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Tianjin at a Glance

Published April 2006

One of the four provincial-level municipalities in China, along with Beijing, Shanghai, and Chongqing, Tianjin is the birthplace of China's Premier Wen Jiabao and the site of one of the world's largest ports. The port of Tianjin is a gateway to China's Northeast and vast western region and has played an integral role in Tianjin's development as a manufacturing and export center in the Bohai region, which encompasses Hebei and Shandong. Tianjin was one of the earliest coastal cities to open to foreign investment in the 1980s. Its special economic zone, the Tianjin Economic and Technological Development Area (TEDA), is one of the leading zones in China and home to more than 4,000 foreign-invested enterprises with investments of more than $29 billion at the end of 2005.

Tianjin's development and integration with Beijing and Hebei Province are now a national development priority, written into China's 11th Five-Year Plan. Official press reports indicate that Tianjin will become China's third economic powerhouse after Shenzhen and Shanghai Pudong. Vice Premier Wu Bangguo visited Tianjin in March, after a visit by Premier Wen Jiabao last spring, to emphasize the central government's seriousness about the new development goals for Tianjin.

Economy

Tianjin has come a long way since the early 1980s, when its best-known product was the Flying Pigeon bicycle, manufactured by a local state-owned-enterprise. Today, Master Kang instant noodles and assorted beverages, products of a Taiwan-invested company, and Motorola, Inc. are two well-known brand names coming out of Tianjin. Despite the fact that Tianjin opened relatively early in China's reform era, its growth has not been as rapid as other coastal areas, in part because of competition with neighboring Beijing and in part because of its slow reform of inefficient state-owned industries.

In addition to the port, TEDA has played a vital role in Tianjin's economic development. Since its opening in 1984, TEDA has added three sub-zones, an export-processing zone, and a microelectronics industry park. TEDA's latest expansion, TEDA West, was approved in December 2004 by the central government, even as other economic zone expansion plans were rejected.

TEDA has successfully focused on four pillar industries: electronics and telecom; machinery manufacturing, including autos; biotech and chemicals; and food and beverages. The four industries made up more than 90 percent of TEDA's total output in 2004. Foreign investors dominate these key industries, most notably Motorola, Samsung Electronics Co., Ltd, Sanyo Electronic Co., Ltd., and Matsushita Electric Industrial Co., Ltd. (Panasonic) in electronics and communications; Toyota Motor Corp., SEW Eurodrive Co., Ltd., and Emerson in machinery; GlaxoSmithKline plc and Novo Nordisk A/S in pharmaceuticals; and the Coca-Cola Co. and Nestle SA in the food and beverage industry.

Tianjin statistics indicate that 80.3 percent of Tianjin's $27.4 billion in exports in 2005 came from FIEs. About 67.5 percent of Tianjin's exports were mechanical and electrical products, and 45.5 percent of Tianjin's exports were new and high-tech products. Tianjin's exports to the United States, European Union, ASEAN, Japan, and South Korea account for 79 percent of its total exports in 2005. The United States, South Korea, Japan, and the European Union top the list of Tianjin's trade partners.

Tianjin by the Numbers, 2005
	Values	Year-on-Year Growth
Economy
GDP	$45.18 billion	14.5%
Fixed-asset investment	$18.70 billion	20.5%
Value-added industrial output	$23.24 billion	17.9%
Retail Sales	$14.67 billion	13.9%
Government revenue	$8.95 billion	26.8%
Average per capita urban disposable income	$1,558	10.2%
Consumer price index	NA	1.5%
Foreign trade
Total trade	$53.39 billion	27.1%
Exports	$27.42 billion	31.4%
Imports	$25.97 billion	22.8%
Foreign-invested enterprise (FIE) exports	$22.02 billion	(80.3% of total exports)
Foreign direct investment
Number of FIEs approved	1,309	18.8%
Amount contracted	$ 7.32 billion	31.0%
Amount utilized	$ 3.33 billion	34.6%
Note: Exchange Rate = RMB 8.11: $1; NA = not applicable Source: Tianjin Bureau of Statistics

Logistics

Tianjin has been a port city since the Ming Dynasty and was one of the treaty ports ceded to Western countries in 1860s after the second Opium War. In 1952, the Port of Tianjin, located at the estuary of the Hai River along the western edge of the Bohai Bay, reopened and processed less than 740,000 tons of cargo. Last year, Tianjin Port handling capacity reached 200 million tons of freight, a little more than half of Shanghai tonnage. Today the port operates more than 70 regular shipping routes and has connections to more than 300 international ports.

China has made port development a high priority to sustain its export growth, and Tianjin's port has benefited. But China is struggling to keep up with growth of water-borne freight; the need for dependable, well-coordinated intermodal logistics services is crucial to easing transportation bottlenecks. Tianjin's major markets for container transport are Beijing, inland China, and Mongolia, but little is being transported by rail to these destinations. In 2003, Tianjin transported more than 56 million tons of freight by rail, compared with 200 million tons transported by highway. This means that much of the freight is being moved on the roads, which are severely congested. An article by Asil Gezen in the July - August 2005 China Business Review ("Going Intermodal") even reports that none of the container freight between Beijing and Tianjin was moved by rail in 2003. By Gezen's estimate (and by USCBC's own experience), the travel time from Beijing to the outskirts of Tianjin is about 90 minutes, and the additional 5 km to the port can take another 90 minutes in heavy traffic. Without proper planning, bottlenecks like these will continue to dampen Tianjin's growth and make shippers turn to alternative port cities.

China's Railway Container Transport Company (CRCTC, majority-owned by the Ministry of Railways) has plans to build a state-of-the-art, intermodal container transport facility in Tianjin, as well as in 17 other cities in China (including Beijing). In September 2005, a delegation of officials from CRCTC, the Ministry of Railways, and the Ministry of Commerce visited Chicago to consider new terminal equipment, rail cars for container transport, containers, information technology, and other equipment systems. This upgrade should help ease the transport burden Tianjin faces as its port expands from handling 3.8 million TEU (20-foot equivalent units) in 2004 to 10 million TEU by 2010.

Because of Tianjin's role as a major trading center, the city depends heavily on airways for freight transport. In 2004, Tianjin announced an airport renovation and expansion project in an effort to become the air cargo transportation and distribution hub of Northeast Asia. The project has a total investment of about $3.1 billion and is expected to be completed by 2007, in time to serve as an alternative to Beijing Capital Airport for the Olympics.

Looking Ahead

Binhai New Area

The development and opening-up of Binhai District has been integrated into the national development strategy. Tianjin's goal in the next five years is to build Binhai District into a high-level modern manufacturing and research and development transformation base and an international shipping and distribution center of Northern China. During this period, Tianjin will build a high-tech industry development axis, an ocean economic development band, three ecological urban areas, and seven functional areas in Binhai. The three ecological urban areas are Tanggu, Hangu, and Dagang; and the seven functional areas are the manufacturing industry area, Binhai high-tech industrial park, Binhai chemical area, Binhai Central Business District, the port distribution area, airport industry area, and Binhai resort and tourism area.

Financial Sector

Tianjin's financial services sector is underdeveloped, according to at least one city official. Under the direction of Mayor Dai

Xianglong, former governor of the People's Bank of China (PBOC), Tianjin could well have the leadership to become a financial center for North China. Signs that the city is looking in this direction include its recently completed Financial Avenue and the newly established Bohai Bank, not only the first national bank approved since 1996, but also the first PRC bank to include a foreign investor - Standard Chartered plc - as a founding partner.

Power

In the summer of 2005, Tianjin's power consumption of more than 6 million kilowatts (kW) reached a new high. More than 30,000 industrial enterprises participated in programs to alternate their power use schedule, and the city reported four blackout days, down from 10 in 2004. Forecasters predict that Tianjin's peak power consumption will reach 10.5 million kW by 2010. To handle the additional demand, Tianjin will build a third substation and add several million kW of capacity by 2010.

Technology

Last year, the State Council approved the establishment of three high-tech zones in Tianjin: National (Tianjin) Telecommunications Industrial Park, National (Tianjin) Chip Component Industrial Park, and National (Tianjin) Integrated Circuit Industrial Park. TEDA also recently set up a venture capital fund to support enterprises with their own intellectual property rights, in line with the national goal of strengthening China's ability to innovate.

Transportation

According to one report, Tianjin Port will build 12 more container terminal berths; five or six berths for bulk commodities such as iron ore, coal, and grains; and five berths for oil and related products. A second highway from Beijing to Tianjin is under construction, and plans for a third highway are in the making. A 115-km commuter rail line, scheduled for completion by the 2008 Olympics, is also under construction. It will reduce the travel time between the two cities to 30 minutes. This will help transport international visitors to the Olympics to the Tianjin Stadium, designated one of the primary sites for the Olympic football (soccer) matches.