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### Viewing cable 07GUANGZHOU88, Guangzhou Baiyun Development Forum: Promotion of

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07GUANGZHOU88 | 2007-01-19 08:43 | 2011-08-23 00:00 | UNCLASSIFIED | Consulate Guangzhou

`

    VZCZCXRO2454
    RR RUEHCN RUEHGH RUEHVC
    DE RUEHGZ #0088/01 0190843
    ZNR UUUUU ZZH
    R 190843Z JAN 07
    FM AMCONSUL GUANGZHOU
    TO RUEHC/SECSTATE WASHDC 5707
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUCPDOC/USDOC WASHDC
    RUEAIIA/CIA WASHDC
    RUEKJCS/DIA WASHDC
    RHHMUNA/HQ USPACOM HONOLULU HI

` `

    UNCLAS SECTION 01 OF 02 GUANGZHOU 000088

    SIPDIS

    SIPDIS

    E.O. 12958: N/A
    TAGS: ECON TBIO KTDB EAIR EIND EINV CH
    SUBJECT: Guangzhou Baiyun Development Forum: Promotion of
    Bio-tech, Real Estate, and Logistics Sectors

    ¶1. SUMMARY: Guangzhou's Baiyun District is stepping up
    efforts to develop its bio-technology, real estate, and
    logistics sectors.  Officials will focus on developing the
    industrial zone surrounding the new Baiyun International
    Airport, strengthening the bio-medical and bio-engineering
    sectors, and promoting Baiyun's relatively clean
    environment to attract residential real estate development
    projects.  While Baiyun enjoys a relative advantage over
    other areas in the biotechnology and real estate sectors,
    competition from Huadu and Panyu Districts in the logistics
    sector will still be fierce.  Opportunities for U.S.
    businesses should remain strong despite Chinese efforts to
    cool down the economy by restricting investment.  END
    SUMMARY.

    Bio-tech Industry Development
    -----------------------------

    ¶2. Baiyun District plans to build a "Golden Triangle of
    Biological Science" with biomedicine, biological
    agriculture, and biological services as the respective
    points of the triangle.  The Liuxi Bay Baiyun Biological
    Port will focus on bio-medicine, biological agriculture,
    and biological research.  Manufacturing and marketing will
    also be done at Liuxi.  Beijing Bioway Biotech Group Co.
    Ltd. is the first company to set up operatons there.
    Guangzhou Baiyun Biological Medical Health Industrial Base
    will focus on bio-medical manufacturing.  Guangzhou
    Pharmaceutical Co. Ltd, Baiyunshan Corporation, and over 30
    other enterprises will set up operations there, making it
    the single largest medicine manufacturing center in China
    in terms of output.  Helong Biological Service Area will be
    the conference site of the World Biological Economy Forum,
    holding exhibitions and fairs on bio-tech products.

    ¶3. In addition to the Golden Triangle, Baiyun will set up
    the Guangzhou 863 Industrialization Promotion Center,
    integrating a high-tech enterprise incubator, an industrial
    service platform, and a popular science media center.  It
    will be one of only five such centers in China.  Currently,
    57 enterprises with a registered capital of RMB 480 million
    (USD 61.5 million) have been established under this plan.
    (Note: the State Hi-tech Research Development Plan, or "863
    Plan," for the 11th Five-Year period has spawned projects
    dealing with biology, aerospace, information technology,
    lasers, automation, energy resources, and new materials
    across China.  End Note).

    ¶4. Guangzhou Sinobioway Co. Ltd., the largest bio-
    engineering group in China, plans to set up a bio-
    engineering incubator in Baiyun.  According to its
    president, the firm's BIOINTEL system (an integrated
    software system developed by Beijing Bioway Biotech Group
    Co. Ltd., combining language and logic processors, a search
    engine, and databases) offers a comprehensive service on
    par with software from Intel, IBM, Microsoft, Oracle, and
    Google.

    Real Estate Development
    -----------------------

    ¶5. Along with Baiyun Mountain and Maofeng Mountain, Baiyun
    District is called "the lung and oxygen bar of Guangzhou."
    Baiyun authorities are promoting its relatively clean
    environment to attract residential real estate development
    projects.  The biggest man-made lake in Guangzhou (to be
    named Baiyun Lake) will be built as a tourist site.
    Despite Ministry of Land Resources' directives in 2003 and
    2006 to cut back on the development of high-end residential
    projects, Baiyun District plans to focus on building garden
    villas and apartments to attract wealthy residents.

    ¶6. In December 2006, the average price for residential
    housing in Baiyun District was RMB 6,965 (USD 893) per
    square meter.  The average price in Guangzhou city was RMB
    7,435 (USD 953) per square meter.  While cheaper to
    purchase, some expats complain that Baiyun is too far of a
    commute from the heart of Guangzhou.

    Logistics Development
    ---------------------

    ¶7. Baiyun District has introduced a "two circles and three
    belts" plan.  "Two circles" refers to developing airport
    industrial logistics and comprehensive logistics services;
    "three belts" refers to developing rail, road, and air
    transportation logistics services.

    GUANGZHOU 00000088  002 OF 002

    ¶8. A representative from the Baiyun Airport Management
    Group said that in anticipation of continued passenger and
    cargo business growth, the Group plans to improve
    infrastructure in the nearby industrial zone.  It will also
    accelerate cooperation with customs and other inspection
    agencies to improve efficiency.  He added that China
    Eastern Airlines will establish an operations center at the
    airport and increase the number of its flights through
    Guangzhou, while China Southern Airlines will increase the
    number of its cargo flights early this year.

    Logistics Development in Guangzhou
    -----------------------------------

    ¶9. Baiyun's logistics development dovetails with the
    Guangzhou Municipal Government's plans for the next 5 years.
    Guangzhou plans to invest RMB 50 billion (USD 6.4 billion)
    to build an expressway network consisting of four ring
    roads and 16 highways leading to surrounding cities.  Over
    RMB 18 billion (USD 2.3 billion) will be used for Phase II
    of Baiyun International Airport's development, to include a
    third runway, a second terminal, and facilities for FedEx's
    Asian-Pacific Transport Hub.  Another RMB 26 billion (USD
    3.3 billion) will be spent on the construction of channels
    in Guangzhou Harbor and of Nansha Harbor Phase III.

    ¶10. Guangzhou authorities are touting their "3+5" plan to
    build international and regional logistics zones.  The
    three international logistics zones will be centered on
    Baiyun International Airport, Nansha Harbor, and Huangpu's
    port and rail facilities.  The following five regional
    logistics zones will be developed:

    --Baiyun Logistics Zone to focus on cargo, purchasing, and
    delivery.
    --Huadu Logistics Zone to focus on road and rail
    transportation.
    --Fangcun Logistics Zone to focus on wholesale companies.
    --Panyu Logistics Zone to focus on road transportation.
    --Zengcheng Logistics Zone to serve customers in Dongguan
    and East Guangdong.

    Growth and Investment in Baiyun District
    ----------------------------------------

    ¶11. Baiyun District's GDP reached RMB 50 billion (USD 6.4
    billion) in 2005, the fourth highest in Guangzhou.  In 2006,
    GDP is expected to reach RMB 57.5 billion (USD 7.37
    billion), up 14%.  In the first 10 months of 2006, Baiyun
    District attracted USD 157 million in contracted foreign
    investment.  Multinational companies such as British home
    improvement chain B&Q and UPS have established a presence
    there.

    Comment
    -------

    ¶12. Baiyun's biomedical and real estate sectors should see
    robust growth in the near-term.  However, Baiyun faces
    intense competition from the neighboring districts of Huadu
    and Panyu, currently the two main logistics centers in
    Guangzhou.  Huadu and Panyu have better infrastructure and
    also benefit from their proximity to the international
    airport, rail lines, and ports.  Baiyun's development is a
    key element in Guangzhou's plans to expand growth in its
    surrounding districts.  However, the competition for a
    piece of Guangzhou's development pie among the subordinate
    district governments is representative of the situation
    among cities in a province and among provinces in China.

    GOLDBERG

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