A new building complex completed this year in Chengdu, Sichuan province, is the world’s largest standalone structure with a building area spanning about 1.76 million square meters. The city is being blamed for allowing developers to build an excess of office buildings. (Tokuhiko Saito)
CHENGDU—Once shunned due to its distance from the coast, the historical capital of inland Sichuan province is today attracting global attention and investment as a dynamic manufacturing center, fueled by its abundance of low-cost labor.
Chengdu is experiencing a massive infusion of foreign investment, growing at an annualized rate of several tens of percent in recent years.
Even as overall investment in China contracted last year due to the global economic downturn, Chengdu reported a year-on-year increase of more than 30 percent.
“Of the world’s top 500 companies, 238 have set up operations in Chengdu,” Mayor Ge Honglin said at a news conference on May 30, touting the city’s international profile.
Chengdu joined the ranks of Beijing and Shanghai this month in hosting the Fortune Global Forum, a convention of world business leaders, organized by Fortune magazine. An energetic and thriving city is selected as the venue for the annual forum, which was held here from June 6-8. Chengdu was the first inland city that hosted it.
Formerly, Sichuan province, with a population of 80 million, was a source for workers who headed off to Shanghai and the coastal region of Guangdong province, which achieved economic growth ahead of other parts of China.
But Sichuan province is now home to a large number of factories attracted by its abundant, cheap labor force.
Businesses have been forced to move inland to set up operations in recent years as property prices and labor costs started rising in the coastal region. Chengdu welcomed them with open arms and preferential treatment from the local government.
On the outskirts of the city today, plants operated by such leading IT companies as Intel Corp. of the United States, Siemens AG of Germany and Hon Hai Precision Industry Co. of Taiwan are lined up at a high-tech industrial complex, where they are eligible for tax breaks.
According to the state-run Xinhua News Agency, 20 percent of all the personal computers in the world and 70 percent of Apple Inc.'s iPads are assembled in Chengdu.
The city has enjoyed annual growth at a pace exceeding the national average.
In 2012, Chengdu's gross domestic product totaled 814 billion yuan (about 13.2 trillion yen, or $132 billion), ranking third of all major cities after Guangzhou and Shenzhen, except for municipalities directly under the central government.
However, the concentration of investments is already showing danger signs of an overheating bubble economy. Developers erected buildings in the city center, on speculation that businesses would quickly snap up the office space.
But the vacancy rate of office buildings topped 30 percent at the end of 2012, according to a market research firm. A local newspaper warned that the bubble could burst if developers cannot recoup their investments.