During the last two decades of rapid economic growth, China's second-tier cities have developed at their own pace as the central government and foreign investors have focused on boomtowns such as Shanghai and Beijing.

Now that China's showcase megacities are experiencing rising costs and fierce competition both in most sectors, foreign investors are slowly waking up to the fact that there are other cities in China besides Shanghai and Beijing.

Last week, as reported in Inc. Magazine's blog, Barry I Friedman, Minister-Counselor from the US Embassy in Beijing, presided over a discussion at the Business Council for International Understanding in New York in which he encouraged US companies to consider investing in China's second-tier cities, including Kunming.

Inc. writer Nitasha Tiku noted that Kunming and 13 other second-tier cities in China are "currently boasting 2 percent higher GDP growth than China's national average. What's more, while these cities comprise only 8 percent of the country's total population, they account for 19 percent of its total GDP."

Major reasons for the recent rise of second-tier cities - which typically range in population from five to eight million - are highway and other transport infrastructure improvements, large-scale migration of rural residents to cities and a growing middle class in these cities.

William A Brekke, commercial counselor at the US Foreign Service, who recently told Xinhua that nearly half of the US companies operating in China had a presence in either Shanghai or Beijing, said the US Foreign Service was working to help promote investment by US companies in China's second-tier cities:

"The [US] Department of Commerce and the China Council for Promotion of International Commerce established an International Associates Network which primarily includes 14 second-tier cities which represent 53% of the nation's total imports. With a growing middle class, they offer large markets. [Translated from Spanish]

The second-tier cities Brekke refers to are: Dalian, Qingdao, Chongqing, Shenzhen, Hangzhou, Tianjin, Harbin, Wuhan, Xiamen, Nanjing, Xi'an, Ningbo, Zhuhai and Kunming.

What is Kunming's role in the rise of China's second-tier cities? The regional feature in this month's issue of Insight, the magazine of the American Chamber of Commerce in Shanghai focuses on Kunming unique advantages for foreign investment. In the article Wang Guangzhong, Director of the Kunming Municipal Bureau of Commerce, emphasizes Kunming's proximity to fast-growing economies elsewhere in Asia:

"Kunming's situation is much different from China's developed coastal cities... Kunming still has much room for economic growth and development - as it becomes more connected to ASEAN and South Asia, it will begin to realize this potential."

[Editor's Note: The Insight article cited above was written by GoKunming's editor]

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