Chongqing Municipality's economy has grown rapidly thanks to the massive Three Gorges Project and "Go West" campaign, Vice-Mayor Huang Qifan told a forum in Shanghai yesterday.

Investment accounts for 70 per cent of the city's gross domestic product, which grew by 11.1 per cent in the first 10 months.

"The momentum will continue for five to 10 years while the huge volume of investment will go on for another three to five years. Then consumption and exports will play a larger role," Huang said at the Asia Leadership Forum, a two-day event sponsored by the US magazine Business Week.

He estimated that by 2010 the city would receive over 1 trillion yuan (US$120 billion) in investment from various sectors and regions. About 40 per cent would go to infrastructure while the rest would be evenly split between the service and industrial sectors.

Transport systems will need 200 billion yuan (US$24 billion) in investment, to fund three new highways and four railways. Power station and electronic network construction will require 100 billion yuan (US$12 billion).

Huang said in the coming years, an average 500,000 farmers a year will become city dwellers, creating the need for more cities and towns to house a growing urban population.

In 20 years, Chongqing will be home to 20 million people, 6 million of whom will live in the city centre. About five other cities will house 1 million residents each.

More than 20 smaller cities and 100 towns are also needed. It will cost more than 200 billion yuan (US$24 billion) to build the city infrastructure to realize this urbanization plan.

The growing urban population will also attract over 200 billion yuan (US$24 billion) in capital to the real estate sector, the vice-mayor added.

In the first 10 months of this year, fixed asset investment rose by a quarter to 130 billion yuan (US$15.7 billion).

Currently, 40 per cent of the money comes from bank loans. Local investment accounts for 25 per cent, government finances 14 per cent, and capital from other parts of China and overseas contribute 10 and 5 per cent respectively. The remaining 6 per cent is financed through the capital market.

Huang said Chongqing hopes to attract more capital from coastal areas and foreign countries.

In addition to its geographical and resource advantages, as a traditional industrial base Chongqing has a large pool of skilled but cheap labour.

Huang said as China's newest municipality, the city gives investors the same, if not better, policies as those offered by Shenzhen two decades ago and by Shanghai's Pudong 10 years ago.