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After the State Council, China's cabinet, approved the Shanghai-Hangzhou maglev project in early March, work on the 175-kilometer-long line is expected to start this year and be in operation before Shanghai Expo in 2010.

Although it remains far away from official operation, the potential for economic cooperation between the two cities has warmed up.

On April 11, a signing ceremony for Hangzhou-Shanghai economic cooperation projects was held in Pudong, Shanghai. In total 48 agreements have been signed including 15 foreign investment projects and 33 Shanghai-Hangzhou cooperation projects. These projects involve US$372 million of foreign investment and 9.777 billion yuan (US$1.22 billion) domestic.

Jianggan District of Hangzhou adjoins Qiantang River and West Lake, covering 210.22 square kilometers with a permanent population of 0.5 million. On the occasion of Shanghai-Hangzhou economic cooperation fair local officials did their utmost to promote the district.

The district received close attention from participants and investors for its position as the terminal of Shanghai-Hangzhou maglev line. The German Chamber of Innovative Economy, Shanghai Dongchang Enterprise Group Corporation and Shanghai Gangsheng Industrial Development Co. Ltd signed deals with the district government involving foreign investment of nearly US$30 million and total investment of 800 million yuan (US$99.85 million).

The successful investment promotion conference was the first step in the ripple effect caused by the maglev railway, said Wu Qun from the office of Jianggan Investment Promotion Bureau.

"When we attended similar conferences previously, we put emphasis on our role as the new city center of Hangzhou," he said. "This year we have one more advantage -- transportation."

The Shanghai-Hangzhou maglev line -- Hangzhou's biggest passenger transportation center of the future -- subways, the Beijing-Hangzhou Grand Canal and fast bus lines make Jianggan District a transportation hub.

But more advantages can be listed.

"Jianggan District, as the future central business district and the large residential zone of Hangzhou, has excellent prospects and significant development potential," Wu said.

Qianjiang New Town in Jianggan District will be the Hangzhou's CBD, new landmark and service platform. It will mainly engage in finance, commerce, trade, information services and tourism. Dingqiao Community is the biggest newly-developed residential area in the city. When  completed it will be a modern community with a population of 100,000 and developments focused on living, leisure and tourism.

At the Shanghai-Hangzhou economic cooperation fair, officials from Jianggan District visited the headquarters of many Shanghai-based companies. Some of them have already signed initial investment agreements involving 2 billion yuan (US$249.3 million).

Jianggan District is not the only one securing big deals.

The delegation of Shangcheng District signed deals with 25 Shanghai-based companies involving a total investment of 1.769 billion yuan (US$220.5 million). Fourteen domestic companies will invest 1.6 billion yuan (US$199.47 million) while 11 foreign firms are investing US$21.2 million. The Shanghai Zhicheng Enterprise Development Corporation alone plans to invest 350 million yuan (US$43.6 million) to set up a Honglou Hotel. 

Last year, Gongsu District of Hangzhou introduced six projects from Shanghai, with contractual foreign investment of US$58 million and actual utilized capital of US$68 million. At the investment promotion fair this year, Gongsu District signed a 500 million yuan (US$62.3 million) deal in Shanghai which ranged across building materials, auto service, commerce and trade. Shanghai Itochu Commerce Co. Ltd, a subsidiary of Fortune Top 500 Company Itochu, and a large Hong Kong retailing enterprise have also decided to invest there.

During the fair, Hong Qinghua, mayor of Jiande City, along with his investment promotion delegation, paid a visit to Shanghai Zhengda Investment Group for cooperation potentials in tourism and trade. The city signed four agreements involving domestic investments of 450 million yuan (US$56.1 million) and foreign investment of US$15 million.

Shanghai and Hangzhou are both located in the Yangtze River Delta and have the most developed economies and significant business drive in China. The two cities are only about 170 kilometers apart and the lives of the people are similar. All this presents unprecedented potential for  economic cooperation between the two cities.

The fair attracted many Fortune 500 companies, foreign-funded companies, large and medium-sized Chinese enterprise and investment agencies. In addition, 53 of China's top 500 private enterprises were represented.

Ten of the 15 foreign investment projects are investing over US$10 million each. Twenty-five of 33 domestic investment projects are investing over 100 million yuan (US$12.5 million) each. The projects of Fuyang International Electronic City and Fuchun River Tourism Zone involve US$120 million and 2 billion yuan investment respectively -- a showstopper at the investment promotion fair.

(China.org.cn by Tang Fuchun, April 27, 2006)