Lanzhou zone to be inland growth engine

Positive moves

In August 2012, the State Council, China's cabinet, approved plans to build the country's fifth State-level development zone in Lanzhou.

Previous approvals included Shanghai's Pudong New Zone and Tianjin's Binhai New Zone. Both projects were established in the 1990s.

The government speeded up the approval of economic zones amid an economic slowdown that started in 2008. Less than a month after the approval of the Lanzhou New Zone, the central government green-lighted another State-level zone in Guangzhou, the capital of affluent Guangdong province.

Analysts said building industrial zones will boost domestic consumption and innovation, both critical for China's transformation of its economic model.

Meanwhile, while major projects in the Lanzhou New Zone are still under construction, some smaller sites are already open for business.

Gansu Joy Agriculture Tech Co, a sunflower oil maker, has built a packaging and storage factory in months and is already producing bottled oil for retail.

The company opened its first production line in September and is waiting for more sunflower seeds so it can run its two packaging lines at full speed. Each line is capable of bottling 200 tons of oil per day.

Wei Mingguang, founder and chief executive officer of the company, said he plans to build a sunflower field near the edge of the new zone next year to feed his production lines.

"Local farmers will be able to lease their land to my company for sunflower planting and agricultural tourism. Farmers will receive a stable income each year, and my company will make sure the land is put into good use," said the 46-year-old entrepreneur.

Wei said local officials are "extremely interested" in his idea and promised to support his plan.

Yet cooking oil refineries and sightseeing businesses may not be the officials' first choices for the new zone.

And whether future projects such as the petrochemical plants, which may cause high pollution, will have an impact on Wei's business is also a pending question.

During the initial planning stage, local officials focused on machinery, petrochemical, new energy, new materials and biotech industries.

However, because investments in those industries are more difficult and require a longer time, the new zone needs a number of companies with shorter investment cycles.

"The Lanzhou New Zone should focus on industries that will play up to its advantages such as the rich natural resources and convenient transportation routes from western regions to the eastern parts of China," said Zhang Shixian, a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences.

The researcher added that companies in similar industries should work together to lower risks when exploring new markets.

More investment and continuous construction will be the key words for the new zone next year. And investors seem willing to give up short-term profits for the long-term returns the new zone has promised.