It must be a big deal for Gansu province to see its bank listed on the Hong Kong stock market. From street signs to billboards at a ski resort, it is hard not to notice the congratulatory messages in its home town even two weeks after its listing.
And Gansu Bank, a leading financial institution in one of the poorest provinces in China, got off to a flying start. Despite being only slightly oversubscribed, Gansu Bank shares have gone up 20% since its debut, thanks to the surge in investors’ interest in mainland Chinese banks this year.
The bank would probably surge even higher if it were listed in Shanghai instead.
Who says a low-end population cannot have high aspirations? I joined a trade delegation last week to explore the potential of investment in Gansu, the origin of the Belt and Road Initiative and a strategic investment location for Islamic and European countries.
Gansu is not a business-friendly city. Staying there for five nights reminded me of my first visit to mainland China 30 years ago when people were making only few hundred yuan a month.
Gansu was one of the few provinces that last year churned out a lower-than-average 3.8% growth in gross domestic product, with an average resident earning around 2,000 yuan (US$315) per month.
Labeled as one of the poorest in China, Linxia city in the province’s Linxia Hui Autonomous Prefecture is a developing industrial town just like Dongguan in the 1980s. We visited a dozen enterprises from strawberry cultivation to food processing. During the cold weather, most of the production lines were suspended in a city that is due for a breakthrough.
Linxia is the Mecca of China because 40% of its population are Muslims, and where there is a halal market untapped by Middle Eastern countries. One example is Qing He Yuen Food, which raises and slaughters cows and lambs along with other food-processing businesses.
Qing He Yuen is a model business in Linxia because it has grown into a leading industry that clocked in 12 million yuan in profit in 2016. Thanks to the national strategy that fosters entrepreneurship in the developing provinces, Qing He Yuen has jumped into the IPO (initial public offering) queue and is awaiting a listing in March, and a possible dual listing in Hong Kong next year.
But Linxia is still a long shot. A modern bar decorated with Islamic architecture and heritage is called Eight Squares and Thirteen Alleys, a Linxia version of Hong Kong’s Lan Kwai Fong, and guess what? There is not much night culture among Chinese Muslims. What a waste!
In a newly opened ski resort, the cover charge is only 60 yuan but it is still far from a vibrant business, badly needing more visitors.
If Linxia is 30 years behind a modern China city, Lanzhou perhaps is way closer to what most modern cities look like. Relying on heavy industries, Lanzhou seems to be the powerhouse of Gansu, accounting for one-third of the provincial GDP.
Lanzhou’s International Trade Port is a logistics center in the making. Strategically located on the Silk Road, Lanzhou is the western gate that connects the northern Chinese provinces with Southeast Asia, Middle East and beyond by air, sea and land transport such as high-speed rail.
The “land port” authority carries the hopes of Lanzhou, which expects container throughput to reach 20 million twenty-foot-equivalent units by 2020 with the value of imports and exports exceeding $15 billion.
With more investments flooding in and cross-country rail services building up, the dream of Silk Road 2.0 might be coming much closer to reality after more than 2,000 years of aspiration.