ZHENGZHOU, China (Reuters) -- Poor and populous but rich in resources and crops, China's central Henan province is catching the eye of foreign investors as they seek to counter rising costs and competition in the wealthier coastal regions.

While Henan is not alone in trying to attract more investment, it is among the most ambitious of Chinese provinces, with plans to spend billions creating huge commercial zones alongside its wheat fields and date groves.

Henan, the centre of China's earliest dynasties, has enjoyed economic growth of 15.8 percent over the past two years but has still lagged the national average of 20 percent. Foreign investment, per head of its 97 million people, is still tiny.

"All provinces are building infrastructure," said Yuan Haiying, the founder of Yuan Associates, a consulting firm that advises foreign companies on government relations.

"The question is what comparative advantage over Shanghai or Guangdong can they offer multinationals," he said.

Henan is landlocked, but officials point to its convenient rail links, cheap energy sources and property prices that are a third to a half of those in Beijing, 700 km (440 miles) to the north. They also promise tax breaks and a responsive bureaucracy.

"Henan is a good place to invest for foreign companies," Wang Wenchao, the party head and mayor of Zhengzhou, Henan's capital city, told a group of visiting executives from U.S. companies.

Zhengzhou is backing its ambitions by spending up to 300 billion yuan ($37 billion) on a Japanese-designed "city within a city". Some 1.5 million people will eventually live and work there.

One of the biggest development projects in China, the new zone already boasts one of China's largest convention centers. Work will start later this year on a 280 meter (920 foot) pyramid-shaped hotel.

The central government is not a major financial backer of the scheme, but Prime Minister Wen Jiabao has made development of the poorer central regions a priority. Most people in Henan live in rural areas, and in China that means poor.

With social unrest on the rise as the interior falls further behind the coastal areas, the National People's Congress, or parliament, will approve next month a five-year plan emphasizing better schools, hospitals and roads in rural provinces like Henan, China's most populous.

Not to be outdone, Henan's second city, Luoyang, also has a smaller version of Zhengzhou's new city on the drawing board.

"They are certainly building the infrastructure," said Emory Williams, chairman of the American Chamber of Commerce in China.

"But our members also need a transparent government, IPR protection and a bureaucracy that doesn't hinder the investment process," he said, speaking about intellectual property rights.

Henan may be climbing onto the radar screen of foreign investors, but few have committed to Zhengzhou's new development, which consists now of ten mostly empty high-rises.

The city, home to one of China's three commodity exchanges, also has plans for an 8 billion yuan textile manufacturing zone and has set aside 22.7 square km (8.8 square miles) to house an export processing zone. Less than one square km of the land is currently in use.