China Growth – Will 2018 be the year Shenzhen and Guangzhou finally overtake Hong Kong?
The southern Chinese city of Shenzhen has marked an economic milestone, surpassing the 2 trillion yuan GDP mark with 8.8 per cent growth in 2017 to cement its role as an engine of the Pearl River Delta.
The city, which is roughly the same economic size as Singapore and Hong Kong, recorded nominal output of 2.2 trillion yuan (US$338 billion) in 2017 thanks to its booming hi-tech sector, state-run Shenzhen Special Zone Daily reported on Monday.
Over 40 per cent of the output came from “innovative” businesses such as internet, biotech and telecom, the report said.
Hong Kong’s gross domestic product was US$320 billion in 2016 and was estimated to rise 3.7 per cent last year, while Singapore’s economy was valued at US$297 billion in 2016 and may have grown 2.5 per cent last year.
Starting as a small fishing village in 1980, Shenzhen has grown from a sweatshop into a hi-tech hub home to 12 million people and a group of leading Chinese tech firms, including internet giant Tencent, telco Huawei and drone maker DJI.
It also had more than 3 million registered businesses at the end of 2017, or one registered enterprise for every four people.
In nominal terms, Shenzhen has doubled its economic output in just six years – the city’s nominal GDP was 1.1 trillion yuan in 2011.
According to Shenzhen Special Zone Daily, 4.13 per cent of Shenzhen’s GDP went into research and development in 2017 – the highest for any Chinese city – and that level was expected to rise to 4.25 per cent by 2020.
Hong Kong Chief Executive Carrie Lam said in October that Hong Kong would double its R&D expenditure to 1.5 per cent of its GDP in the next five years to encourage innovation.
Shenzhen people’s congress delegate Yang Qin said Shenzhen’s example was putting pressure on other cities in the region to go hi-tech.
Yang said technology, instead of labour-intensive production or fixed-asset investment, was seen “among local authorities as the best new engine to boost local economic growth”.
Together Shenzhen, the provincial capital of Guangzhou and Hong Kong, have a combined economic size of about US$1 trillion, forming the backbone of an envisioned “Greater Bay Area” meant to lead the national economy to the next stage of development.