Beijing
- capital economy still facing challenges

The Olympic projects, road construction, hi-tech business and infrastructure expansion in rural areas all dominated the capital?s development agenda in 2005. Direct investment in the Games, amounting to some RMB140bn, will boost Beijing?s average annual GDP growth by 2.1% in the lead up to the event. The service and financial sectors are becoming very significant, too, and there is a lively and diverse expat community.

But the city still has problems to solve. Concerns remain about pollution and serious shortages of water, energy and land. Efforts to reform certain sectors, such as heavy industry, continue to require a lot of effort. And investment in real estate is still relatively high, with demand still rising amid limited supply. There are contradictions between the pace of road construction and the rising number of cars – there are now 11 cars for every 100 permanent residents.

Foreign investor?s views on the city are mixed. In its 2005 White Paper, the American Chamber of Commerce noted, ?the Beijing government continues to a do a commendable job building the infrastructure needed to support a rapidly expanding foreign business community?. The Chamber?s surveys indicate that the regulatory environment has also improved, with less ?red tape?. But resources and pollution remain a concern, and ?Beijing?s commitment to protecting intellectual property rights remains an unfulfilled promise?.

One major issue facing the capital, like many other parts of the country, is an energy shortage ? it imports 94% of its energy from other provinces and regions. Water shortages are common, too. The American Chamber of Commerce noted that its members are ?deeply concerned? about these issues. It was no surprise, then, to see a survey of the ?most liveable cities? by the Horizon group in which the capital slipped from third place in 2004 to fifteenth in 2005, largely because of congestion, pollution and property prices.

Tianjin
? great port city and manufacturing hub

This is a major city that came into prominence in the 20th century, and is now one of the country?s four great municipalities. Tianjin port is the largest in north China and second only to Shanghai, and the city has several large and important development zones, notably the very well-known TEDA. The urban sprawl of Tianjin and Beijing are virtually almost joined up ? on the one-hour train journey between the two great municipalities (soon to be cut to 30 minutes), you do not see much other than housing and factories. But despite being very close to Beijing, the cost of living and labour is significantly less than in the capital, and there is abundant and competitively-priced land.

There are many vestiges of western architecture in many parts of the city, with some 1,000 buildings constructed during 19th and early 20th centuries. Although some areas are being cleared to make room for new developments, many old buildings are being retained and renovated for modern use and as tourist attractions. The city is also a centre of learning, with some 37 higher education institutions, including Tianjin and Nankai Universities, and some 300,000 professionals in different fields.

But although local per capita disposable income is relatively high at some RMB12,000, the city is much cheaper than Beijing ? the cost of living is, according to local residents, around one-third of the capital?s. Taxi flag drop is RMB8, DVDs were seen on the streets at RMB10 for three, and local F&B is certainly not excessively priced. Department stores and boutiques line Binjiang Dao, the typical ?pedestrian walking street?. No wonder, then, that Beijingers often pop down to their seaside neighbour for a cheap night out and some retail therapy.

Tianjin however is the logical choice for manufacturing involving imported components, especially for servicing the Beijing market, North and West of China, as it?s infrastructure is generally excellent and costs still reasonable. It?s never going to have the glamour of Shanghai, but for getting on with no-frills manufacturing this is a great location to be.

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