Video: Under the radar

By Mike Hegedus Special Features Correspondent
CNBC
updated 5/9/2006 7:39:57 PM ET 2006-05-09T23:39:57

It’s shortly after dawn, on the shores of West Lake in this city that was one of the seven ancient Chinese capitals. This is the time of day when the city is closest to it's roots and its 5,000-year-old history.

It is a scene that repeats itself morning after morning, which is good. Because in about an hour, this city of 6.5 million located 180 kilometers south of Shanghai becomes the new China -- bigger than just a handful of American cities and yet virtually unnoticed outside the Chinese mainland.

While it is still the place where the Chinese go to decompress, take vacation, get married and have their pictures taken by a host of Taiwanese wedding photographers, the city that has grown up around this ancient lake is the capital of the fastest growing economic province – Zhejiang - in the fastest growing economy in the world. But could you find it on a map?

“As a whole the GDP is number four in China, but in terms of the average personal GDP in China,  Zhejiang is number one," said Huang Yong, Zhejiang’s Provincial Development Vice Director.

Hangzhou's Gross Domestic Product in 2005 was a little over $36 billion; personal GDP stood at $5,000.

And the engine driving the growth?  Welcome HEDA - the Hangzhou Economic and Technological Development Area - a place that didn't exist 15 years ago. Today, it is host to over 50 of the global Fortune 500 – some 390 companies from 30 countries. Last year alone it took in nearly $2 billion in foreign investment. It’s home to 14 colleges and universities with over 130,000 students. Some 200,000 people live and work here.

What started it all was foreign investment in foreign-owned companies making products for foreign markets - like 2.4 million notebook computers a year for Toshiba annually. It’s the beverage manufacturing center for most of Asia. They make cosmetics here for Mary Kay.

“We have skin care, skin supplement, also like colors, lipstick, lip gloss, eye shadow,” said Vincent Yao, technical director for Mary Kay, on a recent tour.

What's fueling the growth now - both physically and in new foreign capital - are places like Supcon, born out of a local university. It's a software and control systems manufacturer – Chinese owned and privately run. Sales are growing between 30 and 40 per cent annually - without yet having penetrated the U.S. market. In fact, it is these non-state run businesses that account for most of Zhejiang’s economic growth.

“The non state run programs in Zhejiang province have played a big role in the provincial economy,” said Huang. “One hundred percent of non-state run businesses is 70 per cent of the whole GDP. And the the employment rate is up to 90 per cent.”

The hope on the part of provincial officials is that HEDA, with it's emphasis on privately run, Chinese-owned, university sector-inspired, high technology businesses, becomes a model for the rest of the national economy.

And if you think it can't happen, remember this. Five years ago on this spot, there was ... nothing.

“No building here,” said Zhong Weitao, Supcon Vice Manager. “Just empty land.”

In fact, that is one of the toughest things to find in Hangzhou -- empty land. And when you do, it won't be empty for long. One farmer called this her last harvest; the land has been sold for development. Who knows what will be harvested here next?

CNBC: “So what you're creating here is really historic?”
ZHONG: “Yes, yes. We're making history.'

History - in an already historic spot. Now can you find it on a map?

© 2012 CNBC, Inc. All Rights Reserved

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