It houses China's financial and logistics centre and increasingly important manufacturing bases. It's a major destination for foreign direct investment. The per-capita disposable income is the highest in China: at 15,243 yuan (Bt73,300) last year, it's 145 per cent of the country's average and still rising 13.3 per cent year on year.

China's Yangtze River Delta (YRD) area has been likened to the head of a revitalised dragon and is posing some very relevant and crucial questions, both to itself and to outsiders. Questions like "What's next?" and "Is such a dazzling performance sustainable?"

A senior Chinese official from Beijing says the YRD could continue to shine as the "Chinese Wonder" if the right combination of global expertise and local insight could be achieved. But at the local level, the vocal question remains: "Who's in charge here?"

There is no question of the vast potential of the YRD development scheme. But at the recent China Daily CEO Roundtable International Summit at this historical seaport city in Zhejiang province, only a 38-minute flight from Shanghai, foreign participants from major corporations cited the need to build up "talent and people". Also of great concern to foreign investors trying to pry open the Chinese market in this booming coastal area is a lack of coordination between cities and provinces.

"China today doesn't have a single market, but many municipal and provincial markets," declared one Hong Kong-based academic. The fragmented nature of the Chinese market is only one issue among several hot topics, another being a lack of regional coordination. "It can be very costly if there's duplication in infrastructure. The notion of regional cooperation is popular. Many talk about it, but few places have made it a reality," the same professor lamented.

Mayors from various cities in Zhejiang province were on hand to assure current and future investors that they were well aware of the challenges facing their region. After almost two decades of unparalleled development, the YRD now must pause and take stock. Its competitiveness is facing new challenges. One Chinese businessman told me: "The Yangtze Delta is no longer an exclusive special economic zone. Down south, the Pearl River Delta is also fighting for the same group of international investors. My take is: innovate or die!"

The YRD, which consists of Shanghai and 15 cities in Jiangsu and Zhejiang provinces, accounts for about 35 per cent of China's total import and export value. What's more, it represents 22 per cent of tax revenues. Its growing role in China's rapid economic advance was enhanced by the confirmation that this area, in the first three quarters of 2005, contributed 20 per cent of the country's GDP. In other words, a single region covering only 1.14 per cent of the whole country accounts for one-fifth of the total economy. The YRD rightfully claims the distinguished title of powerhouse of the country, with Shanghai hailed as China's financial and logistics centre and Zhejiang and Jiangsu increasingly important manufacturing bases.

But after two decades of blistering growth, the region has run into some roadblocks. The costs of energy and resources have jumped. Environmental pollution has taken its toll. No doubt if competitiveness, innovation and high-end services are high on the agenda of multinational investors looking for untapped opportunities here, there is no escaping the fact that sustainable development is uppermost in the minds of the Chinese leadership. Beijing is trying to strike a balance in the wake of the worrisome widening gap between the rich in the eastern coastal cities and the poor in the western hinterland.

The pace with which China is opening up the Yangtze Delta to the outside world is dazzling indeed. The Ningbo municipal government, which co-organised the one-day talkfest, made it clear it wanted as many "big multinational corporations" represented as possible.

Vice Minister of the State Council (cabinet) Information Office Wang Guoqing told the meeting that the delta now held the "historic opportunity" to integrate with international markets, as China's reform and opening up continued, and globalisation accelerated.

Changes - profound changes - are indeed taking place in China. National and regional officials are now even ready to listen to critical, albeit "constructive", comments from outsiders whose capital and know-how are considered vital to China's "next great leap forward".

But frank and open exchanges of views between private businessmen on the one side and policy-makers and officials on the other remain elusive. The practice of engaging actively in direct discussion in an open forum with stakeholders remains off-limits. Most mayors attending the conference simply read from a prepared text, promising "great business opportunities" and proper steps towards "sustainable development", then left the conference room, leaving critical questions raised by participants from international companies unanswered.

"The officials, however senior they may be, are still too scared to make any blunders if they exchange views in an open manner with the foreign investors, or even their counterparts from other counties. But the fact that they were there, admitting that there were problems with pollution, competitiveness and innovation, must in itself be considered quite a step forward already," commented one seasoned observer.

Still, it's clear that a strategic shift is inevitable if China's regional powerhouses are to maintain their economic edge. The buzzword is of course "sustainable development". But how to move away from resource-intensive industries through innovation while avoiding an environmental disaster remains the biggest challenge, all the way to the top of the Beijing leadership.

Suthichai Yoon