Interior China seen as hot growth spot.

If China is a land of vast opportunity--as well as considerable risk, of course--interior China is a region where opportunity is magnified still more.

Several speakers at a recent Marsh & McLennan panel on "western" China painted a picture of a largely rural area with tremendous potential for tourism and natural resources industries, but one with relatively scant attention until recently because of infrastructure problems and poor connection with the fast-growing port cities to the east like Shanghai and Guangzhou.

Frank Hawke, chairman of Greater China and Southeast Asia for Kroll, a Marsh subsidiary, said there is still extensive poverty in the region around Chengdu, but "islands of development" where real wealth is being created. Much of the discussion focused on the region around Chengdu, about 1,000 miles west of Shanghai.

Hawke and other speakers said the area remains dominated by state-owned industries, but that Western companies are moving in. While only 3.2 percent of foreign direct investment in China went into the region last year, 78 blue-chip global companies have arrived in Chengdu, the area's cultural and economic capital for centuries.

Chengdu's economy, in fact, has grown at a 13 percent clip over the last few years, Marsh noted, and GDP growth has been 42 percent above the national average.

High-tech, healthcare and education projects have been launched, and more than $20 billion is expected to be poured into construction of key projects like new highways, small airports and rail transport.

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Still, lots of challenges remain, noted Cyrus P. Quadland, managing director and practice leader for Marsh's Private Equity and Mergers & Acquisition Services. These include widespread fraud and corruption, "woefully neglected" catastrophic planning, a fragile power grid, suspect phone communications and severe pollution in some areas.