Hangzhou, the capital of Zhejiang province with a population of 5.9m, is perhaps the foremost of Shanghai's satellite cities. While benefiting from good infrastructure, Hangzhou has substantially lower land and labour costs than its giant neighbour. It is also one of the most scenic places in China.
Hangzhou claims to be the largest garment distribution centre in Asia. It distributes one-third of all chemical fibres made in the country. Zhejiang province is itself the third largest producer of chemical and synthetic fibres and holds the same provincial ranking in terms of production of cloth and woollen goods.
Hangzhou is also one of the world's largest retail and wholesale markets for silk products. However silk exports have been hit by the Asian economic crisis, with China's total exports falling 15.2 per cent to US$2.59bn in 1998. Zhejiang's 77 state silk firms reported net losses of Yn22.5m in the first quarter of 1999.
The city's GDP grew 11.2 per cent in 1998 to reach Yn113.5bn and the local government is aiming for 10 per cent growth in 1999. With labour and land costs rising fast in nearby Shanghai, many businesses are moving along the coast to take advantage of lower overheads. American cosmetics firm Mary Kay established its China manufacturing plant here in 1995.
Provincial spending on expressways was Yn7.6bn for 1998 – nearly double the original planned amount as part of a campaign to boost the local economy. The expressway connecting Hangzhou and Ningbo is now fully open. The Hangzhou-to-Shanghai expressway was completed when the 28km Songjiang and Jinshan county sections were finished at the end of 1998.
The western section of the Hangzhou ringroad is also now open to traffic. A new road linking Hangzhou with Nanjing is under construction, with the section up to Deqing already being complete.
One sign of increasing affluence is a vogue for hiring cars, typically for 10-to-15-day periods. Some 30 rental agencies rented 1,000 vehicles during the Spring Festival in 1999 at an average daily charge of Yn200. Statistics show that 70,000 licensed drivers in Hangzhou do not own cars.
The busy Hangzhou-Shanghai railway line is now double-tracked, while work to upgrade the lines from Hangzhou south to Jiangxi province, and east to Ningbo, has been stepped up. Maximum speeds on the Hangzhou-to-Jiangxi line were increased to 120km per hour in early 1999. The single-track Hangzhou-Changxing line was built during the Cultural Revolution to bring coal from the province's largest coal mine to Hangzhou's iron and steel mill.
Hangzhou has a river port capable of accommodating small ships of up to 1,500 dwt. The nearest ocean port is 70km away at Zhapu, which can handle 10,000 dwt ships. Most businesses in the city prefer to use the ports at Shanghai or Ningbo, both of which are less than 200km away.
Hangzhou approved 192 foreign-funded firms with investment totalling US$950m in the first eight months of 1998. One of the city's most prominent investors is. Toshiba, which makes a range of products from telephones to photocopier cables. Tsuba Kimoto Chain of Japan, in a US$30m joint venture with China's Dunpai Group, hopes to pro-duce 25m metres of chains annually by 2004.
Hangzhou Oriental began production of China's first domestic brand of digital mobile phone in late 1998. The company, which began importing mobile phone technology in 1990, claims 10 per cent of the national handset and base station equipment market. Nokia won a US$30m contract to expand the province's mobile telecoms sub-scriber capacity to in excess of 17m in 1999, while Nortel won GSM contracts worth US$60m with China Unicorn. Many other foreign firms have won contracts with Zhejiang Mobile Communication, a corporation founded in 1997 out of the old provincial posts and telecoms bureau.
On the property front, Hong Kong'sGolden Horse Real Estate Company signed a US$130m deal in 1997 to build 530 villas on the shores of Hangzhou's famous Dream Lake, complete with a five-star hotel and shopping centre. Tourism earned the city US$1.96bn in 1998, with the 510,000 overseas visitors spending US$210m. A US$78m exhibition centre opened in the city in early 1998.
Xiaoshan ETDZ is the most prominent of Hangzhou's four economic zones. Xiaoshan, to the east of Hangzhou, has a planned area of 27 sq km (5 sq km of which is developed) and is intended to serve as a separate satellite city. The zone's chairman is a vice-mayor of Hangzhou and he has succeeded in getting approval for the zone to handle its own customs procedures. Contracted foreign investment there reached US$1.2bn by late 1998 and prominent investors include Coca-Cola, Rhone Poulenc and UK food firm United Biscuits. Yamaha has chosen Xiaoshan as the site of its first wholly-owned enterprise in China. The Japanese group is investing US$25m in a venture which has the capacity to make 50,000 pianos and 45,000 sets of components annually.
The zone is close to both the old and new Hangzhou airports and is linked to the central business district by a highway. Construction of the new Yn2.8bn Xiaoshan inter-national airport, capable of handling 8m passengers and 75,000 tonnes of freight each year, is expected to be completed in 2000. A proposed electrified light rail project would cut the travel time between the zone and the city centre to 15 minutes. Part of the proceeds of Zhejiang Southeast Electricity's 1997 listing in Shanghai and London will go towards the 250MW Xiaoshan thermal power plant.
The Torch high-technology zone is situated in the western suburbs of the city, near the university district. It is creating a research and development park aimed at developing the talent and ideas of returned overseas Chinese students. Although the zone is reputed to be cramped, with few green-field sites and poor infrastructure, there were 533 firms located in the zone (including 119 FIEs) in 1998, recording exports worth US$134m.
Things to do
Hangzhou is one of Chinas most scenic cities and was the nations capital during the Southern Song dynasty. It houses Zhejiang Provincial Museum containing relics from the 11th to the eighth century BC, including superb bronzes. Within the old city is a traditional Chinese medicine pharmacy where it is possible to see the art of preparing herbal remedies. A little further on, near where tea plantations nestle around the village of Longjing, is where disgraced former vice-chairman Lin Biao used to live.
West Lake is an excellent area for walking and cycling. The Autumn Moon on a Calm Lake Pavilion teahouse is a good place to watch the setting sun. A new 200 metre-long pedestrian bridge is now planned for the lake, replacing a historic bridge demolished in 1932. The Chinese Tea Museum holds exhibitions on tea-related subjects, while on a nearby hill-side are some of China's largest and most renowned Buddhist carvings and temples.
There are two theme parks in the city. Future World contains the usual reproductions of famous international buildings while Song Dynasty Town tries to portray Hangzhou in the era of the Song dynasty (960-1279 AD), a period of great prosperity in China.
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