Gansu Industry Makeup Population of Major Cities in Gansu Baiyin www.by.gansu.gov.cn 1.72 million   Jinchuan   www.jinchuan.gansu.gov.cn   0.45 million Lanzhou www.lz.gansu.gov.cn 2.93 million Tianshui www.tianshui.gov.cn 3.38 million
Goals for 2002 and Beyond Major Investment Goals Comprehensive natural resource development Infrastructure construction: In 2001, the Gansu government declared that it would invest around $80 million over the next three years in the province’s water supply system. The province is also planning major upgrades to its rural electricity grids as well as the laying of fiber optic cable to upgrade the provincial telecommunications network. Ecological construction and environmental protection Science and technology education Tenth Five-Year Plan (2001–05) Highlights Annual GDP increase of 8-9 percent Fixed-asset investment up 10 percent per year Value-added industrial output up 9 percent per year Value-added agricultural output up 5 percent per year Foreign trade exports up 10 percent per year Unemployment rate below 5 percent Population growth below 0.9 percent SOURCES: Gansu Trade and Economic Cooperation Office, press reports		Major Development Zones National-level Zone: Lanzhou State New and High-tech Industrial Development Zone Email: gxqzsj@sina.com; Tel: 0931-826-7574 Provincial-level Zones: Jinchang New and High-tech Industrial Development Zone Tel: 0935-821-2340 West Baiyin Area Tel: 0943-822-3900; Fax: 0943-822-3900 Linxia Economic Development Zone Tel: 0930-638-3152
		Politics Gansu Communist Party Secretary Song Zhaosu rose through the political ranks of his native Henan, ultimately becoming vice governor in 1988 and deputy secretary of the Henan Communist Party from 1993 to 1998. Song served as acting governor and then governor of Gansu from 1998 to 2001, when he was appointed to his current position. A Hebei native, Gansu Governor Lu Hao graduated from Lanzhou University with a degree in chemistry and has lived in Gansu ever since. Lu was named governor in January 2001, having served previously as Lanzhou’s Party secretary.

Located near the headwaters of the Yellow River at the geographic center of China, Gansu’s capital city is fast becoming a major trade center for provinces in the north and west, such as Xinjiang and Qinghai. With four major national rail lines converging at Lanzhou, the city is a transfer center for containers being shipped along the Euro-Asian continental line, and the Lanzhou Western Railway Station is home to the largest cargo marshalling yard in China’s Northwest. Already a petrochemical base, the city’s oil and gas industry stands to benefit from the construction of the central government’s west-to-east gas pipeline, which will pass through the city on its course from Xinjiang to Shanghai. Lanzhou is also a major physics research center, home to an advanced particle accelerator at the Heavy Ion Research Facility.

Lanzhou is not a pretty place. Arriving at the airport, about an hour’s drive from the city center, one is struck by the bleakness of the landscape and the pollution—in fact, Lanzhou is generally considered to be one of the most polluted cities in China.

From a commercial point of view, however, Lanzhou is likely to be a pleasant surprise for the typical investor with low expectations. Indeed, the Lanzhou government is well aware of its shortcomings and in recent months has taken steps to cut down on pollution and position itself as a more attractive commercial destination, according to city officials. One of the more interesting decisions has been to take on the challenging task of ending local protectionist measures that have blocked trade with other provinces, with the goal of raising the volume of overall commerce and attracting service industries. As an indication of local interest in this market, major Chinese chain stores are moving into Lanzhou at a rapid pace. Some foreign retailers have also indicated that, though other cities might have greater sales volumes, Lanzhou’s relatively low costs allow for greater returns and higher profits. Lanzhou also compares favorably with higher-profile rival Xi’an, capital of Shaanxi, in ease of facility construction. For example, archeological discoveries often slow down construction efforts in Xi’an, whereas many foreign investors report that building projects in Lanzhou can be completed quickly and inexpensively.		Lanzhou GDP GDP, RMB billion   Year 2.79   1996 2.95   1997  3.13      1998 3.33   1999 3.74   2000
		Useful Websites Lanzhou Government    www.lz.gansu.gov.cn Lanzhou Window    www.lzvw.com.cn Lanzhou Information Port    www.lzxxg.com

Economy highlights

• In 2000, agriculture accounted for 5.1 percent of Lanzhou's GDP, while manufacturing and services accounted for 52.7 and 42.2 percent, respectively.
• Lanzhou's Dongbu general goods wholesale market is one of the largest of its kind in China and the 49th largest market overall, registering $525 million in 2000 turnover.

• By the end of 2000, Lanzhou's cumulative utilized FDI reached $340 million.
• In total FDI, Hong Kong's investment of $487 million leads the pack, followed by the United States and Taiwan, with $228 million and $204 million, respectively.
• Gansu's first logistics joint venture, worth half a million dollars, was set up in Lanzhou in late 2001 by Canadian Pacific Railway Co., which took a 50 percent stake, and the Lanzhou Railway Administration Container Transportation Co., the Container Transport Center of the Lanzhou Railway Administration Branch, the Container Transport Center of the Yinchuan Railway Administration Branch, and the Container Transport Center of the Xining Railway Administration Branch.

China Business Review, Volume 29, Number 5, September-October 2002