Yangtze megalopolis an impressive engine of Chinese economic development

With its modern, spacious houses built in the Chinese style, a picturesque waterway and neat parcels of land growing rice and wheat, the village of Fugang is a certified model of rural revitalisation. On the north bank of the Yangtze River in the eastern province of Jiangsu, Fugang has been named Demonstrative Village for the Rule of Law, Signature Pastoral Village and Model Village for Sanitation.

In the middle of the village is a scoreboard where villagers can rate one another’s houses for their tidiness and the state of their gardens. Most of the 36 houses on the board had two or three stars but two had just one.

Further along, was an online sales processing centre and in a showroom across the road the shelves were stacked with local rice, eggs, wheat and fish products. In front of a backdrop showing a field and a slogan about healthy, green food stood a microphone and a lighting umbrella.

The municipal government of Suzhou chartered aircraft to take local business people to France and Germany to meet clients they had not seen for three years

“That’s for the live streaming,” a local woman said.

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Fugang’s entrepreneurial spirit is characteristic of this part of China, which accounts for a quarter of the country’s economic output, a third of its research and development spending and a third of its exports. Five years ago, a national strategy called for the integration of the three provinces of Jiangsu, Anhui and Zhejiang and the city of Shangai, which have a combined population of more than 160 million.

Three years of zero-Covid policies complicated the plan and for much of last year, anyone who travelled from Shanghai to neighbouring Suzhou was put into centralised quarantine for a week. But as soon as the restrictions were lifted, this region was among the fastest in China to restart the engines of business.

The municipal government of Suzhou chartered aircraft to take local business people to France and Germany to meet clients they had not seen for three years. The provincial government of Jiangsu has given businesses in a number of sectors including tourism, entertainment, retail and warehousing a property tax holiday for the first half of this year.

The integration plan includes major infrastructure projects to improve transport links between the 27 biggest cities in the Yangtze River Delta, creating an urbanised megalopolis. But co-operation will not stop the provinces and cities from competing with one another for investment from all over the world and for attention from Beijing.

Over dinner in Nanjing this week, a senior official in Jiangsu’s government reeled off a range of economic statistics from the last few months — for the province and for each of its neighbours. Suzhou, a sleepy water town 30 years ago, now boasts the sixth biggest GDP of any city in China, partly thanks to foreign investment attracted by its proximity to Shanghai and its lower operating costs.

At the Nanjing Automobile Group’s plant, founded in 1947 as a repair shop for the People’s Liberation Army, men and women in blue overalls were fitting seats into vehicles as they moved along an assembly line. But in large cages nearby, sparks were flying as giant steel robots welded the body sections in a process that is 99.7 per cent automated.

The vehicles made here are sold under a number of brands in China but if they are exported, they are sold under the MG marque which the company bought two decades ago. A single assembly line puts together more than 100 variations of the cars, including left-hand and right-hand drive models and electric and petrol-fuelled vehicles.

The pandemic also strangled foreign investment as personal contacts halted and China became inaccessible to the outside world

This factory saw production slump during the worst of the zero-Covid restrictions, which hurt manufacturing across the region and throughout China. The pandemic also strangled foreign investment as personal contacts halted and China became inaccessible to the outside world.

The Jiangsu Industrial Research Institute (Jitri) works with international partners and Chinese institutions and companies to promote innovation in the Yangtze River Delta. Liu Shui, an engineering graduate from University College Dublin who is business director of the overseas co-operation department, said Jitri studied funding models elsewhere before coming up with their own.

“We mostly focus on the early stage of R&D so we help local enterprises and local Chinese research institutes to find early stage innovation resources to help their product to enter the market,” he said.

“If the early R&D team wants to establish a company, most of their shares will be taken by another company. What we do is to reduce the risks and challenges of the R&D team in the early stages to make sure they can keep control of their shares from the preliminary stage to the IPO, so the R&D team can control the company. That means the company is theirs.”

Ecovacs Robotics produces more than half of the world’s robot vacuum cleaners and at its factory in Suzhou this week, chief executive David Qian was demonstrating models that clean coffee and ketchup spills along with dry dirt, plugging themselves into a charger when they are finished.

“What we see is this trend where the Chinese consumers are increasingly elevating their lifestyle. They’re looking for better quality of life,” he said.

“I think in China because a lot of people live in apartments and also people are double income, both of them work, they like to have a robot at home so when they leave home, they would just turn it on, and when you come back, you have a very clean floor.”

The robots use sensors and mapping systems to navigate and Ecovacs recently launched a lawn mower based on the same technology. In Europe, the company complies with GDPR data privacy rules and outside China, all data is stored locally by big cloud suppliers.

What we do in a year may take two or three years for a competitor to do. I think that’s, what we have seen in the last 10 years

—  Ecovacs chief executive David Qian

“This is a product that needs to understand the landscape of your home. We’re very aware of the sensitivity of that. And because of that, I think we enforce ourselves to the highest standard possible and that makes our customers comfortable and makes them happy. And I think ultimately, it’s not a hindrance to our business,” Qian said.

China is no longer a low-cost manufacturing base but Qian believes that being there gives his company a competitive advantage because the turnaround time for innovation in response to customer feedback is shorter.

“What we do in a year may take two or three years for a competitor to do. I think that’s, what we have seen in the last 10 years, where we have seen very many successful Chinese brands. That’s a key, I think, a critical competitive advantage,” he said.

“When you have the biggest manufacturing powerhouse in the world in China, and you also have the biggest consumption market and you put them together using a new method, which is the internet. A lot of our sales, I would say around 70 per cent to 80 per cent of our sales, are done through the internet. So the messages that the users leave us when they use a product, through that data, means we know what they like, what they don’t like, and we have the ability to tap into a vast amount of information.”