Chongqing - Economy

Economy

Chongqing was separated from Sichuan province and made into a municipality in its own right in March 1997 in order to accelerate its development and subsequently China's relatively poorer western areas (see China Western Development strategy). An important industrial area in western China, Chongqing is also rapidly urbanising. For instance, statistics suggest that new construction added approximately 137,000 square meters (1.5 million square feet) daily of usable floor space to satisfy demands for residential, commercial and factory space. In addition, more than 1,300 people moved into the city daily, adding almost 100 million yuan (US$15 million) to the local economy.

Traditionally, due to its geographical remoteness, Chongqing and neighbouring Sichuan have been important military bases in weapons research and development. Chongqing's industries have now diversified but unlike eastern China, its export sector is small due to its inland location. Instead, factories producing local-oriented consumer goods such as processed food, autos, chemicals, textiles, machinery and electronics are common.

Chongqing is China's third largest centre for motor vehicle production and the largest for motorcycles. In 2007, it had an annual output capacity of 1 million automobiles and 8.6 million motorcycles. Leading makers of cars and motor bikes includes China's fourth biggest automaker; Changan Automotive Corp and Lifan Hongda Enterprise, as well as Ford Motor Company, with the US car giant having 3 plants in Chongqing. The municipality is also one of the nine largest iron and steel centres in China and one of the three major aluminium producers. Important manufacturers include Chongqing Iron and Steel Company and South West Aluminium which is Asia's largest aluminum plant. Agriculture remains significant. Rice and fruits (especially oranges) are the area's main produce. Natural resources are also abundant with large deposits of coal, natural gas, and more than 40 kinds of minerals such as strontium and manganese, although the mining sector has been criticised for being wasteful, heavily-polluting, and unsafe. Chongqing is also planned to be the site of a 10 million ton capacity refinery operated by CNPC (parent company of PetroChina) to process imported crude oil from the Sino-Burma pipelines. The pipeline itself, though not yet finished, will eventually run from Sittwe (in Myanmar's western coast) through Kunming in Yunnan province before reaching Chongqing and it will provide China with fuels sourced from Myanmar, the Middle East, and Africa. Recently, there has been a drive to move up the value chain by shifting towards high technology and knowledge intensive industries resulting in new development zones such as the Chongqing New North Zone (CNNZ). Chongqing's local government is hoping through the promotion of favorable economic policies for the electronics and information technology sectors, that it can create a 400 billion RMB high technology manufacturing hub which will surpass its auto industry and account for 25% of its exports.

The city has also invested heavily in infrastructure to attract investment. The network of roads and railways connecting Chongqing to the rest of China has been expanded and upgraded reducing logistical costs. Furthermore, the nearby Three Gorges Dam which is the world's largest, will not only supply Chongqing with power once completed but also allows ocean going ships to reach Chongqing's Yangtze River port. These infrastructure improvements have led to the arrivals of numerous foreign direct investors (FDI) in industries ranging from auto to finance and retailing; such as Ford, Mazda, HSBC, Standard Chartered Bank, Citibank, Deutsche Bank, ANZ Bank, Scotiabank, Wal-Mart, Metro AG and Carrefour, among other multinational corporations.

Chongqing's nominal GDP in 2011 reached 1001.1 billion yuan (US$158.9 billion) while registering an annual growth of 16.4%. However, its overall economic performance is still lagging behind eastern coastal cities such as Shanghai. For instance, its per capita GDP was 22,909 yuan (US$3,301) which is below the national average. Nevertheless, there is a massive government support to transform Chongqing into the region's economic, trade, and financial centre and use the municipality as a platform to open up the country's western interior to further development.

Chongqing has been identified by the Economist Intelligence Unit in the November 2010 Access China White Paper as a member of the CHAMPS (Chongqing, Hefei, Anshan, Maanshan, Pingdingshan and Shenyang), an economic profile of the top 20 emerging cities in China.