DYNAMIC FORERUNNER IN NORTHERN CENTRAL CHINA
When Zhengzhou, the capital of China’s second-most populous province, Henan, set out to construct its giant Zhendong New City, breakneck economic growth indicated that something important was going on in this place. The Yellow River Valley currently is in the process of shifting from an economy dominated by heavy industry and agriculture to a modern economy, led by Zhengzhou as a financial service, IT and logistics center. Plans are on the table that want to forge one of China’s huge agglomerations bustling here, next to a river that once challenged millions of people’s lives by floods and drought.
The cradle of Chinese civilization, Henan, has long been a relatively sleepy place for investments as its economy was too obviously dominated by some old-fashioned 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.
Being central China’s second largest metropolis with an urban population of 4.5 million, Zhengzhou has developed around a train network that runs north-south and west-east, therefore putting the city in a favorable position as a main transportation hub in Northern China. Plans are that Zhengzhou will be at the core of the „Central City Cluster“, a 40-million people area comprised of nine cities situated in close proximity. The intention of this 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.
High-speed rail already connects Zhengzhou with main Chinese 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.
Zhengzhou’s secondary sector is signifantly stronger than its tertiary sector, and 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.
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.
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.
Obviously, a lot has been done to restructure Zhengzhou’s 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