Dynamic Forerunner in Northern Central China

Zhengzhou had been a sleepy place for investments, but that has now dramatically changed. Henan province, cradle of the Chinese civilization, has a considerably long and rich cultural history. But, in modern times it’s economy had too obviously been dominated by some outdated mentality. Being mainly a transportation hub with high potential – situated between Beijing, Xi’an, Wuhan, and Shanghai – Zhengzhou could not play out its basically favorable cards. But with new times come new opportunities: The urging desire of China’s government to promote an inland boom and to reach sustainable development brought with it crucial infrastructural upgrades. In short: Bright times are to be expected for Zhengzhou.

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Zhengzhou on the map

As central China’s second largest metropolis with an urban population of 4.5 million, Zhengzhou is in a favorable position as a main transportation hub in Northern China. The city developed around a main train network that runs north-south and west-east. High-speed rail already connects Zhengzhou with main cities like Beijing, Chongqing, Chengdu, Wuhan, Changsha, Guangzhou, Taiyuan, Xi’an, and Lanzhou. Important highways cross the city. Anyhow, within the city, more work needs to be done: Only one metro line (out of six planned ones) is in operation, and therefore rapid transit bus is currently an important means of transportation. With the local economic boom, the city’s north railway station has become one of the largest train-marshaling yards of China. The international airport of Zhengzhou transports cargo to Moscow, Amsterdam, Chicago, and Anchorage; with respect to passenger traffic, Zhengzhou is yet lagging behind other international aiports, serving only some cities in East and Southeast Asia.

“Zhengdong New City” signified an important upgrade of Zhengzhou. After the completion of “Zhengdong New City”, local economic growth has slowed down somewhat, in accordance with the national trend, but it still remains relatively strong (9,5 percent in 2014). The New City is only a few kilometers outside the city center and about twenty minutes from the airport. It is a comprehensive concept, comprising a CBD, a logistics district, a science and technology park, a modern industrial area, and a university town; its population is currently about one million people. The New City allows Zhengzhou to better use its advantages as a transportation hub, enhancing it to a major logistics center with convenient access to the northern part of the country. Apart from its favorable location, Zhengzhou has abundant natural resources, an extensive labor force, and an industry that builds upon its existing manufacturing base and is keen to welcome modern service industries.

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A view on Zhendong New City, which was the wakeup call for the local boom

There will be a “Central City Cluster” of 40 million people. Plans are that Zhengzhou will be at the core of this area comprised of nine cities situated in close proximity. The intention of the concept is to strengthen the province’s competitiveness in comparison to better-developed areas in China. Within the next few decades, it is expected that Zhengzhou and its neighboring city Kaifeng will solidify into one urban settlement called the “Greater Zhengdong New District“, housing about 20 million people.

Zhengzhou’s secondary sector is still significantly stronger than its tertiary sector. Local pillar industries are coal and aluminium processing, automobile and agricultural machinery, fertilizer production, electrical equipment, and food processing. Recently, Zhengzhou developed into a modern center of finance, retail and commerce. A speciality of Zhengzhou in this respect is a commodity exchange with the permission to trade agricultural futures (only Shanghai and Dalian are also allowed to trade in futures). Certain other emerging industries – IT and software, telecommunication, advanced materials, and biotechnology – are served by Zhengzhou’s three state-level development zones (ETDZ, HTDZ, EPZ). Zhengzhou also aims to become an international conference and exhibition center.

The impressive skyline of the emerging boom city Zhengzhou at night

It is worth to compare Zhengzhou to Changsha in southern central China. Similar to Changsha, Zhengzhou is a capital of yet relatively modest size but within a populous province in central China. It began to boom only in recent years due to its favorable position as a transportation hub. While Changsha is in the south of China, closer to Hong Kong, Zhengzhou is in the north, not far from Beijing and Xi’an. Wuhan, the much larger metropolis, is located between Changsha and Zhengzhou. Nevertheless, these two smaller cities recently showed higher growth rates than their larger neighbor on the bank of the Yangtze River. Let us have a look if there are some significant differences between Zhengzhou and Changsha which may make it easier to evaluate the implications of future investments here.

While Changsha is situated on the rail line between well-developed cities, Zhengzhou is pointing to developed metropolises on one side and yet-to-develop ones on the other. Changsha may therefore profit more from investments that come from top financial cities like Hongkong and Shanghai, while Zhengzhou may depend more on central government attention and foreign direct investment from places outside of China. Changsha’s economy seems to be growing significantly more out of its own effort while Zhengzhou requires decisive support to foster a smooth development.

Both cities are important regional transportation hubs that are currently upgrading their logistics network, but both depend on ports on the coast. Both cities represent the center of cluster regions, but Changsha’s surroundings seems better prepared for the shift to high-tech than Zhengzhou’s which are rooted in traditional heavy industry. Zhengzhou, though, will have an important impact on its comparetively poorer environment that offers lower labor costs, and this might constitute a competitive edge. These are some distinct features which actually do not favor one city over the other but allow a glimpse at which music will be played in the coming years in north and south central China, respectively.

A lot depends on political will to realize the scheduled investment environment that pushes Zhengzhou’s economy forward. Obviously, a lot has been done to restructure the local economy. By truly determined political intent, Zhengdong New City was constructed as a means to initiate the modernization of China’s second most populous province. Now, the geographical advantages and the low labor costs of the region can be exploited to full extent. Zhengzhou is virtually on the verge of transforming itself into a modern center of the service industry. It is already preparing for the upcoming economic rise of the northern part of China and it may influence this upturn by its own means.

© China Under Construction, 2016