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ZNR UUUUU ZZH
R 190843Z JAN 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 5707
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000088 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON TBIO KTDB EAIR EIND EINV CH
SUBJECT: Guangzhou Baiyun Development Forum: Promotion of 
Bio-tech, Real Estate, and Logistics Sectors 
 
¶1. SUMMARY: Guangzhou's Baiyun District is stepping up 
efforts to develop its bio-technology, real estate, and 
logistics sectors.  Officials will focus on developing the 
industrial zone surrounding the new Baiyun International 
Airport, strengthening the bio-medical and bio-engineering 
sectors, and promoting Baiyun's relatively clean 
environment to attract residential real estate development 
projects.  While Baiyun enjoys a relative advantage over 
other areas in the biotechnology and real estate sectors, 
competition from Huadu and Panyu Districts in the logistics 
sector will still be fierce.  Opportunities for U.S. 
businesses should remain strong despite Chinese efforts to 
cool down the economy by restricting investment.  END 
SUMMARY. 
 
Bio-tech Industry Development 
----------------------------- 
 
¶2. Baiyun District plans to build a "Golden Triangle of 
Biological Science" with biomedicine, biological 
agriculture, and biological services as the respective 
points of the triangle.  The Liuxi Bay Baiyun Biological 
Port will focus on bio-medicine, biological agriculture, 
and biological research.  Manufacturing and marketing will 
also be done at Liuxi.  Beijing Bioway Biotech Group Co. 
Ltd. is the first company to set up operatons there. 
Guangzhou Baiyun Biological Medical Health Industrial Base 
will focus on bio-medical manufacturing.  Guangzhou 
Pharmaceutical Co. Ltd, Baiyunshan Corporation, and over 30 
other enterprises will set up operations there, making it 
the single largest medicine manufacturing center in China 
in terms of output.  Helong Biological Service Area will be 
the conference site of the World Biological Economy Forum, 
holding exhibitions and fairs on bio-tech products. 
 
¶3. In addition to the Golden Triangle, Baiyun will set up 
the Guangzhou 863 Industrialization Promotion Center, 
integrating a high-tech enterprise incubator, an industrial 
service platform, and a popular science media center.  It 
will be one of only five such centers in China.  Currently, 
57 enterprises with a registered capital of RMB 480 million 
(USD 61.5 million) have been established under this plan. 
(Note: the State Hi-tech Research Development Plan, or "863 
Plan," for the 11th Five-Year period has spawned projects 
dealing with biology, aerospace, information technology, 
lasers, automation, energy resources, and new materials 
across China.  End Note). 
 
¶4. Guangzhou Sinobioway Co. Ltd., the largest bio- 
engineering group in China, plans to set up a bio- 
engineering incubator in Baiyun.  According to its 
president, the firm's BIOINTEL system (an integrated 
software system developed by Beijing Bioway Biotech Group 
Co. Ltd., combining language and logic processors, a search 
engine, and databases) offers a comprehensive service on 
par with software from Intel, IBM, Microsoft, Oracle, and 
Google. 
 
Real Estate Development 
----------------------- 
 
¶5. Along with Baiyun Mountain and Maofeng Mountain, Baiyun 
District is called "the lung and oxygen bar of Guangzhou." 
Baiyun authorities are promoting its relatively clean 
environment to attract residential real estate development 
projects.  The biggest man-made lake in Guangzhou (to be 
named Baiyun Lake) will be built as a tourist site. 
Despite Ministry of Land Resources' directives in 2003 and 
2006 to cut back on the development of high-end residential 
projects, Baiyun District plans to focus on building garden 
villas and apartments to attract wealthy residents. 
 
¶6. In December 2006, the average price for residential 
housing in Baiyun District was RMB 6,965 (USD 893) per 
square meter.  The average price in Guangzhou city was RMB 
7,435 (USD 953) per square meter.  While cheaper to 
purchase, some expats complain that Baiyun is too far of a 
commute from the heart of Guangzhou. 
 
Logistics Development 
--------------------- 
 
¶7. Baiyun District has introduced a "two circles and three 
belts" plan.  "Two circles" refers to developing airport 
industrial logistics and comprehensive logistics services; 
"three belts" refers to developing rail, road, and air 
transportation logistics services. 
 
 
GUANGZHOU 00000088  002 OF 002 
 
 
¶8. A representative from the Baiyun Airport Management 
Group said that in anticipation of continued passenger and 
cargo business growth, the Group plans to improve 
infrastructure in the nearby industrial zone.  It will also 
accelerate cooperation with customs and other inspection 
agencies to improve efficiency.  He added that China 
Eastern Airlines will establish an operations center at the 
airport and increase the number of its flights through 
Guangzhou, while China Southern Airlines will increase the 
number of its cargo flights early this year. 
 
Logistics Development in Guangzhou 
----------------------------------- 
 
¶9. Baiyun's logistics development dovetails with the 
Guangzhou Municipal Government's plans for the next 5 years. 
Guangzhou plans to invest RMB 50 billion (USD 6.4 billion) 
to build an expressway network consisting of four ring 
roads and 16 highways leading to surrounding cities.  Over 
RMB 18 billion (USD 2.3 billion) will be used for Phase II 
of Baiyun International Airport's development, to include a 
third runway, a second terminal, and facilities for FedEx's 
Asian-Pacific Transport Hub.  Another RMB 26 billion (USD 
3.3 billion) will be spent on the construction of channels 
in Guangzhou Harbor and of Nansha Harbor Phase III. 
 
¶10. Guangzhou authorities are touting their "3+5" plan to 
build international and regional logistics zones.  The 
three international logistics zones will be centered on 
Baiyun International Airport, Nansha Harbor, and Huangpu's 
port and rail facilities.  The following five regional 
logistics zones will be developed: 
 
--Baiyun Logistics Zone to focus on cargo, purchasing, and 
delivery. 
--Huadu Logistics Zone to focus on road and rail 
transportation. 
--Fangcun Logistics Zone to focus on wholesale companies. 
--Panyu Logistics Zone to focus on road transportation. 
--Zengcheng Logistics Zone to serve customers in Dongguan 
and East Guangdong. 
 
Growth and Investment in Baiyun District 
---------------------------------------- 
 
¶11. Baiyun District's GDP reached RMB 50 billion (USD 6.4 
billion) in 2005, the fourth highest in Guangzhou.  In 2006, 
GDP is expected to reach RMB 57.5 billion (USD 7.37 
billion), up 14%.  In the first 10 months of 2006, Baiyun 
District attracted USD 157 million in contracted foreign 
investment.  Multinational companies such as British home 
improvement chain B&Q and UPS have established a presence 
there. 
 
Comment 
------- 
 
¶12. Baiyun's biomedical and real estate sectors should see 
robust growth in the near-term.  However, Baiyun faces 
intense competition from the neighboring districts of Huadu 
and Panyu, currently the two main logistics centers in 
Guangzhou.  Huadu and Panyu have better infrastructure and 
also benefit from their proximity to the international 
airport, rail lines, and ports.  Baiyun's development is a 
key element in Guangzhou's plans to expand growth in its 
surrounding districts.  However, the competition for a 
piece of Guangzhou's development pie among the subordinate 
district governments is representative of the situation 
among cities in a province and among provinces in China. 
 
GOLDBERG