The rival down the road

From The Economist print edition

Two cities that are neighbours but not friends

NORTHERN Chinese officials have long looked with envy on the industrial booms enjoyed by the Yangzi and Pearl River deltas to the south. Leaders in the city of Tianjin talk of replicating the southern experience by turning their port city into a “dragon head” leading the region, a Shanghai of the north. They have not been helped, however, by a longstanding rivalry with neighbouring Beijing and a political culture in northern China that has found it harder to adapt to freewheeling private enterprise.

But Tianjin's leaders believe that the city may be on the verge of getting what it wants. They are excited by a visit paid in late June by the prime minister, Wen Jiabao, and his strong endorsement of Tianjin's New Binhai Zone, a decade-old industrial park and port complex that has already attracted billions of dollars of investment from some of the world's biggest manufacturers. Officials say Binhai will feature in the country's next five-year plan to be promulgated in 2006—a sign, they say, of the zone's elevation from local project to a national strategic priority.

The mutual standoffishness between Beijing and Tianjin—both municipalities that answer directly to the central government rather than any province—is also beginning to erode. Or so officials hope. Work has just begun on a high-speed rail link intended to reduce travelling time between the two centres to half an hour or so. It now takes more than twice as long. Construction of a new expressway between the cities has also just started. Both projects are due to be completed in time for Beijing's Olympic Games in 2008 (Tianjin will host some soccer matches).

But breaking down political barriers in the region could take time. In the 1980s, Beijing municipality invested in its own port, Jingtang, in Hebei Province to the east of Tianjin to avoid having to rely on its neighbour. Most businesses kept on using Tianjin's far closer and better-developed facilities. Tianjin has bridled at the big expansion now under way of Beijing's airport, believing that Tianjin's own airport could have taken some of the traffic.

Xiao Jincheng, a central-government researcher, says both cities are protectionist when it comes to key state-owned industries such as car manufacturing. In the 1990s, squabbling over the siting of an ethylene plant financed by the central government led to the project being split between Beijing and Tianjin. As a result, neither of the plants reaped full economies of scale, and both made losses. China's southern regions, it should be admitted, are no strangers to local rivalries either. Several large and loss-making airports in the two delta areas are testimony to a wasteful race for prestige.

Some Chinese scholars argue that creating a “greater Beijing” (in effect bringing Tianjin under the capital's control) would aid regional development. The idea does not go down well in Tianjin. The city's reformist mayor, Dai Xianglong, a former chief of China's central bank, says market forces will help more. Nowadays, he says, state-owned banks would not lend to projects that are simply wasteful duplications of others in the area. If so, that would indeed be a breakthrough for the region's development.