(Yicai Global) May 23 -- The competition among China’s local governments for investment has become intense, with officials even from the developed eastern provinces rushing to the underdeveloped western regions to seek out cooperation projects.

Wang Menghao, head of advisory and transaction services for southwest China in the industrial real estate department of US commercial property consultancy CBRE Group, recently met with many officials looking for investment from eastern provinces such as Guangdong, Jiangsu, and Shandong, he told Yicai Global.

“Manufacturing and high-tech firms in western provinces are on their lists for a visit,” he noted. “There are many research institutions in southwest China, and firms they have incubated are the focus of investment promotion officials from eastern provinces.”

CBRE's newly developed industrial real estate business focuses on site selection for new production bases for foreign companies. It also provides services for China’s local governments and industrial parks to help attract investment.

“Investment promotion officials at the municipal and district levels are traveling around, turning themselves into salespeople,” Wang said, noting he has been on business trips since early this year, almost without a break. “Because their task to attract investment is a heavy one, they swallow their pride as officials.”

Shanghai, China's most economically developed city, which used to be a major destination for visiting western officials seeking investment, held a Shanghai-Chengdu-Chongqing investment promotion conference in the southwestern Chinese city of Chengdu on May 19.

“To seek outside investment, we’re willing to visit cities with a gross domestic product of more than CNY2 trillion (USD285 billion),” Wang Dong, director of the Shanghai Investment Promotion Service Center, told Yicai Global at the conference.

Shanghai is taking the initiative to attract businesses mainly because sister provinces and cities have many good firms, especially leading enterprises, Wang noted. We also need to go into the workshops of potential partners to understand firsthand the situation of these companies for a precise project matchmaking, he added.

“Coastal developed provinces and cities in eastern regions come here to attract investment, confirming that progress in the Chengdu-Chongqing region’s economic and industrial development is real,” according to an official in Sichuan province’s investment promotion department. “It also reminds us that the fierce competition to attract investment has put great pressure on local government officials.”

In the past, building government-funded infrastructure was a major part of new investment projects in China’s small cities, but the construction cycle is long and the investment return is slow, an economist said. With local governments facing relatively large debt pressures, attracting outside industrial investment has become a good alternative and a priority, he added.

In the scramble for investment, “everyone is redoubling their efforts,” the economist said.

But at a time when the economy is facing a possible slowdown, there are only a handful of booming firms with the desire and strength to invest, while most other companies are generally taking a cautious attitude towards business expansion, he said, adding that that only serves to intensify the battle for investment.

When negotiating with local governments and their industrial parks, Wang Menghao could sense the great importance local government officials place on attracting investment, as well as how fierce the competition is. “Major municipal officials often choose to attend tenders for major investment projects, and don’t simply limit their efforts to just handshakes with potential investors,” he said.

Editors: Tang Shihua, Martin Kadiev