Introduction of Liangjiang New Area，Chongqing, China Inaugurated on June 18, 2010，the 13th anniversary of the upgrading of Chongqing into a municipality directly under the Chinese central government, the Chongqing Liangjiang New Area is the only national-level new development and opening area in the hinterland of China, and the third such area directly approved by the State Council after the Pudong New Area of Shanghai and Binhai New Area of Tianjin. Located within the city proper of Chongqing on the north of the Yangtze River and east of the Jialing River, the Liangjiang New Area encompasses parts of the three administrative districts of Jiangbei, Yubei and Beibei, and has the only inland bonded area in China—the Lianglu Cuntan Bonded Area. It has a total planned area of 1,200 square kilometers, with 550 square kilometers available for new construction and development. At the 10-year mark of the implementation of China’s Western Development Programme, the estalbishment of the Liangjiang New Area is a major strategic decision by the central government to further western China’s growth and promote balanced regional development. The central government hopes to ride on the globlisation and economic integration waves to build a growth pole in the West which will in turn lead the rise of central and western parts of the country. China has implemented three development strategies in the first 30 years of reform and opening-up, all of which have brought about significant changes to regional economies. Shenzhen’s development in the 1980s, Pudong’s development in the 1990s and Binhai New Area early this century have each ushered in an upsurge in the development of the Pearl River Delta, Yangtze River Delta and the Bohai Economic Rim respectively, giving a clear depiction of how China’s economic reform has progressed from the South to the North over these three decades. Ten years on in the new century, the State Council’s decision to approve the establishment of the Liangjiang New Area to drive the development of central and western China signifies the wave of economic reform moving westward. It is fair to say that the Liangjiang New Area is a milestone project of China’s Western Development Programme at its 10th anniversary and will be a new growth engine for western China, a test bed for reform and innovation and a new medium for strategic transformation of China’ s development model. In the face of the global financial crisis, where global market is undergoing drastic changes, the establishment of the Liangjiang New Area is consistent with China’s move to meet these challenges by kick starting its domestic market and transforming development pattern in order to mitigate the effects of a declining export market. By 2015, China will be the world’s second largest consumer market, accounting for 14% of the world’s total consumption. A bulk of this purchasing power will stem from western China. With the State Council’s move to step up domestic demand and the strength of the market, the Liangjiang New Area’s development has a lot of potential. Its area of influence in the West is over 6.8 million square kilometers, which is more than 30 times that of Shenzhen and of Pudong, and 20 times that of the Binhai New Area. The number of people that stand to benefit from its growth is about 4 to 5 times that of Shenzhen, Pudong and Binhai. The vast markets in central and western China set the stage for the Liangjiang New Area to spearhead growth in these regions. Liangjiang New Area’s excellent transport connections: Firstly, located in the heart of China geographically, Chongqing is at the the hub connecting central and western parts of China, linking China and the world through multiple domestic and international transport facilities. Chongqing is currently developing China’s fourth largest international airport, largest inland river port and an 8-line railway network. It is estimated to take 28 days transport goods from the Yangtze River Delta to Europe by sea, and just 27 days from Chongqing to Europe via Chongqing’s rail and sea transportation network. Secondly, the completion of the New Eurasian Continental Bridge and connection to the Indian Ocean will greatly reduce logistics cost for the Area, creating favorable conditions for it to gather global production factors and build a platform for rapid transaction by making the best of the Yangtze River waterway, the Jiangbei International Airport and the only bonded area in inland China, thus making it a frontrunner in connecting inland China with the world. Liangjiang New Area’s six clear-cut strategic positioning: An important inland base for advanced manufacturing and modern services; China’s inland financial and innovation center; an important gateway to connect China’s hinterland with the world; and a showcase of China’s scientific development. Liangjiang New Area’s industrial zoning: The Liangjiang New Area is made up of three zones on modern services, advanced manufacturing and comprehensive urban functions respectively. There are ten functional areas supporting these zones, namely: Jiangbeizui Central Business District, Bonded Area, Yufu Modern Manufacturing and Logistics Zone, Longxing Modern Manufacturing Zone, Beibu Urban Economic Zone, Airport Industrial Park, Yuelai Conference and Exhibition Centre, Caijia Hi-tech Industrial Zone, Shuifu Ecological Industrial Zone and Mugu Export Processing Zone. The Chongqing municipal government has drawn up a “5+3” strategic development plan in order to nurture a group of high-growth new industries. The five major strategic industries identified are railway transportation, power generation equipments (including nuclear power, wind power etc.), new energy cars, electronic information and energy-saving materials. There will be three strategic innovative functional bases, namely a national-level research and development headquarters, a major science and technology application base and a data center. Liangjiang New Area’s preferential policies: The Liangjiang New Area has been granted unprecedented preferential policies by the State Council. Apart from the policies designed for the Shanghai Pudong New Area and Tianjin Binhai New Area, the Liangjiang New Area also benefits from policies under the Western China’s Development Programme and the reform to coordinate urban-rural development. This is to support the development of the Liangjiang New Area by creating pull factors for industries, funds and talent to congregate. The Liangjiang New Area currently has a total of 10 preferential policies. For example, the corporate income tax will be levied at 15% by 2020; Hi-tech industries whose product value and technological revenue make up more than 60% of their annual production value will enjoy a corporate tax rate of no more than 10%. These preferential policies have gained attention from investors around the world. Liangjiang New Area’s sound development conditions: Unlike Shanghai’s Pudong and Tianjin’s Binhai New Areas which started almost from scratch, the Liangjiang New Area is a culmination of an established old city and a new city. It already has the only inland bonded area, the largest conference and exhibition centre and financial business district in western China. Its GDP in 2009 was about 80 billion RMB, 13 times that of the Pudong New Area and 4 times of the Binhai New Area when they were founded. Therefore, it has already got a certain basis for development. Liangjiang New Area’s strategic goals: The Liangjiang New Area hopes to achieve preliminary results within 2 years, put in place its development framework within 5 years, and establish itself within 10 years. Its GDP is expected to double and reach 150 billion yuan by 2012, and exceed 300 billion yuan by 2015. By 2020, the Liangjiang New Area is expected to establish itself as an internationally influential modern and environmentally friendly advanced new area with global companies and talent congregating and setting up their regional headquarters here, which can be a model of opening-up for other regions in inland China. By then, its GDP will hit 600 billion yuan, with industrial sales revenue reaching 1 trillion yuan. This is equivalent to Chongqing’s current GDP, and is effectively replicating another Chongqing in ten years. What is behind the numbers is the Liangjiang New Area’s drive to implement the central government’s strategic plans in the shortest possible time and the determination to rewrite Chongqing in China’s economic landscape. Ten Preferential Policies for Liangjiang New Area Liangjiang New Area enjoys the most number of preferential policies out of the three national-level economic development areas in China. Apart from the policies designed for the Shanghai Pudong New Area and the Tianjin Binhai New Area, the Liangjiang New Area also benefits from policies under the Western China’s Development Programme and the reform to coordinate urban-rural development. The ten preferential policies are: 1. Industries identified by the government for encouragement will enjoy a low corporate tax rate at 15% till 2020; 2. With 2010 as a base reference point, newly increased local revenue and financial and administrative charges under the 12th Five-Year Plan will all be used for the development of the Liangjiang New Area; 3. The guidelines for land use in the New Area is independently planned and will be in favor of the Area; 4. The Chongqing municipal government shall set up a special fund of 10 billion yuan dedicated for the construction of infrastructure at the Area; 5. The State Council has given approval to set up an industrial investment fund to facilitate the construction of infrastructure and the development of key industries in the Area; 6. Hi-Tech companies whose product value and technological revenue make up more than 60% of their annual production value will enjoy a corporate tax rate of no more than 10%; 7. For Hi-tech industries or emerging industries located in the New Area, the risk compensation received by the company from the year that it is profitable for up to 3 years is tax free; 8. Major industries supported by the government will enjoy dual preferential policies for land use. Institutions of higher learning that are involved in technological research and development will be given subsidies; 9. The government will provide support on project approval, land utilisation, loan and financing, technological development and market access; 10. Newly introduced senior management from the heardquarters of large enterprises will be given settlement allowances as part of the government’s talent attraction efforts.