The Australia-China Chamber of Commerce and Industry of New South Wales








The Network of Co-operative Agreements

With Cities and Provinces in China




Areas of concentration for trade and investment

Cities and provinces in China with ACCCI Co-operative Agreements


Note that the data contained in this document pertain to 1994.  Consult the Key Cities Index for more recent data.


Why has this booklet on strategies been produced?

Chamber members have indicated that they are associated with ACCCI of New South Wales largely because they realise that China is too important to Australia to be neglected.  They also recognise the sound and sensible nature of the Chamber’s objectives, which are:

v      promoting Australian business, in general, within the context of two-way trade and investment with China,

v      promoting the Chamber and the businesses of its member companies with businesses and organisations in China, and

v      promoting various Chamber projects (such as Rugby Union Football and Dragon Boat Racing in China), which have the principal purpose of bringing the business communities together.

Members of the State Council of the Chamber remain fully committed to these objectives, and are currently developing strategies to achieve them.

The purpose of this booklet is to describe the strategies already developed that are now being put into effect. 

How will Chamber members benefit?

Chamber members will benefit only to the extent to which they avail themselves to the opportunities that are being created.  An informal survey of a portion of the Chamber’s membership indicated that they generally lack the following:

v      in-depth analyses of particular commercial sectors and industries in China, with a view to determining what China needs and what can be supplied from Australia,

v      specific information about business prospects in China, including exports, imports and joint-venture investment opportunities, especially on a regional basis,

v      reliable contacts in China from whom information can be obtained and, if desirable, introductions can be made, and

v      knowledge as to where to begin to seek joint-venture partners and how to insure that the “appropriate” partner is found,

The basic strategies of the Chamber are intended to establish a way of obtaining these analyses, information, contacts and knowledge.  Initially, they will be acquired mainly on a case-by-case basis, in response to specific requests from members, or in connection with particular opportunities that are seen to arise from our Chinese counterparts.

 Eventually we hope to anticipate members’ needs and to collect the analyses, information, contacts and knowledge in the belief that some Chamber members will be able to use them and to benefit from them. 

The mechanism with which that collection is expected to be made is both innovative potentially durable.  It is essentially a channel for the two-way flow of information, a basis for mutual understanding among the business communities and a platform for the exchange of business people between Australia and China.  As a mechanism or structure, it functions only if it is used.  Its success, and its permanence, will depend upon that usage.

What are the key elements in the strategy?

The vastness of China, and the size of its population, prompted the State Council to be selective in the number of counterpart organisations in cities and provinces in China with whom we establish “ld friend” status.  Having acquired such status is extremely valuable, but it also entails obligations.  The Chamber’s organisation is relatively small, compared to that of its counterparts in China.  We cannot hope to fulfil obligations entered into with all major cities in China, or with all organisations in China that send trade missions to Australia.  Being selective is not necessarily a sign of snobbishness on our part, it is essential for our own ability to function.

The most important element in the Chamber’s strategy is to establish “old friend” status with cities and provinces which have the following characteristics:

v      they allow scope for the friendship to be mutually satisfactory,

v      they are expected to grow substantially over the medium-to-long term so that early participation in their business and commercial activities will be rewarded as a sustainable activity, and

v      they are not yet so large and so open-to-the-world as to be over-committed with too many “old friends”. 

With the signing, or the intention of signing, co-operative agreements with 24 cities and provinces, the Chamber now has 24 potential “old friends”.  The agreements only provide the basis to form that friendship.  The status must be acquired through a period of mutual exchange, assistance and obligations.  As noted above, it is the accumulation of obligations, both paid and received, which is of value. 

What are the co-operative agreements?

Each agreement is an undertaking by the Chamber to co-operate in the business areas of export/import, investment joint ventures, business information including academic research and development, commercial culture such as the performing arts, and public administration including social services. 

Each party agrees to co-operate as follows:

v      in export-import matters, by exchanging information on rural activities, mining ventures, manufactured products and a variety of services,

v      in investment and joint ventures, by facilitating capital flow and technology transfer,

v      in business information including academic research and development, by establishing long-term institutional economic relations,

v      in commercial culture such as the performing arts, by encouraging viable cultural interchange, and

v      in public administration including social services, by transfer of all forms of management expertise.

Each party agrees to sponsor and promote visits by business delegations for the expansion of bilateral trade and investment.  All projects are subject to agreement by both parties and the co-operative agreement will remain in effect until such time that the two parties mutually decide to terminate it.

In most cases the agreements will be reviewed within 3 years after signing, in order to determine how much benefit has been achieved and to seek ways of improving that benefit.  Considerable effort has been made to ensure that the agreements are not filed away and forgotten.

What have we gained from the agreements?

The principal attribute of the agreements is to formally record an expression of interest in working toward a mutually beneficial set of co-operative activities.  That expression alone establishes the first layer of good will.  They enable the Chamber to ask for assistance when member companies visit the city or province.  They also enable Chinese companies and organisations to ask for our assistance. 

They provide the Chamber with a reliable source of reference about particular business ventures in China and about individual business people.  They also give the Chinese a similar source of information about Chamber members and friendly-to-the-Chamber organisations. 

They enable both parties, and their respective constituents, to have a starting point in a wide range of business activities.  In short, they provide a basic institutional framework for obtaining the analyses, contacts, information and knowledge mentioned above.

Why choose four areas of concentration

As most members are aware, the number of trade delegations which the Chamber has hosted over the past 20 years is exceptionally large.  Moreover, the number of visits per year has been increasing.  In order to concentrate these incoming and outgoing trade delegations into single-interest groups, and thus to avoid the ‘shotgun’ approach to trade exchanges, four areas of concentration have been identified and are described in the next section. 

They are broadly defined at the present time in order not to preclude particular interests of Chamber members.  It is hoped that further concentration within these four areas will be possible.

Organising two-way trade delegations on a regular basis is regarded as an important aspect of the co-operative agreements.  Personal experience and personal contact is by far the most effective way of gaining the information and knowledge required for successful business ventures in China, or joint ventures in Australia with partners in China.

The selection of four areas of concentration will also assist in achieving a systematic collection and presentation of information on the key cities and provinces in China.  This information will require time to collect, verify and process.  The Chamber has made arrangements with an Australia-China consulting firm to assist in obtaining some of the information to be used as briefing material for outward trade delegations.

 We will also seek full information about incoming trade delegations.  Considerable time has been lost in the past in the process of ‘exchanging credentials’ during visits.  Exchanging that information before the visits enables the respective delegations to focus on the main purposes of the visits and to optimise the use of the limited amount of time generally available for the trade missions.

Areas of concentration for trade and investment:

The State Council of the Australia China Chamber of Commerce and Industry of New South Wales selected four areas of concentration in its strategic plans for trade and investment relations with the cities and provinces in China that are part of the network of co-operative agreements.  These areas are as follows:

Urban Services

Rural Industries


Commercial Culture

The purpose of this section of the strategies booklet is to define the four areas and to explain the reasons for the selection of each as an area of concentration.

Urban Services

Broadly speaking, urban services include all activities of the services sector (or tertiary sector), which are provided specifically to users in urban areas.  They do not include public utilities and construction, since the Chamber grouped these services with infrastructure.  The services sector is conventionally divided into four major categories:


Transport, storage and communications

Finance, insurance and business services

Government services

Each of these has a number of sub-categories.  For example, commerce would include wholesale trades, retail trades, hotels, restaurants, theatres and other entertainment services.  Since each category is exceptionally broad, the Chamber has restricted its interest in urban services to include the following:

Finance, banking and insurance services

International trade services

Business services for manufacturing

Real estate and property

Selected government services such as public administration and health administration

The first two categories are highlighted as important areas of development in China.  This conclusion is based upon the development of those same sectors in Taiwan during the past two decades. 

Between 1952 and 1994, a total of US$1.4 billion in overseas direct investment flowed into Taiwan for both categories, and jointly comprise about 15% of total overseas direct investment during the period. 

Over the same period of time, US$2.3 billion in outward investment approvals occurred for Taiwan in finance, banking and insurance.  A large share of this outward investment went into mainland provinces.

International trade services include a range of business and professional services oriented toward the facilitation of international trade.  This would include legal services, accounting, transport agencies and other services that are needed for an efficient and sustained flow of merchandise trade.  It is one of the most rapidly growing division of China’s services sector.

Business services for manufacturing could include legal and accounting services, but also includes technical assistance from Australian manufacturers.  Joint ventures with Chinese manufacturing enterprises will be explored, partly as a means for Australian manufacturers to export to China and partly for the purpose of securing supplies of Chinese products in Australia.  This would involve financial, legal and technical services.

In the recent past, real estate and property services to China have been provided principally by Overseas Chinese.  Considerable scope exists, however, for Australian enterprises to become part of the huge potential in urban expansion and renewal.  The process of rapid industrialisation in China will significantly alter the current percentage of people living in rural areas. 

Government administration in China is becoming more ‘westernised’, but will probably always retain features of Chinese traditions dating from the time of Confucius.  Modernising the system of administration without losing the more important elements of those traditions is a challenging task.  Improvements in health administration are among the more urgently needed aspects of public administration.

Rural Industries

Rural industries include primary production as well as rural secondary industries and rural services. 

It includes the following:






Township and village enterprises

Of particular interest is township and village enterprises (TVEs).  This includes a variety of activities ranging from food processing to small and medium sized manufacturing plants relying upon rural labour and primary products for inputs.  These enterprises employed more than 12 million people in 1993.  The gross output of TVEs increased from US$207 billion to US$363 billion in 1993.

Most of that employment and output has occurred in China’s coastal provinces such as Jiangsu, Shandong, Zhejiang, Guandong and Henan.  The non-coastal provinces such as Sichuan, Anhui and Hebei have nevertheless experienced rapid growth in TVEs. 

Most of the northwest and southwest provinces are lagging behind the other provinces in these developments, and therefore offer an opportunity for longer-term Australian participation in both trade and investment.


Infrastructure is generally classified into the following categories:

Land transport, including road and rail

Air transport, including airports

Sea transport, including seaports

Telecommunications, including public switched telephone networks, microwave transmitters, optical fibre cable and satellite earth stations

Electricity supply

Gas supply

Urban and rural water supply

Wastewater treatment

Solid waste disposal

In most parts of China infrastructure development has kept up with the need for improvement.  This has resulted from the rapid rate of economic growth, and from the inability to assess infrastructure requirements associated with the faster pace of economic activity.  The need is particularly noticeable in the northwestern provinces where infrastructure has not been improved substantially since the 1950s.

Rail transport in China increased at an average rate of 8.8 per cent per year in constant GDP terms since 1987 but even with that increase, there are significant shortages of capacity.  Road construction has also lagged behind demand, except for the more prosperous coastal provinces. 

Although the efficiency in civil aviation has improved in recent years, the growth in passenger travel from 11.6 billion passenger-km in 1985 to 47.8 billion passenger km in 1993 created enormous pressures.  The air transport system requires substantially more improvement in order to operate effectively.

China has relatively few seaports that can handle modern containerships, and continues to rely on relatively small general cargo vessels.  Despite this, the amount of cargo handled more than doubled from 1985 to 1993.  The major ports are becoming increasingly more constrained.

The number of main telephone lines in China in 1991 was only 0.73 per 100 people compared to Australia’s 46 per 100 people in the same year.  To catch up with the rest of the world, China’s expenditure for telecommunications is expected to increase from the present level of about US$5 billion to more than US$12 billion in the year 2000.

Although China’s power sector has managed to grow at a rapid pace of more than 8 per cent per annum from 1980 to 1993, to become the fourth largest generating system in the world, persistent power shortages continue to occur.  Of particular importance is the need for electrical network strengthening in the poorer provinces.

Gas supplies, mainly town gas, have been increasing in response to the desire to avoid excessive pollution from coal-fired heating and cooking in the provinces north of the Yangtze River.  Considerable work remains, however.

Water supplies are rapidly improving in the coastal region, but residential access to tap water per capita in urban areas remains at just over 90 per cent, on the average.  In rural areas the availability of safe water is of course lower, and the need for improved sanitation is greater.

Commercial Culture

The Chamber has long recognised the importance of mixing cultural exchanges with trade missions.  They provide a focus of attention that is separate from, but conducive to, the business and commercial interests that are the principal driving force of the co-operative agreements.  The special category of ‘commercial culture’ includes a variety of cultural activities that have a potential to be commercially viable.  This includes a range of entertainment and leisure activities that contain a significant amount of cultural content.

The selection of particular activities to be exchanged depends largely upon the special characteristics of the individual cities and provinces.  The intention is to view these activities broadly to include potentially all forms of visual art, music and the performing arts.

For many years the Chamber has been active in its sponsorship of cultural activities.  The W. J. Liu Exhibition of scrolls has been one of the most popular and widely appreciated of these activities. 

We expect to enlarge the list of these activities substantially in the next few years, thus providing scope for Chamber members to meet with a wide variety of both Chinese and Australian officials. 

Cities and provinces in China with ACCCI Co-operative Agreements:



Beijing is one of the three municipalities in China whose government is considered to be at the same level as a provincial government.  The other two municipalities are Tianjin and Shanghai.  The mayors of those cities therefore occupy the same ranking within the Chinese hierarchy as provincial governors.

In the case of Beijing, the city limits extend for some 80 km from the centre.  Within these limits exist an urban area, a number of suburban areas and nine rural counties to form a total area of 16,800 sq km.  The overall population is more than 10 million, compared to 63 million in Hebei Province, which completely surrounds Beijing. 

Although the city’s origins have a much longer history, most of the urban pattern, layout and structures, such as the Forbidden City, were designed in the early part of the 1400s when the Ming Dynasty moved back to Beijing from Nanjing.  At that time, the Inner City occupied the area around the Imperial City, and a suburban zone was added to the south.

As a result of large amounts of money poured into it since 1949, Beijing has most of the trappings that are befitting to China’s national capital.  Streets were widened, parks, museums and open spaces were created and the old wall was removed.  The city continues to change rapidly, as does most of China, but with those changes Beijing remains a different part of China.

Under Mao Zedong, Beijing began to industrialise and become a “People’s City”.  Clothing and textile manufacturing developed quickly, together with iron and steel industries, petrochemicals and machinery.  Despite the continuing dominance of central government administration, the city now produces a wide range of manufactured goods. 

Transport and telecommunications continue to be the best in China.  These and other infrastructural advantages have appealed to many foreign enterprises, resulting in a large number of joint ventures.

ACCCI’s co-operative-agreement partner in the city is the Beijing Branch of the Chinese Council for the Promotion of International Trade (CCPIT).  Since the organisation represents a large number of manufactures, like other branches, they are keen to seek new outlets for their products and to obtain more joint venture partners. 

With a location in the same city, the Beijing Branch of the CCPIT has close connections with the national office of the CCPIT.  That provides an additional advantage in forming an association with the branch.

Not surprisingly, per capita income in Beijing is substantially higher than in most of China’s cities, at RMB 6,805 yuan per annum (in 1993).  Only Shanghai is higher at RMB 8,652 yuan per annum.

Northeastern China

For most of this century, China’s northeastern region was a three-dimensional checkerboard for various warring factions.  First it was Imperial China v. Imperial Japan, with Manchu bandit leaders initiating rear-guard action to appropriate whatever was not firmly secured. 

Then it was Imperial Japan v. Imperial Russia, with the latter eventually leaving with as much as they could carry, including office furniture and railway tracks.  Eventually, militarist China struggled with militarist Japan for control over the region’s supplies of raw materials.

Finally, Chiang Kaishek’s Kuomingtang troops engaged in three critical battles in the northeast with Mao Zedong’s locally recruited sympathisers.  The local revolutionaries used captured weaponry including Japanese tanks and US jeeps.  By this time, they were fed up with the numerous checkerboard games, and especially with players who took away their ‘marbles’.

In recent times, the northeast has become an industrial powerhouse.  Some observers suggest that the Japanese influence during World War II contributed to the region’s ability to achieve an apparently painless industrial revolution. 

The desire to become self-sufficient must nevertheless be strong in a region for which exploitation was both ruthless and persistent.  This cannot be attributed to any one of the former combatants, but to the entire chain of events.  

Changchun (Jilin Province)

Although Liaoning Province is regarded as the northeast’s main engine for industrialisation, Changchun received a boost in 1950 with China’s first motor car manufacturing plant.  Manufacturing during that period received assistance from the Soviet Union.  Trucks, tractors, Red Flag limousines, locomotives soon appeared, together with carpets, articles of fur and wood carvings.

Jilin Province now has about 26 million people, making it smaller than Liaoning to the south (40 million) and Heilongjiang to the north (36 million).  Per capita GDP is also lower – Rmb 2,071 yuan compared to Rmb 3,254 yuan in Liaoning and Rmb 2,433 yuan in Heilongjiang.  This results partly from a greater reliance on agriculture in Jilin – more than 25 per cent of GDP compared to 15 per cent in Liaoning and 20 per cent in Heilongjiang. 

Changchun is also interesting as the site of the Puppet Emperor’s Palace and Exhibition Hall, commemorating the late Henry Puyi, China’s last emperor.  The city has a film studio which got its start making documentaries during China’s civil war period. 

Thus, the combination of agriculture, manufacturing, culture and the arts make Changchun a microcosm of China itself.  The Chamber looks upon the city as a potential centre for future developments in the northeast.

Tumen/Hunchun (Jilin Province)

Tumen and Hunchun are likely to become twin cities if current plans for a free trade zone encompassing China, North Korea and Russia eventuate.  Hunchun is now classified as a backwater area located a few kilometres west of the Russian border and approximately the same distance from the North Korean border. 

The Chamber does not have a reliable crystal ball to suggest when, if ever, that particular area will become a growth triangle.  It is nevertheless clear, on the basis of past experience, that the Chinese will not allow its border regions to remain insecure.  The pace of development for Tumen and Hunchun may be slow for some time to come, as other regions receive a higher priority, but it will develop.

Hailar (Inner Mongolia Autonomous Region)

Inner Mongolia is the longest of China’s provinces, spanning more than 2,600 km mostly in an east-west direction.  The region conjures visions of a vast movie set beyond the Great Wall with sweeping grasslands emerging where the Gobi Desert ends.

It is nevertheless the home of more than 22 million people.  The Mongol ethnic group comprises about 10 per cent of the population, with Mongol-Han dominating, particularly in the border regions.  Pockets of Manchus occur in the east, and some Hui are located near the provincial capital of Hohhot and along the northern bank of the Yellow River.  Daurs and Ewenkis are found in the northeastern tip.

Inner Mongolia is also the site of one ‘foot’ of the most ambitious reafforestation programmes in the world.  On either side of the Great Wall, and extending for 6,000 km, a belt of trees is designed to protect farmland from desert sands carried by northern winds. 

It will also help to restore the timber stands which became depleted during the period of enormous population pressures toward the end of the Qing Dynasty.  Already the tree-planting programme has raised the afforestation level from 9 per cent to 13 per cent.  Intentions are to bring the level to 20 per cent by year 2000.  This will involve a total of 70 million hectares.

There are two centres of development in Inner Mongolia.  One is in the northeast with railway links to Jilin Province, as well as to Mongolia and Russia.  The other is in the west with a rail line following the Yellow River and connecting Hohhot to Ningxia Autonomous Region to the west, and continuing eastward to the Beijing-Mongolia line.

In between is Xanadu Palace, near Duolun.  These connections follow the road system installed by Kublai Khan, who became the first emperor of the Yuan Dynasty.  Trade links with Russia and with the rest of the world were thus formed in the second half of the 13th century. 

Since the province is a natural grazing land, its chief economic activity is livestock breeding, including horses, sheep, cattle and camels.  It is thus a major source of leather and dairy products.

Hailar is a growing city in the northeast, not far from the border with Outer Mongolia.  It has been opened relatively recently and appears destined for major grasslands development in the region of Dalai Lake.  It has and airport and is a principal supply point for Manzhouli which is on the border with Outer Mongolia and Russia.

As with Tumen/Hunchun, China will secure its border areas, particularly in view of the growing spirit of independence exhibited by the 2 million or so inhabitants of Outer Mongolia, which occurred with the recent departure of Soviet troops and personnel.

Eastern China

Tangshan (Hebei Province)

Tangshan is only a few kilometres outside the municipal limits of Tianjin, and is therefore more closely associated with activities in that city than with those in Hebei Province.  Tianjin has a population of more than 9 million, including rural areas. 

Tianjin became a treaty port in 1858, largely as a result of the British and French assessment of its location on both the Grand Canal and the Bohai Sea.  The Grand Canal is the ancient inland waterway connecting the Yangtze and the Yellow Rivers, running between Hangzhou and Beijing.  The Bohai Sea is the ocean inlet north of Shandong Province and bounded on the east by Dalian. 

After 1949, Tianjin became a major industrial city and produces a wide variety of consumer goods, heavy machinery and precision equipment.  The consumer products, in particular, are well regarded in terms of their quality.  They represent most of the relatively few examples in China of brand-name production for national distribution. 

Tangshan is on the mainline railway connecting Tianjin with Harbin to the north.  Together with Shenyang in Liaoning Province, it is noted particularly for its production of locomotives and other railway equipment.  It is an important link between the older industrialised region of China and newly industrialising regions in the northeast.

Yantai (Shandong Province)

Shandong Province is slightly larger in size than Zhejiang, but has an even greater population of about 86 million.  Traditionally it has been a poor province.  The Yellow River changed its path through the province some 26 times within recorded history. 

The river is also notorious for flooding and for periods of sustained drought.  To make it even more difficult for the province to be self-sufficient in food, about two-thirds of the province is hilly, with high mountain peaks in the southwest and a coastal chain of mountains within the Shandong Peninsula, which extends into the sea. 

The province has nevertheless made a quantum leap into industrialisation, assisted by early German influences in Qingdao.  It is likely to continue this progress in manufacturing, but improvements in agriculture and rural industries will remain an important need for some time to come. 

Yantai is very much a sea-oriented city.  The name means ‘smoke-terrace’, and Yantai acquired that name during the Opium Wars when fires were lit on the headland to warn ships of approaching pirates.  The city continues to reflect its origin as a fishing village and a naval defence outpost. 

As with many other coastal cities, the attraction of manufacturing as an a major boost to economic development has been irresistible.  Yantai is noted for its production of wine, spirits and fruit, but is rapidly diversifying its output. 

The Shandong Peninsula is the recipient of direct investment from the Republic of Korea, which lies only 400 km to the east.  Rapid development of the coastal cities is expected to follow from this inflow. 

Linyi (Shandong Province)

Linyi is a relatively small community in the southeastern part of the province.  It therefore has linkages with northern Jiangsu Province and with Anhui Province.  An important element in that area is conversion of locally available grain supplies into livestock feed, as well as significant improvements in breeding stock and in meat and poultry processing. 

Although there are numerous centres for concentration in rural industries, Linyi represents a good choice on the basis of location.

Changshu (Jiangsu Province)

Changshu is in the central part of the huge industrial complex that extends from Nanjing to Shanghai on the southern bank of the Yangtze River.  The historical importance of Changshu has been dwarfed by that of the two larger centres, as well as by neighbouring Suzhou. 

This arises partly from the Chinese tradition of locating cities in concentrated areas with rivers flowing through or around them.  In the case of Suzhou, a moat was constructed to enclose the old city.  Changshu, on the other hand, is located on the main roadway between Nanjing and Shanghai and in earlier periods was a quite town specialising in lace-making.

Industrialisation has altered land use in China and places a premium on broader, less concentrated areas that are close to river transport.  This avoids the congestion associated with rail or road movement of goods and allows ample space for expansion.

Changshu has these characteristics with some distance between the old site of the town and the river.  The farmland, which collected nutrient-rich soil from upstream erosion, has been converted into industrial estates that are linked by wide roadways and are easily provided with the necessary utilities. 

Changshu is nevertheless associated with the commercial culture of Nanjing, Suzhou and Shanghai, and is rapidly becoming the satellite industrial centre for these more traditional cities.  Its growth seems guaranteed within that strategic part of the Yangtze delta.

The population of Jiangsu Province is about 70 million.

Ningbo (Zhejiang Province)

Zhejiang Province is one of the smallest in area but has traditionally been one of the most prosperous.  This results partly from the fertile land in the northern portion of the province, which is part of the Yangtze River delta, and partly to its close proximity to Shanghai.  Historical events also contributed to the forward-looking nature of the province.  Hangzhou became the site of the imperial court for the Southern Song Dynasty in 1126, in order to avoid northern invaders.  The city grew in size and became the centre of Chinese culture during the period. 

Ningbo lies to the southeast of Hangzhou and is separated from Shanghai by a portion of the sea that extends west to Hangzhou.  Within that general area, the local dialect is Shanghainese.

Ningbo rose to prominence in the 7th and 8th centuries as a trading port from which Zhejiang’s exports, especially silk, were carried to Japan, to the Ryukyu Islands and to other parts of China’s coastal region.  The Portuguese established trading quarters in Ningbo in the 16th Century, mainly for the purpose of trade with Japan.  Thus, Ningbo is an open city not only by central government decree, but also by tradition.

The manufacturing sector in Ningbo is its principal engine for development.  The city produces a wide range of industrial products, mainly classified as miscellaneous items such as pumps, small motors and various articles of metal.  Most of the heavier industries in the province are located closer to Shanghai.

The city is also becoming a services centre for the region extending eastward from Hangzhou and to the south.  Its relatively small size, its location close to Shanghai and its forward-looking attitude make it a good choice as a key location in Eastern China.

The population of Zhejiang is 43 million people and the population of Ningbo is about 500,000.

Southern China

Fuzhou (Fujian Province)

Although Fujian Province cannot claim to have exported Mao Zedong (see description of Zhuzhou on page 26), it has made that claim for an extremely large number of Chinese who migrated to Taiwan, Singapore, Malaysia, Indonesia and the Philippines.  The local dialect is referred to as the south-of-the-Min-River language and is very similar to Taiwanese.  Both provinces of course speak Mandarin as the official language.

Fujian officials are attempting to re-build a sense of identity with the province among Overseas Chinese, and are encouraging investment in the ‘homeland’.  As a result, Fuzhou, the provincial capital, has become a moderately wealthy city. 

It is a well-established port city, with a history of transport and commerce that goes back to the early days of the Silk Road and the adventures of Marco Polo.  During most of that history, only the coastal cities displayed any degree of prosperity.  The higher elevations in the western part of the province continue to exhibit poorer living conditions.

The economy of Fuzhou remains heavily dependent upon agriculture and fishing, but its industries are developing rapidly.  Xiamen, which lies about 200 km to the south, became more industrialised as a result of its early status as a special economic zone. 

However, the zone, and the city within it, is on an island and is thus restricted in terms of future development.  Additionally, in encouraging investment from Overseas Chinese, the authorities invited investors to purchase dwellings and to live in Xiamen on a permanent basis.  This stimulated land development, financed partly by the Overseas Chinese, resulting in a number of luxury flats and villas. 

Although these housing developments are generally located away from the more favourable manufacturing sites, they nevertheless give rise to an additional restriction on future land use for industrial estates on the island.  

The population of Fujian Province is about 32 million, and nearly 6 million people live in Fuzhou.

Shenzhen (Guangdong Province)

The name ‘Shenzhen’ refers to three places:  Shenzhen City is opposite the border-crossing from Hong Kong at Lo Wu; Shenzhen Special Economic Zone (SEZ) is a separately administered region that extends to the north, east and west of Shenzhen City; and Shenzhen County is north of the SEZ.  The co-operative agreement entered into by the Chamber is with the municipal authorities who have administrative influence over all three.

The Shenzhen region is rapidly becoming similar to Hong Kong.  Its population has grown at about 20 per cent per annum, giving rise to the comment that ‘all peacocks in China fly south (to Guangdong Province)’. 

The economy of Guangdong Province continues to grow at a faster rate than the national economy (about 14 per cent per annum compared to 10 per cent nation-wide in 1994).  In the recent past, Shenzhen’s economy grew at an incredible rate of 45 per cent per annum. 

With industrial output per capita of Rmb 68,931 yuan in 1993, it can claim to be the undisputed leader of China’s industrialisation programme.  Shanghai is a poor runner-up with Rmb 25,637 yuan per person and the leading industrial city in northern China, Tianjin, manages only Rmb 18,304 yuan per person.

The SEZ came into existence in 1980.  Three other SEZs were formed at that time:  Zhuhai, near Macau, Shantou in the eastern part of Guangdong Province and Xiamen in Fujian Province.  After a brief, uncertain period of widespread smuggling activity, the Shenzhen SEZ became firmly established with the help of Hong Kong entrepreneurs who moved their clothing and toy factories across the narrow waterway that separates the Colony from Shenzhen. 

Not surprisingly, Shenzhen is the site of the first McDonald’s Restaurant in China and signed the first of the ACCCI network-oriented co-operative agreements.  Being first is an important part of Shenzhen culture.

The region produces a wide range of manufactured goods, the success of which can be attributed to the close connections with Hong Kong industrialists.  Already, however, the cost of land and labour has risen to the extent that factory relocations to other parts of Southern China are taking place.  It is likely that Shenzhen will become a services centre, and a friendly rival to a post-1997 Hong Kong, having similar activities. 

A number of Australian companies have chosen Shenzhen as their corporate headquarters for business ventures in China.  Considering the fact that Hong Kong has not been a popular business address for many Australians, it is possible that Shenzhen may one day have a ‘kangaroo valley’.  For that purpose, and to act as an important introduction for Shenzhen exporters into Australia, the Chamber considers Shenzhen too important to ignore.

The population of Guangdong Province is 66 million people and the population of Shenzhen is about 880,000 people.

Sanya (Hainan Province)

Hainan is a large tropical island off the southern coast of China.  It was administered by the provincial government of Guangdong until 1988, when it became Hainan Province.  It is sometimes referred to as the ‘Asian Hawaii’, to convey its popularity as a winter tourist attraction. 

However, Its facilities and infrastructure have not yet reached the full status that may be claimed in travel brochures aimed at the Hong Kong market.

The Limulingshan Mountains are located on central axis along the longest length of the island, reaching just under 2,000 metres at the southern portion.  This hilly land gives rise to a number of small rivers that flow to the west, east or north.  It is also the home of two original minority groups – the Li and the Miao.

The provincial capital is Haikou, which lies less than 30 km from the mainland, and has little to recommend it apart from being a transit point and a commercial centre.  The coastal plateau on either side of the mountains is occupied by Han Chinese, with an number of Indonesian and Malaysian Chinese as well as Chinese-Vietnamese refugees.  The land is devoted principally to tropical fruits and vegetables.

Sanya is the second largest city in Hainan and would be classed as a town on the mainland.  Sanya is a busy deep-water port and is a tourist resort as a result of the beaches along the southern tip.  The town lies along a narrow peninsula running parallel to the coast and is connected to the larger land area by two bridges. 

Basuo (Hainan Island)

Basuo (Dongfang) is at the western extreme of the island and is in a generally underdeveloped region.  The lack of tourist resorts has become an attraction, and the portion of the island between Basuo and Sanya is regarded as a particular scenic area.  Basuo is also near the largest iron ore mine in China.  The western region has the Institute for Tropical Plants, the Nature Reserve for the Projection of Hainan Deer and a large salt works.

ACCCI’s interest in Basuo stems partly from the participation in the area of Australian military personnel during World War II.  The western and southern parts of the island are almost certain to become major tourist attractions as Asian incomes rise.  Although it is popular now only among Overseas Chinese, the number of European tourists has been increasing.  Considerably more investment will be needed, however, to cater to larger numbers of tourists.   

Since the island was a place of exile during China’s long history, its overall infrastructure, including, and perhaps especially, educational services has been neglected.  Opportunities to supply services therefore exist.  The relatively small size of the province, as well as its physical separation from the Chinese central bureaucracy, may help in establishing workable relationships in joint ventures.

The population of Hainan Island is about 11 million people.

Central China

The broad plains of Central China are difficult to define precisely according to boundaries.  The region generally includes the provinces situated between the Yellow River and the Yangtze River, but Anhui Province is more closely linked economically to the coastal provinces than to Henen Province lying to its west.

Similarly, Hubei Province is more traditionally a part of the Hunan-Guangdong region than to Sichuan in the southwest or to Henan in the north.  The importance of the Henan-Hubei-Hunan axis is the way the three provinces are situated on a north-south line connecting Guangdong to Beijing. Such north-south axes, in particular, are likely to become more relevant as industrialisation proceeds from the coastal provinces to the western provinces of China.

Luoyang (Henan Province)

Henan Province has a population of nearly 90 million.  The Yellow River cuts through the northern part of the province and at that point the river widens into a more formidable waterway.  Upstream it carves out narrow valleys which limit the spread of its water during the rainy season. 

The region to the west of Henan Province is the location of the ancient Chinese settlements that moved eastward and created an urban-centred civilisation along the Yellow River about 3,500 years ago.  Zhengzhou, the present provincial capital became the centre of the Shang Dynasty in the 16th century BC. 

Today, Henan Province is one of the smallest provinces in area, but is also one of the most densely populated.  Over the centuries, flooding of the Yellow River left broad deposits of nutrient-rich soil and the province was able to sustain a large number of inhabitants.

Luoyang lies about 100 km to the west of Zhengzhou and is one of the richest historical sites in China.  The region between Luoyang and Zhengzhou has a number of ancient temples and tombs.  Since Luoyang was once the centre of Buddhism in China, some of its relics are unique.

The city has not yet reached the level of industrialisation that is visible in Zhengzhou, but it is developing rapidly.  On particular interest, commercially, is Luoyang’s location along the main railway line connecting Zhengzhou to Xi’an and the cities of the northwest, as well as its position on the Luo River which joins with the Li River before reaching the Yellow River.

Wuhan (Hubei Province)

The population of Hubei Province is 57 million, of which 7 million are situated in Wuhan, the provincial capital.  In addition to being on major north-south rail and road links, Hubei is on an important east-west connection between Shanghai and Sichuan Province.  The province in general, and Wuhan in particular, is rapidly becoming a transport hub.

Hubei province has two distinct parts.  The eastern two-thirds is a low-lying flood plain drained by the Yangtze River and by the Han River, the long river’s main northern tributary.  Rice is grown intensively in this region, generally produced in substantial surplus. 

The western portion consists of rugged highlands separating Hubei from Sichuan Province.  Mixed crops are grown in the valleys and basins formed between the hills.

Wuhan was the first of the interior cities to undergo industrialisation and is now considered to be one of China’s great manufacturing centres.  It is also one of China’s largest metropolitan areas, created by joining three formerly independent cities.

 This type of large municipal arrangement appears to be an advantage for China’s interior cities which would otherwise lack a strong local government for the purpose of undertaking necessary infrastructural improvements.  As a result of the integration of smaller municipalities, Wuhan is the only city along the Yangtze which sits on both sides of the river. 

Wuhan is the mid-point in the long navigable part of the Yangtze River from Shanghai to Chongqing.  The recently established “open city” arrangement for Wuhan is likely to add further to its growth potential.  Although Wuhan is some distance from the Three Gorges (Sanxia) Dam project, it will undoubtedly be a major staging area for the estimated US$20 billion project.

Zhuzhou (Hunan Province)

Hunan Province has some of the richest land in China.  During the Ming and Qing dynasties it was a major granary, supplying large quantities of rice to poorer regions.  Its population began to grow toward the end of the Qing dynasty, resulting in about 63 million inhabitants at the present time.  The province lies above Guangdong, but has not yet achieved the economic growth rate of its neighbour.  Per capita income is only one-third of that in Guangdong.

The provincial capital is Changsha, which is located on a historical site dating back more than 3,000 years.  The Hunan Provincial Museum has one of the finest collections of ancient Chinese artefacts, obtained principally from nearby tombs. 

Mao Zedong is regarded as one of Hunan’s major exports.  He was born in the village of Haoshan, not far from Changsha.  The area was the start of the Taiping Rebellion in the middle of the last century and Changsha claims the beginning of the Chinese Communist Party.  The first recorded meeting of the CCP, however, was in Shanghai.

Zhuzhou lies to the south of Changsha and became an industrialised city in 1937, due to its location along the Yangtze River, the Canton-Wuhan railway and the Shanghai-Kunming Railway.  Travel booklets suggest that the only reason for foreigners to come to Zhuzhou is to change trains. 

It is nevertheless an important distribution centre for coal and freight.  It also is a large manufacturing centre for railway equipment, locomotives and rollingstock.  The city will have an important role in future economic developments in Hunan.  The smaller, industrialised cities in Southern China, having both river and rail transport, are likely to grow more rapidly.

Northwestern China

Xi’an (Shaanxi Province)

Shaanxi Province is the beginning of China’s northwest, with a thick layer of fine, wind-blown loess soil.  The area in the northern part of the province consists of a plateau caught in a pocket formed by the Yellow River as it flows northward from Lanzhou into Inner Mongolia, returning southward to form the eastern border of Shaanxi. 

The land is terraced with deep ravines created by centuries of water and wind erosion.  The southern part of the province is cut by the Wei River as it flows eastward to join the Yellow River at the border between Shaanxi and Henan.

The earliest evidence of human habitation dates back about 6,000 years to Neolithic times.  The plain between Xi’an and the eastern border of the province was then a lush, green forest.  The early Chinese gained sufficient control of the water supply to establish permanent villages.  Prosperity gave rise to a civilisation and to the establishment of traditions. 

The area is best know for the Army of Terracotta Warriors near Xi‘an.  That alone has made the city the most popular tourist stop after Shanghai and Beijing.

The region is also highly industrialised, with factories established shortly after 1949 for the purpose of developing the border regions to the west.  The range of manufactured products is almost as great as that produced in Shenzhen, but the capital equipment is much order and less efficient.

Most of these industries, and the related infrastructure, will be revitalised during the next decade, resulting in a significant increase in productivity.  Trading and investment opportunities in the area are seen to be substantial.

The population of Shaanxi Province is about 34 million people, of whom 6 million live in the provincial capital, Xi’an.

Gansu Province

Gansu Province is immediately west of Shaanxi and stretches as an irregular crescent toward Inner Mongolia and Xinjiang Autonomous Region.  The provincial capital is Lanzhou, an industrialised city of more than 3 million people built within a long, narrow valley formed by the Yellow River. 

The city is also a services centre for the portion of the province to the south, which is predominantly agricultural-based.  Its importance on the Silk Road has been re-established by the major rail line west to Ürümqi and further to Central Asia.  Not far from Lanzhou another rail line connects the city with Qinghai and Tibet.  At least in that part of China, ancient transport centres have not been diminished in importance.

The province is generally rugged and barren, with partially developed natural resources including coal, oil and non-ferrous metals.  The Chamber’s co-operative agreement is with the provincial government, largely because the development of the southern and western parts of the province is high on the list of priorities.  Hence, agriculture and mining will be highlighted.  The industrialisation of Lanzhou is expected to continue with larger injections of joint-venture capital.

The population of Gansu Province is just over 23 million people.

Qinghai Province

Xining is the provincial capital of Qinghai Province (pronounced ‘ching-high’ rather than ‘queen-high’) and lies in the eastern portion.  Not far to the west is the boundary of the original Chinese Empire.  The vast area beyond is generally associated with Tibet, in terms of both physical characteristics and the ethnic composition of the inhabitants. 

The province was a penal colony during China’s political sorting-out periods, and most of the 1 million Han Chinese now residing in Xining remained there afterward, or were attracted by the frontier existence.  The area in the northeastern part of the province, between Xining and the border with Gansu Province, is a grassy plateau with elevations of between 2,500 and 3,000 metres.  The land is devoted to dry-land farming. 

In the southeastern portion, mountain ranges rise to more than 5,000 metres and form the origin of the Yellow River.  The region west of Xining is sparsely populated (the entire province has less than 5 million people), with scattered salt lakes.  The land is devoted principally to sheep farming and mixed crops. 

Southern Qinghai is a high plateau with a steep mountain range separating it from Tibet.  This range of mountains is the origin of both the Yangtze River and the Mekong River.

In addition to the need for improvements in dry-land farming, Qinghai has a supply of mineral resources, including crude oil, which have not been exploited.  A petrochemical industry is therefore likely to develop with the availability of raw materials, hydropower and rail transport from Xining to points east.

Ürümqi (Xinjiang Autonomous Region)

The autonomous region is China’s western most outpost and was an integral part of the Silk Road.  The oasis towns to the north and south of the Taklimakan Desert (generally referred to now as the Tarim Basin) provided stopping points for the caravans.  These towns exist today, with a unique culture that flourished for 2,000 years. 

They are supported by irrigated farming, mainly grain crops and fruit, with sheep and horses in the nearby foothills.  The dominant minority group in the area consists of Turkish-speaking Uigur people, or Kazakhs.  They are generally taller and heavier than Han Chinese, and could easily be mistaken for southern Europeans.

Ürümqi (spelled as Wulumuqi in China) is the provincial capital and is the only city in the province.  With a population of about 1.3 million, the city represents a relatively small proportion of the 16 million living in the province.  Those numbers give an indication of the village structure of the western region.

The development potential of the region around Ürümqi is underpinned by the recent installation of an optical fibre telecommunications system linking China with the Central Asian republics, and ultimately with Europe.

A railway line from Ürümqi to Lanzhou was constructed in 1963 and has recently been upgraded to a double track line.  Trade with the Central Asian republics, security of the western region and exploitation of the minerals and crude oil deposits in the Tarim Basis are the principal motivating factors. 

The economic development of the region must be seen as long-term, but the steady migration of Chinese from eastern provinces to the region is evidence that growth is likely to be sustained.


China’s southwest has the largest number of poverty-stricken areas.  This has resulted from the nature of the land and resources in the area.  It is a region of steep mountains and dense, semi-tropical vegetation.

Streams fed by melting snows have created fertile basins that were isolated for centuries.  River transport is hazardous, due to rapids, and roads are very difficult in most of the region.  The construction of several rail links in the region occurred after World War II and is considered to be a major engineering achievement.

The southwest was incorporated into the Chinese Empire during the Qin Dynasty as a means for protecting the southern border.  Apart from Sichuan Province, however, the region is underpopulated, compared to the rest of China.  During most of the period into the modern era, it was not a major concern of the ruling establishment.

This apparent lack of concern changed after China’s opening to the world in 1979.  The economic and social disparities between the coastal provinces and the interior provinces, especially those in the southwest, have become increasingly apparent.  The central government cannot afford to neglect these areas and it has recently undertaken several ambitious poverty-alleviation programmes.

Chongqing (Sichuan Province)

More than any other province in the region, Sichuan has received favourable attention from Beijing.  It is the most heavily populated of any province in China, with more than 111 million people.  That would easily make it an major ‘nation’ on its own. 

The Chinese refer to the province as the ‘Heavenly Kingdom’, largely because of its varied terrain with broad plains in the east and steep mountains in the west.  It also has a rich cultural heritage from centuries of isolation and is rich in natural resources. 

Per capita income in the province is lower than average, at Rmb 1,356 yuan per annum, and income disparities with the province are substantial.  The broad plains in the east support the vast majority of the rural-oriented population. 

Sichuan Province received a boost with the construction of several rail links, particularly the link between Chongqing and Chengdu, the provincial capital.  As a result, manufacturing contributes more than 40 per cent of GDP. 

Economic reform began in Sichuan Province a year or so before it was officially announced and before SEZs and ‘open cities’ were created.  Visible effects of the reform can be seen especially in Chengdu and in the other major cities.

Chongqing has a population of about 15 million people and is larger than Chengdu.  It was known earlier as Chungking and became a treaty port on the Yangtze River in 1890.  Its development was boosted during World War II when it became the centre of government.  

The city is situated between the Yangtze River and the Jailing River which joins the Yangtze at the eastern end of the city.  Since the peninsula is hilly, it is one of the few cities in China with a virtual absence of push bikes.  Motorised vehicles and a cable car provide the necessary transport.

Chongqing is considered to be the major industrial city of the southwest, although gross output of manufacturing in Chengdu is only slightly lower.  Together, the two cities contribute a large share of province’s industrial output. 

The rapid growth of the urban economy in Chongqing has created infrastructure constraints, and the city lacks many of the amenities found in Chengdu.  The capacity of Chongqing to expand westward and to the opposite sides of the two rivers is substantial, and it will almost certainly grow into an even larger industrial centre.

Nanchong (Sichuan Province)

Nanchong is north of Chongqing and east of Chengdu.  The city is located in the broad Sichuan plains that provide food for the urban areas.  Although food processing activities have been established, considerable progress is possible in adding greater value to the produce of the surrounding rural areas.

Kunming (Yunnan Province)

Yunnan Province is one of the most varied of all provinces in China.  It ranges from snow-capped mountain peaks to tropical rain forests.  Its neighbours are Tibet and Sichuan Province to the north, Myanmar (Burma) to the west, Laos and Vietnam to the south and Guizhou and Guanxi to the east. 

Not surprisingly, it has one-third of China’s minority groups and about one-half of China’s exotic plant and animal species.  The province is relatively poor, with only Rmb 1,334 yuan per person per annum.  Only Guizhou has a lower per capita income.

Yunnan means “south of the clouds”, which conveys the source of its warm, sunny surroundings.  Strong local identities exist in various sections of the province, making it a quite different place from China’s coastal region.

Kunming is situated to the north of Lake Dian, a relatively large body of fresh water that established it as a settlement more than 2,000 years ago.  Like other parts of the southwest, it received a push during World War II when eastern Chinese migrated there to escape Japanese occupation.  It was part of the famous Burma Road which supplied southwest China, and was part of the mammoth airlifting of supplies from India, during the war.

Manufacturing in Kunming was initiated with a view to achieving self-sufficiency.  As a result, nearly everything needed in the region is made there.  Transport links have been improved, but remain inferior to those in other parts of China. 

An attraction for joint ventures is the mild climate and its proximity to Southeast Asia.  Air travel from Singapore and Kuala Lumpur is frequent and is relatively quick.  The development of Kunming will continue as a manufacturing centre for the 38 million inhabitants of the province, and it will undoubtedly contribute to the industrialisation of the Indochina region.  Kunming has a population of more than 4 million people and a rapidly expanding infrastructure.  It also retains elements of a frontier region. 

The municipal government has jurisdiction of an area covering 6,200 sq km, with four urban districts and four rural counties.

Nanning (Guangxi Province)

Guangxi Province has a population of 44 million people, with an ethnic mixture which characterises much of the southwest region.  It is bounded by Guangdong Province to the east and is beginning to show the effects of economic prosperity in eastern and southern provinces passed along to other regions. 

Nanning, the provincial capital, was a small trading village at the turn of the century.  Its population is now just under 3 million.  Industrialisation was aided by the post-1949 railway expansion in the region.

Nanning is linked by rail to Vietnam, thus giving the reform-era Vietnamese an entry into China’s markets.  It also provides an alternative outlet for Nanning exports through Hanoi and Haiphong.

Economic development in Guangxi Province is viewed as medium to long term.  As noted elsewhere in this discussion of the Chamber’s signature cities and provinces, China’s border regions will receive a greater amount of attention in the future than they did in the past.  Becoming established early in the process, and being associated with those developments, is extremely important to long-term relations between Australia and China.


Areas of Concentration:

Statistical Yearbook of China, 1994,

Asia-Pacific Telecommunications Indicators, 1993

Various World Bank reports.

ACCCI Cities and Provinces:

Statistical Yearbook of China, 1994 and China – A Survival Kit, 4th Edition, Lonely Planet Publications, 1994.


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