for the period. Investments in roads, factories and other fixed assets have doubled in the same period over the previous five years, to a total of 534 billion yuan ($66.7 billion). And last year, the economy grew 14.5%, compared with the national average of 9.9%.

Many city residents attribute the turnaround at least in part to Mr. Dai. Having helped secure hundreds of billions of dollars in loans, the 62-year-old former governor of the People's Bank of China has spearheaded a campaign to transform the city. Countless old properties have been pulled down to make way for modern high rises and luxury-housing complexes. The city has widened its roads and is building a subway system. New museums are under construction and parks have opened along the Hai River running through the center of the city.

Mr. Dai also has strived to build up Tianjin as northern China's financial center. He played an active role in the establishment last year of Bohai Bank. The bank, which is 19.99% held by Britain's Standard Chartered Bank, could play a key role in boosting growth in the region, such as by providing loans to the private sector, local economists say.

After aggressive lobbying by Mr. Dai, the state-owned Assets Supervision and Administration Commission, which oversees China's key state-owned companies, chose Tianjin as one of three sites for setting up an experimental property-rights exchange in March 2004. These exchanges help facilitate the sale of companies owned by the central government, with total deals potentially valued in the trillions of yuan. (Beijing won the right to host one of the other two exchanges, reportedly after lobbying by Mayor Wang Qishan, another former banking official.)

Mr. Dai and other city leaders are also touting the Tianjin Binhai New Area as the "third pole" for China's economic growth, in a role similar to those played by the Shenzhen special-economic zone and Shanghai's Pudong area in revving up development in their respective regions. Situated across the sea from Japan and South Korea, Binhai is already home to investors from more than 100 countries, drawn by its competitive land and labor costs, preferential tax policies and a large talent pool fed by nearly 200 neighboring universities and research institutions.

At Tianjin Samsung Electronic Co. in Tianjin Binhai New Area recently, workers assembled video cameras, video recorders and DVD players. The company is among 11 joint-venture projects Samsung Group has set up with Tianjin Zhonghuan Electronic Information Group Co. with a total value of $1.16 billion.

Jin Shengzhi, Tianjin Samsung Electronic's general manager, says Tianjin is attractive because of its developed components industry and favorable policies. "Local government officials give strong support to our ventures," often asking whether the company is facing any difficulties and offering to help, he says.

Tianjin is also getting a boost from the central government, which pledged in its new five-year economic-development plan to "advance the development and opening up of Tianjin Binhai New Area." As a result, the area is expected to get the go-ahead to build China's largest tax-free port, to experiment with other market overhauls and to offer favorable taxation policies for high-tech ventures.

Some major state investments are already coming to Tianjin. Early this year, Sinopec Tianjin Co. got the nod from Beijing to set up a vast petrochemical complex that will produce more than one million tons of ethylene a year once it is operational in 2008. The project is the city's largest industrial program, with total expected investment of 25 billion yuan, according to a recent report by the official Xinhua News Agency.

China's General Administration of Civil Aviation last October signed an agreement to set up the country's only civil-aviation science and technology industrialization base in the city, to conduct research and manufacture equipment. That could give Tianjin an edge in a continuing, heated race among several cities, including Shanghai, Xian and Zhuhai, to win a bid to set up an assembly line to build A320 airplanes for Airbus.

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