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Davos preview: Tianjin draws investment to logistics, infrastructure

Reporter: Xia Cheng 丨 CCTV.com

09-09-2014 00:17 BJT

The World Economic Forum summer sessions kick off in Tianjin on Wednesday. The city is in the spotlight not only for hosting the event- Tianjin is a key part of a planned economic circle -- that will likely pump up growth in the region. Aside from lifting property prices, as Xia Cheng finds out, there are immediate opportunities in infrastructure and logistics.

The World Economic Forum summer sessions kick off in Tianjin on Wednesday.

The World Economic Forum summer sessions kick off in Tianjin on Wednesday.

Tianjin is home to more than 150 Fortune 500 companies, and the maritime transport gateway for Beijing. That’s why it’s at the center of Northern China’s economic landscape.

This is Beijing South Railway Junction, Tianjin is just 30 minutes away by bullet train. And there’s a parallel new line between the two cities in the pipeline. It’ll be part of a planned 14 line railway network that serves Beijing, Tianjin and surrounding cities.

The network to be formed by 2020, will connect Tianjin and Beijing, via trains, planes and subways.

This is part of the plan to integrate Beijing, Tianjin and neighboring Hebei province as an economic zone, dubbed "capital economic circle". Economists suggest the new circle adopt the model of greater Tokyo, which has a self-sufficient, multi-layered industry structure within the area.

But the challenge for Tianjin is how to stand out in its development.

"Beijing most likely would be the center, how do the other two define themselves, that’s still not very clear," The Economist Intelligence Unit (China) Dep. Director Qian Liu said. 

"So we do think the different cities should focus on their strength. Beijing has an advantage in service and retail sales, Tianjin is advanced manufacturing," JLL Managing Director Michael Hart said.

Anoter advantage of Tianjin is its location for trade and shipping, and that prompts investment opportunities.

"We certainly have seen strength in the logistics market, so warehouses. Part of the reasons is because logistics are needed for manufacturing, part is because e-commerce. If you look at the Tianjin, Beijing and Hebei area , there are a hundred million people, it’s one of the largest single regions in the world, definitely a big need for logistics," Michael Hart said.

In August, Tianjin Port and Hebei Port forged a 325 million US dollar joint venture for port facilities.

JLL expects a 7 to 9 percent return from warehousing investment this year in the region, the highest among all property types.

But for commercial space, Qian Liu says that supply has outstripped demand in Tianjin, even before the proposal for the capital economic circle, due to a lack of corporate confidence.

"Infrastructure investment would still be a leading factor, if you want to drive people to move to, for instance, outside Beijing to Hebei, or if you want factories to move to cheaper regions," Qian said.

That’s starting to happen. A Tianjin infrastructure investment group issued 3 billion yuan of debt this month, the second issuance this year.

The to do list includes upgrading business infrastructure like the power grid, water transport and aviation. That will make Tianjin not just physically close to Beijing, but also narrow the gap to the capital in terms of business friendliness.

Tianjin is home to more than 150 Fortune 500 companies, and the maritime transport gateway for Beijing. That’s why it’s at the center of Northern China’s economic landscape.

Tianjin is home to more than 150 Fortune 500 companies, and the maritime transport gateway for Beijing. That’s why it’s at the center of Northern China’s economic landscape.

Another advantage of Tianjin is its location for trade and shipping, and that prompts investment opportunities.

Another advantage of Tianjin is its location for trade and shipping, and that prompts investment opportunities.

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