Wuhan in central China’s Hubei Province has ambitious plans. Sometimes known as the Detroit or Chicago of China because of its long industrial history, the city is now looking to move away from its heavy industrial roots and develop into a metropolis that can rival China’s top-tier giants.

At first glance, this seems to be little more than wishful thinking. Wuhan is still very much a typical Chinese industrial hub – manufacturing is at its core. Problems such as pollution and relatively poor living conditions compared with China’s biggest cities make it less attractive for foreign investors. This, coupled with the fact that its traditional iron and steel businesses are struggling to make profits due to low prices, make its dream to modernise seem somewhat far fetched.

Advertisement

However, the drive to urbanise in Wuhan, and Hubei in general, is quite remarkable. Realising that the country’s overall high growth will not last forever, the province is looking to switch to higher paying jobs and industries further up the value chain. These improvements in efficiency saw Hubei becoming the fastest growing province in China in 2012, with expansion of 12%.

Pushing high-tech

Crucial to this is the development of high-tech industries. Zhou Yunzhi, deputy general manager at Tianma Microelectronics, one such company in Wuhan, told the BBC: “We want some old industries to fade out and to develop new and high-tech industries.”

Also, given that the plan to fully transform Wuhan is not planned to be completed within five or even 10 years’ time, but two or three decades, it is possible to see a foresight uncommon in a number of other Chinese urban development plans. That is not to say that huge strides are not already being made, however. Wuhan has already increased international air routes, become involved in a joint venture with France’s Keolis to run the Wuhan Tianhe International Airport, built a number of metro rail lines and seen consular offices open from Japan and the UK, with Hong Kong soon to follow.

Further growth, however, very much depends on government investment. In 2013, Wuhan’s government pledged to invest Rmb422bn ($69bn) in infrastructure before the end of 2016, with more than 10,000 construction sites being worked upon in 2014 and beyond. This will allow the city to catch up with the likes of Guangzhou, particularly in terms of urban transport with its large metro rail system, and improved roads and bridges.

Such major changes are not without problems, however, and poor construction management, flooding and financing issues have hampered some projects. These problems will need to be overcome if Wuhan is to achieve its ambitious plans.

Central focus

Another of the key aspects of the shift to more service-driven and high-tech investment is the city’s involvement in the Wuhan 1+8 city cluster initiative, designed to develop the urban areas of central China to feed future growth and make up for slowing growth in coastal areas.

In fact, as the level of investment falls in some of the coastal areas, it continues to grow in central China. "There is a trend that international capital and coastal enterprises are moving to China's midwest. As a result, the growth of foreign investment in Hubei is closely related to the industrial transfer in east China," said Chen Bin, director of the Foreign Trade Management Office under the Hubei Department of Commerce, in an interview with China Daily last year.

And Wuhan is seeing the greatest benefit of any area in central China. In 2012 alone it saw 35 new enterprises with foreign capital enter the market. Wuhan also now has the most foreign-invested financial institutions in central China.

Development zones are also playing an important role in Wuhan’s growing attractiveness to foreign investors. The East Lake High-Tech Development Zone focuses on optoelectronics, biopharmaceuticals, energy and clean technology – a whole world away from the previous saturation of heavy industry in the region.

Driving growth

Yet, there is still growth in the more traditional industries. French car manufacturer Renault recently finalised a long-expected joint venture with Dongfeng Motor Group to build vehicles in Wuhan. The factory will become operational in 2016.

Automotive investment is part of the city’s growth, but diversity of investment is also important. For instance, the China Game Industry Annual Conference was recently held in Wuhan, with more than 1000 representatives from major domestic enterprises such as Tencent, Shengda, Perfect World and Giant. Then there is Hilton Hotels and Resorts, which chose Wuhan as the location for its first Hubei property in 2013, seeing the growing demand from high-end business clients visiting nearby development zones.

And, surprisingly for a city so closely associated with manufacturing, education also features heavily in the economy and is seeing investment from foreign firms. “Among the main sectors, education figures prominently," says Eric Pelletier, trade commissioner at the Canadian Consulate General in Shanghai in a recent podcast. "Wuhan is actually the third largest education centre in China. I think there are something like 30 universities and 700 research centres. So what that means is that the pull of skilled workers in Wuhan is pretty big.” 

The UK’s Queen Mary University already has ties with Wuhan’s universities. “We currently have co-operation agreements with Huazhong University of Science and Technology and Wuhan University of Technology,” says Dengyu Pan, chief representative for Queen Mary University. “These institutions are very famous in China and carry a strong reputation for their research and teaching standards.”

And as Mr Pelletier points out, such a strong educational base means a strong labour pool, although a potential ‘brain drain’ remains a concern as talented individuals look elsewhere.

If Wuhan is to meet mayor Tang Liangzhi’s goal of attracting even more foreign investment in 2014 and beyond, it needs to succeed in its ambitious plans for developing infrastructure and improving overall living standards. And with the level of investment already seen, it seems many are confident this will happen.