Tucked away in the Qin Wangchuan Basin in northwestern China is the Lanzhou New Area (LNA), a vast industrial hub that is becoming the bridgehead for threading Central and West Asia in Beijing’s lofty One Belt One Road (OBOR) connectivity project.
The scale of establishing a brand new industrial zone, which will service an extensive hinterland with well-connected transport nodes is astounding. Already the LNA occupies an area of 1700 square kilometer area, with its north to south axis covering 49 kilometers, 26 kilometers longer than its width. More acreage will be added, in case of an adequate response.
Still a work in progress
Yet, vast empty spaces, interspersed with freshly painted structures bearing quality brand names such as Geely vehicles and Tsingtao beer, show that LNA is still a work in progress, though not without a promising future. Around 120 companies have been registered in the zone so, out of which, 20 are solely into international trade.
But what happens to the heavy investment that has already been pitched to develop the park, in case corporates and other companies do not fill up the spaces to match the ambitious plans?
Overcapacity, shrinking market size
Already, the LNA is not untouched by some of the headwinds that are confronting the Chinese economy —overcapacity and shrinking overseas market size.
“We are already diversifying into real estate and shopping malls,” says Yang Gang of the Lanzhou LS Group, a company manufacturing energy equipment, including oil drilling machines and offshore rigs as its core business. Falling oil prices is forcing some of the diversification of the company, though new demand including solar and wind energy is opening up a promising, but somewhat hazy future along the OBOR.
‘Eventually we will succeed’
As China’s economy transitions, the planners of the LNA do have a plan-B -- possibly as a holding operation -- in anticipation of an eventual industrial rush. “We can use the land for agriculture, in case the going is slow, but eventually we will succeed,” says Xu Da Wu, deputy party secretary of the LNA.
Mr. Xu explains that the area is suitable for organic farming and medicinal plants that are used in Traditional Chinese Medicine (TCM). The Gansu province, of which the LNA is a part, is already the second largest producer of TCM products, developed from plants that are grown in abundance across the province, including the Kumtong mountain, famed for its centrality in the emergence of Taoism in China.
Leveraging its location
The Chinese side is also collaborating actively with Kyrgyzstan as the gateway to the TCM in Central Asia.
Leveraging its location as a transportation hub along the OBOR, regular freight trains are already pass through LNA on their way to Hamburg, says Mr. Wu.
Before the trains head to Xinjiang and then into the Central Asia, West Asia and Europe, Lanzhou is being connected with its diverse hinterland. A rail connection with Lhasa in Tibet is already operational. Trains also run regularly to the coastal industrial hub of Guangzhou.
Along the ancient Silk Road, connections exist with Xian, the starting point of this ancient highway, as well as with nearby Xining, capital of the mountainous Qinghai province. Urumqi, the capital of Xinjiang, is 1800 kilometers away.
Free Trade Zone
A Free Trade Zone (FTZ) is at the heart of the LNA. Registration with the FTZ allows duty free imports and exports, along with possibilities of storage in warehousing facilities, in this 3.39 square kilometer cluster. The FTZ stands at a logistical advantage as the main airport is only two kilometers away, while a railway cargo terminal located at a distance of 12 kilometers.
