The planned over-the-counter (OTC) market and the Beijing-Tianjin express railway are upgrading the importance of Tianjin and spurring the economic integration of the cities.

The State Council released "Suggestions on Promoting Development and Opening-up of Tianjin Binhai Development Zone" in June 2006, in hopes of turning Tianjin into a new engine similar to the Shenzhen Special Economic Zone and Shanghai Pudong New Area to boost the economy, especially in the Bohai ring.

To realize the goal, the central government and Tianjin municipal government have provided policy and money support to improve its financial system and infrastructure.

And Airbus has invested 7 billion euros to build A320 aircraft final assembly lines in the Binhai Development Zone and plans to produce 300 A320 aircraft by the year 2016 to meet the needs of the Chinese market.

The OTC market

Tianjin is now planning to establish an OTC market in the Binhai Development Zone according to "Overall Planning of Coordinated Reforms in Binhai Development Zone of Tianjin" approved by the State Council during the Chinese People's Political Consultative Conference (CPPCC) and National People's Congress (NPC) this year.

Although a detailed schedule has not been released so far, measures are being taken actively.

OTC market refers to stock transactions outside the main stock exchange boards. It is mainly open to small- and medium-sized enterprises unqualified for listings on the main board.

The flow of stock ownership is not strictly restricted by assets scale or the profit-making ability of the enterprise in the OTC market. It usually requires comparatively lower listing fees and easier procedures.

For small- and medium-sized enterprises, the OTC market provides a more convenient financing channel.

"A large number of domestic enterprises have raised a considerable amount of money in the OTCBB (Over the Counter Bulletin Board, a form of OTC market) market in the United States," says He Xiaofeng, a member of the Research Center on Finance and Industry of Peking University.

"Shenzhen Bak Battery Co Ltd got listed in the US OTCBB market in January, 2005 and altogether has raised US$77 million; Fushi International (Dalian) Bimetallic Cable Co Ltd, US$12 million; Shanxi Puda Co Ltd, US$10 million; and Far-east Energy, US$10 million," says He.

As a component to improve Chinese capital market, the proposed OTC market would meet the various needs for capital at different levels. For example, nearly 1,000 venture investment funds have been registered in Tianjin. The establishment of an OTC market will provide them with a new opportunity to find investment channels.

Express railway

While the OTC market would increase financial importance of Tianjin, the Beijing-Tianjin express railway is strengthening communications between Tianjin and Beijing.

The State Council approved "Planning of Intercity Communications System among Beijing, Tianjin and Hebei in the Bohai-ring" in 2005, and the Beijing-Tianjin express railway began construction in June the same year.

Costing about 7 billion yuan, the express railway began test runs on July 1, 2008 and will run regularly beginning August 1. The shuttle train covers the 120-km distance within 30 minutes, and is the first Chinese passenger train reaching 300 km an hour. Depending on the schedule, a conventional train takes two hours for the journey.

Shorter travel or commuting time isn't the only benefit. Tianjin's larger society is being influenced one way or another by the high-speed train; the most obvious and direct impact is on its real estate market.

Housing prices in Beijing are much higher than in Tianjin and the faster intercity express railway, would make it easier to live in Tianjin and work in Beijing. For Tianjin natives, "it will be more convenient to enjoy roast duck and Beijing opera".

And as China's real estate market teeters on the edge of a depression there are hopes for a revival in Tianjin where housing firms such as the Singyaoo Group from Kunming has already bought a 734 hectare piece of land in the southwest part of the city.

Singyaoo is planning to build a "new downtown" in Jiahu district consisting of living and recreational facilities such as an enormous indoor ski run, swimming and surfing pool, a pedestrian mall and a seven-star hotel designed by Richard Mayer, a leading US architect.

China CITIC Bank will provide a loan of 20 billion yuan for the mammoth construction project.

"We are building a new world here - a world for world-level entertainment and relaxation, " says Yan Yu, chairman of Singyaoo Group.

(China Business Weekly July 21, 2008)