CHONGQING'S AIR/RIVER FREE TRADE PORT TO BECOME AMONG

UNCLAS SECTION 01 OF 02 CHENGDU 000222

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TAGS: EIND EINV ELTN ETRD PGOV CH
SUBJECT: CHONGQING'S AIR/RIVER FREE TRADE PORT TO BECOME AMONG
WORLD'S LARGEST, SYMBOLIZES CHINA'S COMMITMENT TO GROWTH IN INLAND
AREAS

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1. Summary: Chongqing's Lianglu/Cuntan Free Trade Port Area,
China's first inland free trade port, is a huge airport/river
bonded area with extensive highway and rail links, and will make
Chongqing the logistics hub of China, local officials boldly
predict. Chongqing Airport, the first in China to be approved
with four long runways, will eventually reach annual passenger
levels of 75 million, possibly making it the world's second
busiest, and in the top five for cargo handling. Of great
significance, Chongqing has started testing direct rail links to
Europe via Central Asia and Russia that are cutting shipping
times in half (14 days versus 28-plus by sea). End Summary.

"Airport + River Port" Bonded Area is China's First
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2. Consul General, Senior Commercial Officer, and PolEconOff met
September 23 with Zhu Dalun, Chief Supervisor, and Deng Kai,
Investment Official, at the Chongqing Lianglu/Cuntan Free Trade
Port Area (LCFTPA). Established by State Council decree in
November 2008, LCFTPA is the first free trade port in inland
China. The facility is the only Chinese port that combines and
interconnects both bonded air and river ports, including 2.37
km2 of bonded space at Chongqing Jiangbei International Airport,
and a 6.0 km2 bonded river port at Cuntan.

Chongqing as Future Logistical/Transportation Hub of China
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3. Chongqing is uniquely positioned in the center of China to be
a logistical hub connecting both to the nation's booming coastal
areas to the east, and to Central Asia and Europe to the west,
Zhu asserted. To make his case, he pointed to a wall map with
Chongqing at the center and three almost equidistant spokes
radiating out northeast, east, and southeast to China's
principal coastal poles of growth -- the Bohai Sea area
including Beijing, Tianjin, Dalian and Yantai; the Yangtze River
Delta including Shanghai, Suzhou, Hangzhou and Ningbo; and the
Pearl River Delta including Guangzhou, Shenzhen and Hong Kong.
Three major international package delivery companies -- UPS,
FedEX, and DHL -- have all been studying using Chongqing's
international airport has a hub, he stated.

Chongqing Airport to be China's First with Four Runways
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4. Chongqing's International Airport, currently one of China's
ten largest, is the first airport in China to be approved for
construction of four runways. Chongqing currently has 70 air
routes providing links to more than 55 cities; within three
hours one can reach nearly any region of China, and within six
hours nearly anywhere in Asia. 2008 passenger throughput
reached 11.2 million, and cargo capacity reached 160,000 tons.
When all four runways are operational, the company predicts
annual passenger throughput of 75 million, and an annual cargo
handling capacity of 2.5 million tons. (Note: This would make
Chongqing the second busiest airport in the world.
Hartsfield-Jackson International Airport in Atlanta, the world's
busiest in passenger volume every year since 2000, saw just over
90 million in 2008, with Chicago O'Hare following with just
under 70 million. The cargo predictions would put it in the
world's top five. End Note.)


5. The expansion of the existing airport terminal and
construction of the second runway will be completed in 2010.
Zhu did not offer projected completion dates for runways three
and four, which will be mainly used for cargo, with the third
runway efficiently ending adjacent to the Lianglu airport free
trade zone.

Western China's Largest River Port
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6. The Cuntan International Container Terminal, with the largest
throughput capacity of any port on the upper and middle
stretches of Yangtze River, is also the largest of four major
river ports in Chongqing. It provides river and airport
international cargo terminal functions, bonded logistics,
processing, and trade. The river port's annual capacity is
designed to be 1.26 million TEU ("twenty foot equivalent unit,"
or a twenty foot shipping container),though the actual amount
will be closer to two million TEU. In 2008, the port moved
240,000 TEU. Once the water level of the Three Gorges Reservoir
reaches 175m, a 5,000 ton vessel will be able to navigate all
the way to Chongqinq year-round, with 7,500 ton vessels
available for six months.

A Web of Highways, and Europe by Rail in 14 Days
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7. Located at the geographic center of China and sitting astride

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the Yangtze River, Chongqing is already the largest commercial
logistics hub and industrial center on the upper stream of the
Yangtze and in western China. Touting the city's convenient
road and rail links, "like two concentric wheels with 10
spokes," Deng said one can reach more than 20 cities in
neighboring provinces within three hours from Chongqing. By
2012, highways will be built from Chongqing to Xi'an, Chengdu,
Kunming, Guiyang, Changsha, and Wuhan. By 2015, the city hopes
to implement planned railway links allowing one to reach
surrounding provincial cities within four hours, and the Yangtze
River Delta, Pearl River Delta, and areas of Southeast Asia
within eight hours.


8. As of 2010, Deng reported, Chongqing will have operational
direct rail links to Europe. Passing out of China via Xinjiang
Province into Kazakhstan, the line will run through Russia and
into Europe, eventually terminating in Luxembourg. The company
is already successfully running test shipments to work out kinks
in customs stops along the way, Deng said. When operational,
the rail link will allow containers to reach Europe in 14 days,
compared to the current 28-plus days for shipments originating
in Chongqing.
BROWN