Double identity

Best known to Chinese as the home of picturesque West Lake and birthplace of the legend of White Snake, the city of Hangzhou – Shanghai's little brother to the southwest – is shedding its reputation as a purely tourist town and has become an industrial and export powerhouse.

With its location on Hangzhou Bay and China's biggest city only 180 kilometers away, Hangzhou has become a magnet for foreign investment, with light manufacturing, electronics, and textiles leading the way.

Hangzhou's GDP has nearly doubled since 2000, and foreign direct investment has risen more than threefold. Among the foreign multinationals investing in the city of 6.5 million are Coca-Cola, United Biscuits and mobile phone giants Motorola and Nokia. The city is served by three airports and two railway stations, making it easily accessible from just about anywhere.

Hangzhou's history as a trade and administrative center dates back to the Sui dynasty (581-618 AD) and the building of the Grand Canal, which became China's most important north-south trade route stretching 1,794 kilometers up to Beijing. As commerce grew, so did the city.

World's finest city
At its height, classical Hangzhou (at the time called Lin'an) was the capital of the Southern Song dynasty (1127-1279) and the largest city in the world, with a population of over one million. Marco Polo claimed to have visited (although perhaps he just heard about its reputation), describing it as "Without doubt the finest and most splendid city in the world".

To this day, Hangzhou is known for its fine silks and delicate tea. Longjing ("dragon well") green tea, produced just outside the city for over 800 years, is regarded as China's best. Home to the National Silk Museum, Hangzhou has more than 300 large-scale silk companies and 2,400 apparel companies. The garment industry generated US$2.1 billion in sales in 2004.

The rise of the foreign-dominated treaty ports of Shanghai and Ningbo as well as the disastrous Taiping Rebellion of the 1850s and 1860s, in which much of the city was destroyed in the fighting between imperial forces and rebels, saw Hangzhou's influence decline. Indeed, it was not until the construction of railways and roads in the 20th century that the city managed to regain a semblance of its former glory. Zhejiang's per-capita GDP is the highest in China after the municipalities Shanghai, Beijing and Tianjin, and Hangzhou is the province's wealthiest city.

West Lake retains its beauty and popularity with visitors, and the northern and eastern shores of the lake, next to downtown Hangzhou, have undergone significant upscale renovation. Hong Kong property developer Shui On, builder of Shanghai's fashionably old-fashioned Xintiandi shopping and eating area, has erected the Hangzhou version, Xihutiandi (literally "West Lake heaven on earth"), which is currently prospering in its first phase. There is plenty of shopping on the lakefront, and foreign names like Starbucks and Hagen-Dazs are prominent.

Industrial identity
Apart from the leisure activities, Hangzhou maintains a separate identity as a town of industry. "The city government really has foresight," says David Ying, general manager of the Hyatt Regency Hangzhou hotel, citing the establishment of a second industry-led city center near the Qiantang River. "They realized that there is give and take between preserving culture and history and building business."

A key zone in this second city center is the Hangzhou Economy and Technology Development Area (HEDA), which includes industries as diverse as electronics, high-tech chemicals and foodstuffs. In 2005, HEDA moved up to ninth place in the national rankings of tech development zones in terms of total gross industrial output value. Hangzhou also has a high-tech zone and concentrated foreign investment across the Qiantang in Xiaoshan.

The Yangshan deep-water port – the first phase of which recently opened 31km south of Shanghai on Big and Little Yangshan Islands in Hangzhou Bay – offers an interesting and crucial opportunity for Hangzhou and the Yangtze River Delta (YRD). Already well connected, Hangzhou will have quick, cheap access to what will soon enough supplant Hong Kong's Kwai Chung container facility as the world's largest port.

In anticipation of Yangshan's development, two new container facilities are under construction: one near Hangzhou's ancient Jing-Hang canal and one in Jiaxing, along the Shanghai-Hangzhou sea route. The two container ports, due for completion in 2007, are a sign of Hangzhou's ever-deepening integration into the YRD region.

Section tests for the tracks of a city subway system are currently in progress, and there are rumors of a maglev high-speed rail link between Hangzhou and Shanghai. "[The authorities] are seriously talking about it," says Ying, who believes it is only a matter of time before the two cities are linked by a high-speed train.

As to whether Hangzhou can sustain its tourist-friendly image in the face of these growing industrial demands, come back on a nice day in 2010, and count the number of photo ops along West Lake's main causeway to find out.