China’s “Go West Policy”

The 1.37 billion population (2011) in China is pulling the world with its fast growing economy. Top international companies have already recognized that an investment in China is fundamental for the positioning of global players. With an average 10 % p.a. GDP growth rate over the last 10 years, China is amazing the world; in absolute terms Chinas’ GDP has multiplied over the last 10 years.

The fact that Chinas’ economy is booming and getting attention from foreign companies and investors is not something new for us. While cities like Beijing, Shanghai and Tianjin are getting more and more expensive, investors are looking for new areas such as the Sichuan province in the western area of China. Companies like IBM, SAP, Symantec and as of late the German company Bosch have already established their business in Chengdu in the High-tech zone and state owned Tianfu Software Park as they are aware about the advantages it provides.

In ancient China, Sichuan used to be part of the Silk Road, an important highway from the East to the West, also named the “door” from China to its neighboring countries. After the “Open Door” policy in 1978 Chinese people, willing to work in order to improve their own living conditions, moved from rural areas to the large cities in northeastern China. Those are the areas with the highest population density, which are still attracting a lot of Chinese due to the high income compared to other areas of China, which in turn causes depopulation. Briefly, 70 % of the population is living in the northeastern area of China.

The province Sichuan, also known as Deng Xiaoping’s birthplace, neighbors the municipality of Chongqing, which was historically part of Sichuan. Chengdu is the capital of the province Sichuan and has earned special attention in China’s governmental 5 year plans since Chinas’ “Go West” policy was implemented in 2000. The development of the High-tech industry has to be highlighted as one of the core areas of the “Go West” strategy. The “Go West” policy aims to improve the living conditions of the relatively underdeveloped and poor, but natural resource rich, western area of China. Thus the Chinese government is investing in infrastructure and education in order to attract foreign companies as well as to keep skilled people in the western area of China.

This is reasoning why Chengdu transformed into one of the most important hubs in western China with a continually growing population of approximately 14.04 million citizens and placing Chengdu as one of the most quickly developing cities in China. The well developed water and electrical power supply, as well as the good transport and telecommunication infrastructure nominate Chengdu on the 4th position of Chinas’ most livable cities. Foreign companies can benefit from comparatively low priced but skilled and hard working labor force, as well as from governmental support for establishing their business in China in the form of low taxes, which in turn is pushing the awareness of Chengdu as an attractive Chinese city to invest.

Author: My Kiet Truong