Two-speed China

Updated: 2012-08-24 08:25

By Andrew Moody and Hu Haiyan (China Daily)

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Changsha experiment

One place that has been in the news recently has been Changsha, in Hunan province, now basking in the steamy heat of its summer with temperatures in the high 30s.

With growth rates that run well into double digits, it has been reported that the local government has plans to invest 829 billion yuan in an airport extension, roads and other infrastructure projects.

The scale of investment - which the local government denies is that big - has drawn comparison with the 2008 economic stimulus package, being a fifth of what was spent for the entire country in the wake of the financial crisis on just one city with a population of 7 million.

Liu at the EIU says that such an investment level may be difficult for the local economy to soak up.

"It is something like 150 percent of the GDP of the local economy. I think we saw with the stimulus package there was too much liquidity created that was difficult to absorb. It is probably not sustainable or healthy for the long term," she says.

However, Changsha could not now be better situated to develop. It is a hub on the new 313-km/h Beijing to Hong Kong high-speed rail link.

It is already connected to Shenzhen with a travel time of three hours, and when the Beijing section opens in December, the travel time to the capital will be just six hours.

Yet some local people in Changsha remain disconnected with their fast-growing local economy.

Lei Lei, 41, a housewife shopping in Heiwado, one of the city's bright new shopping malls, with her son Yu Zhenghang, 7, says the high growth rate creates a distorted picture.

"You cannot just take GDP as a measure of development. A lot of what is happening does not address, for example, the housing needs of people. The local provision is still pretty poor."

She welcomes investment in transport and other infrastructure but says it does not alleviate many of the stresses of daily life.

"My main concern is not to get sick because if I get sick there is no one to take care of my child. I don't have the money to pay for medicine, and I can't afford health insurance either."

But many small business owners have seen the benefits of fast growth. Wen Haitao, 39, runs the Dr Wen Vet Clinic of Changsha City, based in Tianxin district.

He started the business 19 years ago but says turnover has doubled in recent years.

"It has become quite an exciting place. My client base has also changed. I have a lot of foreign customers from Russia, Japan, South Korea and the United States. One difference is they bring in a lot of cats. Chinese people tend to have just dogs," he says.

Qui Qingchun, 44, who runs a body therapy business, Fange Biology Co, which employs 10 people, says the growing middle class in the city has made it possible for businesses such as his to exist. Treatments start at 1,000 yuan.

"It would not have been possible to operate a business like this just a few years ago. But similar businesses to mine are now doing well," he says.