TIANJIN: Tianjin is one of the many places on the mainland where the economy seems to be growing before your very eyes. In future, though, that growth might be a bit slower.

A futuristic library, soccer stadium, light-rail system and tropical plant garden are just a few of Tianjin development zone's rewards for a generation of breakneck growth that has turned a vast expanse of salt pans and wasteland, two hours east of Beijing, into a manufacturing powerhouse.

But Tianjin Economic-Technological Development Area, or TEDA as the zone is called, is now running into the same bottlenecks that are impeding the growth of many of the mainland's fast-growing industrial cities.

Highways are jammed. Tianjin port is struggling to expand capacity fast enough and transporting coal is a headache.

The biggest problem, says Pi Qian Sheng, a senior official of the local government, is that TEDA is running out of land. "If there's a project that needs 100,000 square metres of land, we have difficulty in providing it," Pi says.

To solve the problem, TEDA is developing a huge new industrial zone further west of the city. The central government has given its permission to proceed with the construction of the zone, but delays in acquiring the land have dampened some foreign companies' investment plans, Pi says.

He is confident the setbacks will be temporary and that TEDA, after 20 years in which growth in industrial output has averaged 30 per cent, can look forward to another 20 years of strong expansion, albeit at a slightly less giddy pace of 20 per cent.

"I don't think these development ideas of ours are Utopian," Pi says. "We know we need to plan earlier and budget better. We need to be prepared."

Land-planning controls are one of the many policy tools that the central government has been using to deflate an investment bubble in sectors such as steel and cement.

TEDA has few such industries. Information technology, cars and pharmaceuticals are its main sectors. Motorola, Toyota Motor and Samsung Electronics head the list of the zone's 3,600 foreign-invested companies, which last year exported US$7 billion of goods.

Still, Pi says Tianjin has felt the pinch, though not too badly. A few projects have been halted, property investment has dropped and some companies have found it hard to get credit.

One of the crucial questions investors must answer in judging whether the mainland's economy will glide to a soft landing or come crashing down, is whether Beijing will be able to maintain the array of regulatory, legal, lending and administrative controls in the face of demands from local governments to promote rapid growth.

Bargaining process

Yao Li, the International Finance Corp's investment officer in Beijing, says he too has heard a lot of complaints from local officials as he travels around the country.

In a clear sign that the controls have been having an impact, the IFC, the private-sector investment arm of the World Bank, has seen a dramatic increase in loan applications, Li says.

Yet there are also clear signs that the curbs were now being selectively eased: Li says the central government had recently told the IFC that it could resubmit a land-use application for an investment project that it had earlier been asked to withdraw.

Professor Fan Jianping, vice director of the State Information Centre, a Beijing think tank, says local governments have broadly implemented the policies laid down by the centre.

"They might not have done it scrupulously, but to a large extent they have made changes in line with what the central government was looking for. This is a bargaining process."

That's also how it looks in Tianjin, which proudly claims to have manufactured the mainland's first bicycle and first television set.

Pi, the senior official there, says it would be wrong to assume that the local government has turned a blind eye to Beijing's orders. But, he adds with a wry smile, that Beijing has always told local governments to adapt its policies to suit local circumstances.

"There are policies at the top, and relevant measures at the bottom," he says. "I think we've done a good job."

(HK Edition 09/14/2004 page17)