Economy

Western front

Deals galore signed at Chengdu investment fair

Sigfússon: Iceland’s hot on China

Visiting the teeming Western China International Fair in Chengdu last week, Steingrímur Sigfússon, Iceland’s finance minister, wasn’t suggesting the sale of any more of his country’s land to Chinese buyers (see WiC122).

But he was in promotional mode for eight Icelandic companies at the fair. His target? The 678,000 officials, businessmen and ordinary consumers who packed stands and halls at the event. Other guests included World Trade Organisation director-general Pascal Lamy and representatives of multinationals such as Siemens, Dell, Cisco, Hyundai, Shell and LG.

This year is the 40th anniversary of Sino-Icelandic relations but the first time Iceland has taken part in a general trade fair in China.

Key companies attending included Sino-Icelandic geothermal joint venture Sinopec New Star; Alvogen Group Iceland (biopharmaceuticals and fish oil); Ossur (which makes artificial limbs); and Bakkavör Group, a food processing company that’s considering opening a plant in Sichuan province, said Petur Yang Li, Iceland’s commercial representative in Beijing.

“Personally I am very optimistic that soon we will see some business from Icelandic companies in western China,” said Yang, singling out geothermal energy as a promising area.

Iceland’s exports to China last year were just $29 million, importing $249 million in return, said Yang. Yet the presence of the Icelandic team in Chengdu showed that the appeal of China’s “Go West” development strategy is reaching further afield – even as far as Reykjavik.

The fair reflects the Chinese government’s desire to spread the fruits of economic growth into China’s poorer hinterland, and diversify away from the richer eastern seaboard. Although not a new strategy, “Go West” is picking up pace.

The figures suggest that. This year’s event, the twelfth, produced agreements on investment projects worth Rmb945 billion ($148.8 billion), according to the Urumqi-based Tianshan news website, citing information from the closing news conference. That was up almost 26% on 2010 (the bulk of deal flow was from Chinese entities, with foreign investment agreements reaching just Rmb93 billion).

Of the total, actual deals signed amounted to Rmb253 billion, an increase of 11.2% over 2010.

‘Western China’ includes 12 provinces, autonomous regions and cities, including the major land masses of Tibet and Xinjiang, as well as the densely populated Sichuan province and Chongqing municipality (it alone has a population of 32 milion). Key agreements in Sichuan included a Rmb3.7 billion deal between Datong Group and Tianquan county for hydroelectric power projects, and a Rmb400 million investment by PetroChina Southwest with Langzhong city, in LNG.

For Xinjiang, an area in which the government is especially keen to boost investment, officials and businessmen from the Xinjiang Production and Construction Corps, a semi-military governmental organisation, signed Rmb6.3 billion worth of projects in 24 separate agreements, according to Xinjiang-based media. The deals included a Rmb150 million agreement with the Shenzhen Zhongji Automobile Group to build a factory making commercial vehicles.

As the “Go West” effort becomes better known outside China, so also do some of the largest cities in the region. The pick up in pace of industrial and economic development in the major cities of Chengdu and Chongqing is a case in point. Although behind their coastal peers in absolute terms, both cities have been closing some of the gap with stronger GDP growth performance.

The Icelandic team is aware of that too, it seems.

“We have noticed that people in big cities like Chengdu and Chongqing are actually spending quite a lot on travel, almost the same as other second tier cities in the East. We think it’s a big consumer market for Iceland,” said commercial rep Yang.


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