A bridgehead to service Silk Road

A solar farm near Lanzhou, Gansu Province. A new industrial zone in the area is to service the hinterlandwith well connected transport nodes.

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 brand new industrial zone, which will service an extensive hinterland with well connected transport nodes, occupies an area of 1700 square km. More acreage will be added, in case of an adequate response.

Yet, vast empty spaces show that LNA is still a work in progress. Around 120 companies have been registered in the zone so far, out of which, 20 are solely into international trade.

Diversification But what happens to the heavy investment that has already been pitched to develop the park in case corporations do not fill up the spaces to match the ambitious plans? 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.

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. 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 already pass through LNA on their way to Hamburg, says Mr. Wu. 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.

Trade zone There’s a Free Trade Zone (FTZ) 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 km cluster.

The FTZ stands at a logistical advantage as the main airport is at a distance of only 2 km away, while a railway cargo terminal located at a distance of 12 km.