Australia: Regional China rises: Australian businesses should venture beyond Shanghai and Shenzhen to ride the Project of the Century


Australia's perception of China has been shaped by Shanghai's glamour, the halls of power in Beijing and Shenzhen's vibrant economy. These centres are important, but for Australian businesses there are opportunities elsewhere in China.

The central Chinese city of Xi'an is one city that should be on the radar. A regional capital of almost nine million people, Xi'an is already an important manufacturing, technology and education hub (it has 63 colleges and universities).

But more importantly it is poised to receive a vast inflow of funds as part of China's new regional development strategy.

Outside China, Xi'an is mostly known as the home of China's famous Terracotta Warriors. But a thriving tourism industry is only the tip of this city's investment appeal.

Xi'an lies around 1,000km southwest of Beijing. Literally translated as 'Western Peace', the city marks the beginning of China's ancient Silk Road trading route.

Xi'an has a long history as a trading centre and gateway to China's inland regions. It was a capital city throughout China's dynastic age.

Now China is embarking on an ambitious initiative to resurrect its ancient overland and maritime Silk Road routes used for centuries to trade goods between China and Central Asia & Europe – see the map below.

Courtesy China's Silky Indian Ocean Plans

Named the One Belt One Road Policy (the Belt being the overland route and the Road being the maritime route), the initiative will pour trillions of dollars into regional China to build new infrastructure – ports, rail, roads, telecommunications and utilities. This infrastructure will become the backbone of the revitalised trade routes.


Xi'an, as the central hub of regional China, is set to be a key beneficiary of the One Belt One Road Policy. Chinese-led multilateral initiatives including the Silk Road Fund, the Asia Infrastructure Investment Bank and the BRICS New Development Bank headline the public funding sources for infrastructure projects.

Collectively, these entities alone will soon have US$240 billion to fund infrastructure projects in China and the wider region. This will be complemented by a multitude of Silk Road funds being established by almost every provincial government across China to drive and attract further investment in their provinces. See our previous article on competition between provinces providing opportunities for Australia Connectedness: The Key to Unlocking Asia?

Xi'an's re-emergence as an economic centre is not only about its strategic location. It also holds a special place in Chinese President Xi's heart. His father grew up in Shaanxi, the province of which Xi'an is the capital.

In China, having support at the highest level of government certainly helps. It is no coincidence that when the Xi Government decided to create the world's largest gold fund in May to raise 100 billion RMB to invest in gold projects, Xi'an was chosen as the location for the fund's headquarters.

Location, location, location goes the old saying. And Xi'an's location is arguably its strongest selling point for attracting new business and investment. Just four-and-a-half hours from Beijing by bullet train, Xi'an is the gateway to the largely untapped markets of western China and Central Asia.


For businesses outside China, the One Belt One Road Policy creates opportunities to 'ride the dragon' by leveraging off development across the Belt – much like the general stores and pubs that profited more from Australia's gold rushes than the gold miners themselves. See our previous article on opportunities arising from China's One Belt One Road Policy China's One Belt One Road - A new opportunity for Australian Expertise.

But entering China's colossal market can be daunting. Australian businesses new to China would do well to look beyond the typical business destinations on China's eastern and southern seaboard.

For those already in China, it may be time to revisit your business strategy to take advantage of One Belt One Road – already dubbed as the world's 'Project of the Century'.

Xi'an is not the only regional centre worth investigation. Lanzhou (capital of the central northern Gansu Province with a population of 5 million) and Zhengzhou (capital of the central eastern Henan Province with a population of 8 million) both lie on the Belt, and will benefit from development inflows.

But it is hard to beat Xi'an's appeal. At a time when China's national and provincial governments are committing vast resources to developing the regions, Xi'an has both political advantage and a golden location at the beginning of the Silk Road.

So what are you waiting for? An opportunity to ride a dragon to Central China and beyond is not one you should let fly by.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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