Chongqing by night. Courtesy of Chongqing Municipal Government

August 9, 2007 -- Since the middle of July, Chongqing has been at the center of the nation's attention. The worst rainstorm to hit Chongqing for the last 115 years, left the city so seriously flooded that it caused 3 billion yuan (US$396 million) of damage.

This news overshadowed an event that would otherwise have grabbed the headlines: the city should have been celebrating the tenth anniversary as a zhixiashi, a municipality directly governed by the Central Government.

In 1997, Chongqing, Wanxian, Fuling, three regions in Sichuan province were approved by Beijing to combine as China's forth zhixiashi after Beijing, Shanghai and Tianjin.

Chongqing is the biggest among the four in terms of landmass. And as of 2006, the population of Chongqing was around 32 million people.

That means a big consumer market for investors.

"The increase of population and the economy here means a huge potential in the customers we focus on: individuals and small and medium size businesses," said Jackson Tang, the general manager of Liberty Mutual Insurance Company Chongqing Branch.

On July 25, Liberty Mutual, the Boston-based diversified global insurer and sixth largest property and casualty insurer in the U.S. decided to base its China headquarters in Chongqing. The Company ranks 95th on the Fortune 500 list of largest corporations in the U.S. based on 2006 revenue. This is the first time that such a well-known multinational has chosen Chongqing as their China headquarters.

Liberty Mutual's Chongqing office wrote its first auto insurance policy in June 2005. The company expects its Chongqing business could increase by 20 percent each year in the coming years.

Another foreign company attracted to the size of Chongqing's population was Honeywell.

"We chose Chongqing is because it is China's most populous city, it is a strategically important market," Dave Cote, Chairman and CEO of Honeywell said in the opening ceremonies of Honeywell (China) Advanced Solutions in Chongqing this May.

In May, Honeywell established its forth Global Engineering Center in Chongqing after opening up others in India, Romania and Argentina.

"It has a robust industrial sector, great technologies and a large engineering talent base," added Cote.

It is not only the size of Chongqing that makes it special; the location itself is special.

"Chongqing has geographical advantages, because of the Yangtze River. It can provide logistics services effectively. As well as this, there is an integrated industry system, abundant natural resources, and low cost labour... All of these advantages are attracting foreign enterprises to come to Chongqing," Zhiqing Liu, a officer of Chongqing Foreign Trade Committee, told Emerging China.

The local demographic does not fit the standard consumer mould, since most of them are farmers: more than 73 percent population of Chongqing lives in the countryside.

"Chongqing's foreign invested companies are different from those located in coastal cities," He Qing, the analyst of Chongqing Academy of Social Sciences, told Emerging China. "Most products from joint ventures in coastal areas are exported due to the geological advantages, but Chongqing is an inland city, so most of them are looking for local consumers within China."

"Urbanization in Chongqing means golden opportunities for construction and real estate companies as the demand must surge," added He Qing.

"Ten years ago, choosing Chongqing as a zhixiashi was one step in China's overall Westward Development Strategy," Xu Jialu, the Vice Chairman of the Standing Committee of the National People's Congress said, in a speech during a forum to celebrate the anniversary of zhixiashi on June 29 in Chongqing.

When Chongqing celebrated its tenth anniversary as a zhixiashi in June, Beijing approved Chongqing as the testing ground for balanced development between urban and rural area.

Since the second quarter of 2002, Chongqings economy has kept two-digit increase for five years in succession. Growth has speeded up as the proportion of state owned companies has diminished.

For the first few years after becoming a zhuxiashi, Chongqing's economy was overwhelmed by state-owned companies, 70 percent of which were at a loss. As these enterprises went bankrupt one by one, the city's unemployment rate surged dramatically.

As a result, Chongqing's private sector has boomed. In 2006, 54 percent of the city's GDP was contributed by the private companies and about 60 percent of the city's employment of the city comes from the private sector.

Chongqing's most famous product is automobiles, especially the motorcycle. Out of every four motorcycles exported from China, one comes from Chongqing. In the first half of this year, 1.4 million bikes have been exported.

And as a result, Chongqing's largest enterprises are all motorcycle or automobile makers. Changan Automobile and Jialing Motorcycle are two venerable state-owned enterprises; whilst private companies like Lifan and Zongshen have quickly diversified into other sectors such as finance.

These companies have also made significant deals with foreign partners: Changan has partnerships with Ford and Suzuki; while Jialing has partnered with Honda.

Growth in the private sector, as well as cooperation between both foreign and domestic players on such a large scale is proof that Chongqing is becoming an ever more important industrial center.