Japan is poised to lead foreign investment in the next important phase of China’s development, centered on Chongqing, an inland city whose name most outsiders have never heard.

The “Japan factor,” hardly mentioned during China’s 50th-birthday party and media binge recently, is about to get the attention it deserves.

The focus has been on United States-China relations because China’s President Jiang Zemin is convinced that good relations with Washington are crucial to China’s development.

Scholars like Harvard’s Ezra Vogel (remember his book “Japan as No. 1” in 1979?) are turning the focus of their research to the U.S.-Japan-China triangle. The emphasis is not so much on security as on a matrix for development of the Asian region, with China as the centerpiece.

Japanese investment activity in China is crucial. Talk all day about American and European investment in Beijing and Shanghai, but the fact is that if Japanese investment in those two cities and elsewhere in China — there are more than 1,500 Japanese firms at work in the crispy-clean northeast Chinese city of Dalian alone — were suddenly yanked out, the country’s development boom would go bust.

Talk about Chinese spies and missiles, as well as Taiwan, dominates news about China in the West. To give some perspective, the economic story of the 1980s was the opening and takeoff of Shenzhen, next door to Hong Kong. This was the last great contribution of late paramount leader Deng Xiaoping.

The 1990s belonged to Shanghai, with Premier Zhu Rongji leading an infrastructure drive that is still going on with flair, and even some flashiness.

Concentrated effort in the next decade will be on Chongqing, the awesome, sootcovered industrial city at the confluence of the Yangtze and Jialing rivers, whose 30 million people live far inland from the wealthy coastal cities.

Ask Osamu Kida, one of Japan’s leading China watchers, about Chongqing. When I saw him at his former post in Shanghai last year, he tried to tell me about the new wave in Chongqing.

Kida’s life-long habit has been to read six or seven Chinese newspapers everyday.

All I knew about Chongqing was that it used to be known as “Chungking” when Generalissimo Chiang Kai-shek headquartered his Nationalist forces there in the 1940s. It was a main base for Gen. Claire Chennault’s American Volunteer Group, the “Flying Tigers.”

In 1997, Chongqing was granted special-municipality status — like Beijing, Shanghai and Tianjin — to spur economic development. Foreign investment incentives have been set up and money is starting to come in.

Kida says Chongqing is rich in resources and “has great potential to become another Shanghai.” Business relationships with Japan are expanding with manufacturing plants of Suzuki, Honda, Isuzu and Yamaha showing the way.

Now holding the title of special Japanese representative in Chongqing, Kida wrote an article for the October issue of the Japanese-language magazine Gaiko Forum, “Can Chongqing become the model mega-industrial city for the 21st century?” He managed to sound positive and convincing without any chamber-of-commerce spin.

Following the Cultural Revolution, military industry was moved to Chongqing from the coast and the city has flourished as a major industrial base for automobile, steel and chemical manufacturing in China.

“The idea was to decant economic development westward from the coastal areas — and to staunch the constant eastward flow of rural migrants,” wrote Time magazine’s Lori Reese recently.

It is the world’s most polluted city: Chongqing’s main product is acid rain. Kida says wryly, “If you have an extra hour, drop by my office and watch the metal furniture turn to rust before your eyes.” High sulfur content in the coal in the area causes an acid-rain problem that is carried by winds as far away as Japan. Sister city Hiroshima has sent experts to help on the problem.

Many experts agree that implementation of a Japan-China environmental program signed recently will contribute more to Asia’s future than any new generation of ballistic missiles.

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