Progress – at a price

Nineteen months after becoming a municipality directly under the authority of the central government, Chongqing is slowly coming to terms with a fresh set of challenges. This industrial city perched on the steep banks of the Yangtze River is finding it difficult to adjust to its new status.

The March 1997 vote by the National People's Congress gave Chongqing more autonomy, but it also detached the city from landlocked Sichuan province. Formerly, Chongqing was a commercial and industrial centre of six million inhabitants in an area of 22,000 sq km. Now it is a region of 82,000 sq km, including some very poor districts of eastern Sichuan. Its population has expanded to 30 million, the vast majority of them peasants.

The lure of the interior
The decision to grant Chongqing enhanced status was hailed as a triumph by the city leadership. Chongqing became the first inland municipality, on an equal footing with Beijing, Tianjin and Shanghai. That meant it was able to keep a larger share of its fiscal income and also gave it more leverage in winning: approval for big investment projects. New tax concessions and incentives were designed to attract foreign investors. Taxes on the income of foreign enterprises investing in Chongqing have been reduced from 33 percent to 24 percent and those operating in the agricultural sector now enjoy a 15 percent reduction in income taxation after the exemption period expires. The new status also allows domestic companies to enjoy the same tax benefits as foreign investors.

However, the task of making Chongqing an engine for economic growth in central China, complementing the role of Shanghai at the mouth of the Yangtze River, is fraught with difficulty. The new boundaries have created an imbalance between the western, industrial part of the municipality and its eastern areas, made up of the Three Gorges Dam area and several very poor rural districts. This is the hidden cost of the new status: Chongqing will have to bear most of the financial burden of resettling up to one million people displaced by the dam project, as well as taking responsibility for improving the well-being of two million people who currently live below the poverty line.

These obstacles have failed to dent the enthusiasm of Chongqing's municipal leaders, as was apparent when they gave a press conference in Beijing during the NPC session, one year after the change of status. "The establishment of Chongqing municipality is intended to give full play to the geographical advantage of this municipality," explained a Chongqing party secretary. "Chongqing should play the role of a window to the outside world and to others part of the country, acting as a dragon head of the Yangtze River valley and bringing social and economic progress to the upper reaches of Yangtze and also the south-western part of our country as a whole."

To realise these goals, the municipality has emphasised city planning and improvement of infrastructure in its 43 districts. This massive task masterminded by 1,000 engineers and city planners still awaits the final approval of the central government after two years of preparation. Meanwhile the heart of the city, home to 400,000 people, is already being reshaped. Built on a slope, the oldest part of Chongqing is a maze of narrow, murky and overcrowded back alleys. The houses and small shops which line the streets are crumbling because of poor quality construction materials. The municipality is now sending in the bulldozers as part of a long-term plan to transform these neighbourhoods into green parks overlooking the river. Chongqing will attempt to protect its cultural heritage by devoting Yn10m to the protection of historical buildings.

Mr. Li Shiyu, director of the city planning bureau, says drastic changes are on the drawing board . "We will control the number of people living on the shores because we would like to establish a green belt of trees around the river," he says. "We will establish a preventative zone against floods. Buildings beneath this line will be prohibited. We don't wish boat passengers to see these insalubrious habitations."

To improve the environment, the municipality will also have to tackle the long-standing problem of wastewater treatment. World Bank loans will go towards building 10 waste treatment stations.

Reducing traffic congestion
Another priority is the reduction of traffic congestion, which is said to have exasperated President Jiang Zemin when he came on an official visit to Chongqing a few years ago. Since then, the municipality has built the first part of a ring road that will run 50km around the city centre when completed. A metro project is being evaluated and several options have been discussed with Japanese and French companies. A feasibility study for a first 17km line is being drafted and the Japanese government has offered to provide loans. Additional infrastructure projects include the construction of up to 17 new bridges across the Yangtze and Jialing rivers. Four have already been built, two of them with Portuguese participation. "Our goal," says Li, "is to emulate the planning of the River Seine in Paris."

In addition to all this work, Chongqing has to bear the cost of resettling many city residents to the suburbs. The new administrative centre in Jialing alone will involve the resettlement of 50,000 inhabitants on a five sq km area north of Chongqing. Most families are to be allocated larger accommodation – about 10 sq metres bigger than before. Alternatively they will be offered financial compensation.

The strategy is popular since residents are anxious to improve their living conditions. "Some discontent does exist, but the majority are satisfied," says one official. "Real estate is booming; new buildings are sold before they are completed." This has resulted in a shift in the pattern of real estate development in central Chongqing. Following investments such as the Yn1bn Metropolis Plaza, a shopping, entertainment and restaurant complex funded by the Hong Kong magnate Li Ka-shing, attention is now turning to residential housing in the suburbs.

Privatisation experiments
However, the path to modernisation faces another historical obstacle. The city has inherited numerous defence-related state factories as a result of the political circumstances of the 1950s. During this era, key industries were moved to the city by Mao Zedong to protect ' them from possible foreign attack. Today, Chongqing has more than 10,000 enterprises, some with huge workforces of between 50,000 and 100,000 employees.

These conglomerates are short of modern equipment,' management techniques and increasingly lack cash to keep themselves afloat. But while Chongqing's industrial performance is lagging behind that of other regions, only 17 of the 700 large and medium-sized enterprises owned by the municipality went bankrupt in 1996-97, and just three have folded so far this year. This small fig-ure however is misleading, according to Mr Zhang Feiyue of the Chongqing Economic Commission. "It is difficult to say which enterprises have closed because while some have stopped totally, others have temporarily ceased production or closed just part of their operations," he says.

As a result, the whole region has become a hub of privatisation experiments as small and medium-sized companies look for investors. Raising capital through the securi-ties market remains a central government decision and an increasingly rare option since the onset of the Asian crisis. By the beginning of this year, 22 Chongqing companies were listed, mainly on Mainland stock exchanges with one listed in Hong Kong.

The restructuring involves a growing social cost. Facing pressure to streamline, companies are laying off many workers. For example, Chongqing Steel Works has slashed 40 percent of its 50,000 workforce. Last March, Mayor Pu Haiqing estimated the number of unemployed from the state sector at 400,000, but explained that 210,000 had already been re-employed, meaning that only 190,000 were seeking work. Whatever the real unemployment figure, Chongqing is striving to provide basic living allowances – Yn130 a month – and training programmes. "About 60 percent of the enterprises which have stopped production are unable to pay monthly allowances to their workers, so the municipality is taking care of it," says Zhang. Chongqing is currently spending more than Yn42m on unemployment welfare and training.

The municipal leadership is relying on the impetus given by its new status to compensate for these disadvantages. Last year, Chongqing's economy grew at the rapid rate of 11.5 percent and the city is attracting more interest from foreign investors. At the end of 1996, Chongqing had 2,000 foreign invested enterprises (Fibs) and utilised foreign investment amounted to US$3bn. Last year was particularly successful, with agreements signed for 230 new FIEs and 19 representative offices. A total of US$940m was invested. Some of the new-comers want to take advantage of the municipality's natural resources. Others, such as Ericsson and French supermarket chain Carrefour, which already manages two large stores in the city, are eager to target the 200m consumers living in the Yangtze basin.

Mayor Pu appears committed to encouraging more inward investment by cutting red tape to attract foreign companies. "If they are not satisfied, they will go somewhere else," he said last March. Chongqing is offering preferential conditions to foreign companies taking over bankrupt state factories or investing in the area of the Three Gorges Dam. Meanwhile, banks from Hong Kong, Japan and Canada maintain local offices and are monitoring a possible financial liberalisation in the city. Chongqing has been keeping an eye on the yuan transactions granted to foreign banks in Shanghai with the hope of following the example of Pudong.

However, in the light of the Asian crisis, the prospect of financial opening seems remote. Only last month the People's Bank of China announced its plans for greater cen-tralisation. Under this restructuring, the Chongqing branch of the central bank was placed under the direct supervision of the headquarters in Beijing.

Coping with the of migration
For many years, migration has been synonymous with Sichuan Province. There are several million itinerant workers roaming around the province and neighbouring regions in search of work, a phenomenon so widespread during the last decade that they became known in the press as the ‘Sichuan army.'

With its steep lanes and constant flow of goods to the port, Chongqing has always been a popular destination for many migrants. Dressed in blue or green jackets, they usually hang around the streets waiting for customers, charging Yn5 to deliver goods or luggage to riverboat passengers as they embark or disembark. Most live in crowded Chongqing dormitories and go back to their villages at the time of the harvest. In spite of the hardship, the work is a helpful supplement to their meagre peasant income.

"In a factory, I would be stuck for six months at a time," says 55-year-old Mei, whose family lives in the nearby country-side. "Here, I choose to work at my own pace. When I decide, I go back to my house to help my wife raise our pigs."

On the top of this traditional migration, the new Chongqing municipality also has to deal with the challenge of the Three Gorges Dam resettlement. About one million people are to be resettled from lands which will later be submerged. During the first stage, 339 enterprises and 21,600 people have been relocated. From now until 2003, a further 450,000 people will be resettled. "We are now entering the second stage of the resettlement," explained vice-mayor Gan Yupin last March. "The number of people to be relocated this year stands at 67,000."

The municipality has adopted a strategy of relocating the population as close as possible to small towns and cities to stimulate the work environment. The intention is to integrate the peasants with the urban population, enabling families to supplement their agricultural income by working in factories as well. One way to do this is to encourage large Chinese companies to invest in the reservoir area. At the end of last year, 575 such projects were established, with a utilised investment of Yn1.75bn. However, there is still a large surplus labour force which is forcing many people out of the region. The authorities acknowledge their measures are insufficient to prevent an exodus.

"While there are surplus workers in the Three Gorges Dam area, there is a demand for labourers in some developing parts of the country. Therefore migration is only natural," said Gan. With the help of central government funding, Chongqing is bearing 85 percent of the cost of the resettlement. Between 1993 and 1997, a special credit of Yn4.12bri was allocated to this task.

Nevertheless, the operation has raised much criticism. For instance, there have been reports of corruption involving officials in charge of resettling the reservoir population. "In the beginning, it is fair to say there have been some individual loopholes," acknowledged Gan. "But we have since adopted a series of measures and intensified supervision procedures. So we can say today, the management of the resettlement fund is proceeding entirely in a standard manner."

Home of the hotpot
Located on a peninsula between the Yangtze River and its tributary the Jialing, Chongqing is a faster-paced and less friendly place than Chengdu. Known as the hilly city it is surrounded by hills, which tends to exacerbate the considerable pollution problems in the area. In 1995 the ambient concentration of air pollutants was more than three times the World Health Organisation standard. But traffic problems are said to have eased in the past year with the completion of a four-lane highway skirting the peninsula and the completion of a second Yangtze bridge. Taxis charge an extra Yn5 for a bridge crossing.

The heart of the city and its main commercial district lies around the Jiefangbei (Liberation Monument), an area which is now being partially pedestrianised. Metropolitan Plaza is a centre for modem shops, while a market on Bayi Lu sells frogs, snakes, spices and fungi.

The City Lights disco bar has become a favourite night spot. Chongqing's most famous dish is the hotpot in which skewers of sliced meat and vegetables are placed in hot spiced oil. Wuyi Lu, where many small, vendors can be found, is known locally as ‘hotpot street.' Qiao Toil Hotpot is recommended for those wanting to sample the dish at a restaurant. One of the best views of the city is from the hill at the top of Pipa Shan Park. At night the bright lights of the city are spectacular and the smog less noticeable. Views of the river are also good from the city's two cable cars. Chongqing Museum in Pipa Shan Park contains a complete skeleton of a Yangchuanosaurus dinosaur, dinosaur eggs and a hanging coffin similar to those which can be found near Yibin.

Former Nationalist capital
In the western suburbs 4km from the city centre is the Red Rock village, the base of China's shaky wartime alliance between the Guomindang and the Communists. Thou Enlai, who later became China's premier, spent much of the war here running the regional Communist Party and liaising with Chiang Kai-shek's nationalist government. Between 1937 and 1945, when the Japanese occupied Nanjing, Chongqing was the capital of the Nationalist government. As one of the last strongholds of the nationalists to fall to the communists, Chongqing was also the site of a notorious prison in the north-west of the city. The SACO Prison, now renamed the US-Chiang Kai-shek Criminal Acts Exhibition Hall, is where political prisoners of that era were tortured. The photographs and instruments of torture make grim viewing.

Hot springs to the north and south of Chongqing offer a relaxing retreat. About 20km to the south is the Nan Wenquan (Southern Hot Springs) where there are green hills, pine woods, bamboo groves and indoor and outdoor spas fed with piping hot spring water. The Northern Hot Springs on the lower slopes of Jinyun Mountain, 30km to the north of Chongqing, have been a spa since 423 AD. There are three enormous spring-fed pools in which you can swim.

On the road between Chengdu and Chongqing is Dazu, where thousands of rock sculptures depicting religious and historical scenes and dating from the 9th to 13th centuries have been carved into cliff faces in the surrounding county.

For centuries the 6,400km-long Yangtze River was virtually the only route into Sichuan province – Chongqing being the limit of year-round navigation for larger river craft. Today, Chongqing is the starting point for Yangtze boat cruises downstream to Yichang and Wuhan in Hubei province or even as far as Shanghai. The section to Yichang, which passes through the spectacular and, in former times, extremely hazardous Three Gorges, is highly popular among tourists. Yellow Cat Gorge, one of the last ravines navigated before arrival in Yichang, marks the site of the Three Gorges Dam, currently under construction and due for completion in 2009.

When completed, the dam will eventually submerge many natural and historic sights along the way.