THE NEXT CENTER OF CHINA'S BOOM

THE NEXT CENTER OF CHINA'S BOOM

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 recent 50th birthday party, is on the verge of getting the attention it deserves.The focus has been on U.S.-China relations because Chinese President Jiang Zemin is convinced that good relations with Washington are crucial to China's development.

But 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. It is not so much of a security emphasis as a matrix for development of the Asian region, with China as the centerpiece.

Japanese investment activity in China is crucial. You can talk all day about American and European investment in Beijing and Shanghai. The fact is, however, 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 city of Dalian alone - were suddenly yanked out, the country's development boom would go bust.

To give some perspective, the economic story of the 1980s was the opening and take-off of Shenzhen next door to Hong Kong. The 1990s belonged to Shanghai, with Premier Zhu Rongji leading an infrastructure drive that is still going on.

Concentrated effort in the next decade will be on Chongqing, the awesome but soot-covered industrial city at the confluence of the Yangtze and Jialing rivers, whose 30 million people are 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.

All I knew about Chongqing was that it used to be known as Chungking when Nationalist forces were headquartered there in the 1940s. It was a main base for Gen. Claire Chennault's ''Flying Tigers'' in the war against Japan.

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 some money is starting to come in.

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

Kida, who holds the title of special Japanese representative in Chongqing, is positive without sounding like someone from the chamber of commerce.

Chongqing, for instance, is the world's most polluted city; a main product is acid rain. And Kida says wryly, ''If you have an extra hour, drop by my office and watch the metal furniture turn to rust before your eyes.''

Following the cultural revolution, military industry was moved to Chongqing from the coast due to national policy and the city has been flourishing as a major industrial base for automobile, steel and chemical manufacturing.