Chongqing the money king

In the western metropolis, cash generates cash

In the assembly plants of Hewlett-Packard's manufacturing hub in Chongqing, in the city's sprawling Xiyong Micro-electronics Park, thousands of employees are making products, as industrious as worker bees. A few hundred meters away, staff of the HP settlement center for the Asia-Pacific region, in the 37-sq-km park's Xiyong Comprehensive Bonded Zone, are just as busy in the international settlement business.

Foreign exchange transactions of about $35 billion (27 billion euros) in offshore accounts were carried out here last year, more than triple that of 2010.

Strong manufacturing industries and international settlement services are being made to work together in Chongqing, reflecting its ambition to transform itself into an international financial settlement center and China's first inland offshore financial center offering settlement services by 2015.

"As the only municipality in the western part of China, Chongqing has developed rapidly since the implementation of the go-west strategy," says Mu Huaping, director of the Chongqing Economic and Information Technology Commission, who is in charge of the development of the international settlement business here.

Chongqing's GDP grew 16.4 percent last year, making it one of the fastest growing regions in the nation. Walking along the scenic drawcard Nanbing Road, the city's gleaming skyscrapers show off their best side, mirrored in the Jialing River, which divides the city and which just 10 years ago played host to a motley string of shanties.

"Chongqing also has a solid foundation of transnational businesses and foreign investment," Mu says. "It can become an important destination for transnational corporate settlements like Singapore."

Daryl Guppy, a financial analyst who specializes on market movements and is a keen watcher of Chinese markets, agrees that the goal of building Chongqing into an international financial settlement center is in line with Chongqing's economic mode.

"Now Chongqing's economy is mainly in export-driven mode, and conducting international settlement can bring huge benefits to the local economy," says Guppy, an Australian who writes a regular column for China Daily.

Last year, the value of Chongqing's exports totaled $19.84 billion (14.86 billion euros), 1.6 times that of 2010, and imports were $9.38 billion. Although Guppy has not visited Chongqing for a while, he says he is extremely interested in its huge market.

"It is very appealing to people who work in the finance-related industries like me."

With its fast development, huge market and favorable government policies such as tax breaks, Chongqing has attracted many big names in the IT sector such as HP, Acer and Foxconn Technology Group to build their manufacturing centers here.

Chongqing is also investing a lot of effort in transforming itself into the largest PC maker in Asia, and it plans to have annual production capacity of 100 million units by the end of 2015.

The fast-developing IT manufacturing industry is swiftly stimulating growth of the international settlement business in Chongqing, says Huang Zhiliang, professor and vice-president of Chongqing Technology and Business University.

HP moved its Asia-Pacific settlement center from Singapore to Chongqing in 2009, after the manufacturing hub was set up here. The settlement center brought billions of yuan in tax revenue to the local government in 2010.

Apart from HP, other IT companies such as Acer have also begun to conduct their settlement businesses here. Acer has provided the related service since November 2010, after it set up its Chongqing branch.

Last year, VST of Hong Kong, an information and communications technology products and services provider, and ECS Technology of Singapore also signed agreements with the government of Chongqing to invest about $120 million to jointly set up a settlement center in the city.

This settlement center is tipped to generate transactions worth as much as 8 billion yuan ($1.27 billion, 952 million euros) in its first year.