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The former stomping ground of ousted Chinese Communist Party leader Bo Xilai could be helpful in getting China out of its investment-heavy and export-fueled economic model before it has run its course and put a permanent damper on the nation's economy. But without improved infrastructure, Chongqing's ultimate economic potential could be unrealized.
Over the past five years, the city, under Bo's reign, posted nearly 16% annual growth, compared to the nation's 10.5% average. Investment into so-called fixed assets grew to 84% by 2010, much higher than the 66% nationwide and the 62% posted when Bo took Chongqing's reins. At the same time, local debt increased to 131% from 112% of bank loans as a proportion of output.
Eventually, what goes up has to come down. But perhaps not so in the case of Chongqing, where exports soared 160% while other parts of China saw slowed export growth. The city seems poised to replicate the success of China's east coast a decade before but it doesn't quite have the infrastructure to support it.
However, its central location puts it in opportune position to serve a growing domestic market, which China needs to develop to sustain its current growth. It is perhaps why Ford picked the city to base a manufacturing plant, proving that Bo's empire could be the key to transitioning China from export driven and investment heavy to a more sustainable situation or not.
Read all about it: http://on.wsj.com/InDJFB.