Waiting for investment

Planes flying into Yinchuan in northwest China, on a lonely stretch of the Yellow River, pass over what can only be described as "badlands," a hillocked brown loess waste which appears as bleak as Mars. It is hard to imagine anything other than lizards surviving out there, but appearances are deceptive.

Yinchuan is on the western bank of the river, between the river and the Helan Mountains, and the plain is watered with an irrigation system first created in the Han dynasty 2,000 years ago. Just a short walk from the eastern bank, the badlands begin, supporting… karaoke pickup dancehalls!

Yes, in the midst of nothingness, there are holiday camps of concrete Mongolian yurts grouped around a central larger building which offer "relaxation" and entertainment to overstressed businessmen from the city. A testament to creative entrepreneurialism.

"They are basically like the dancehalls in the city," said my taxi driver, "but the business is good and the tax rate is very low because the government wants to have someone use the land and create jobs."

A little further along, a part of the Great Wall of China juts out towards the banks of the slowly swirling river.

The Great Wall was a grandiose plan to seal off an entire country behind a wall, which had some measure of success for centuries until the barbarians started to arrive by aeroplane. It is in fact not just one wall but many walls paralleling and criss-crossing each other, each strand marking an extent of the Chinese empire at different periods in history.

Right at the point where the Wall hits the River near Yinchuan, a fisherman was sitting on the bank with his boat and nets spread out around him. Mr. Zhang has been a fisherman, he said, for 30 years, and has fished in all the main rivers of China, and out on the ocean in deep-sea trawlers. But the fish of the Yellow River, particularly the "nianyu" a hammer-headed yellowish creature, are the tastiest he has ever caught, he said.

"I can sell a fish to a hotel in Yinchuan for 30 rmb, but the catches are really poor these days so I keep most of what I get for my best customers," he said.

His best customers, as it happens, include senior local public security officials and judges, always good people to have as friends, especially if you are an itinerant fisherman like Mr. Zhang who has lost his ID card.

I asked him about the catches today compared to 30 years ago.

"I would say that for every fish caught today there would have been 10 fish back when I started," he said. "It's the pollution and the over-fishing. If the government doesn't do something to stop it, in another 10 years there will be no fish left in these rivers."

Yinchuan has a population of 800,000, of whom two-thirds are Han Chinese, and one-third Hui people, who are almost indistinguishable from regular Chinese except that they are Muslim and the men tend to wear a white cap. Superficially at least, the Hui make almost no contribution to the culture of the city. This has been for the past few centuries a Han frontier town, and the wilds of Mongolia are no more than a few dozen kilometers to the west.

The city is divided into two sections – the old city closer to the river and the new city, another 10 km to the west, closer to the Helan Mountains. The new section is where the city hopes investment will settle, but so far it remains fairly lifeless, with broad underused streets and mostly empty shopfronts.

"The idea was to move factories from the old city to the new area and then attract investment, but it never really got off the ground," said a local businessman. "The old city is still where the action is."

Yinchuan's "old" city is in fact not old anymore, except for the street plan. Only two old buildings seem to have survived – a city gate and the drum tower in the center of town. There are the usual franchise clothing outlets and one KFC. No McDonalds yet.

There is little foreign investment, and work is not easy to come by in the city. Hundreds of men stand around at the local labor market each day in paint-striped trousers, carrying hammers and the other tools waiting to be chosen. The price of a day's work? From 30 yuan (USD3.50) a day, depending on skill set. "Give me a job, any job," pleaded one hotel employee.

So what to do with Yinchuan from an investment point of view?

Tourism is the obvious first choice. There is the Yellow River, and the Wall, and the wide desert. The Xia dynasty, the first of China's dynasties, had its base in the Yinchuan area around 4,000 years ago, and the domed tombs of its kings are situated to the west of the city. Almost nothing is known about the dynasty or its culture, and the tombs.

Beyond the tombs rise the Helan Mountains. Pass over the mountains, and you are in Inner Mongolia, a land that has emptiness to rival the Australian outback. In the midst of this emptiness is a major business opportunity.

The transport situation is not ideal. The river is useless, the railway links Yinchuan to Lanzhou and Xian in the southwest and Baotou in the northeast. In other words, it's pretty out of the way. But over the past couple of years, the freeway construction program has moved ahead, and a huge sum has been invested by the Yinchuan government in roads – to the point where it is said to have emptied the city treasury.

The floods of tourists who spread out from the coastal cities of China each national holiday in search of fun and ethnic titillation have already overwhelmed Hainan and Guilin, and Yangshuo, Tibet and Li Jiang are pretty much overwhelmed. So the hordes will need pastures fresh, and Yinchuan is surely well placed to take advantage of that.