Commentary: Shanghai and Shenzhen, very important cities in China’s subsequent part of progress
SHANGHAI: On Oct 14, Chinese language President Xi Jinping visited the southern metropolis of Shenzhen, the place he delivered a speech celebrating 40 years of progress for the reason that particular financial zone (SEZ) was established there and set a path for the long run.
A month later, Xi headed to Shanghai’s Pudong district – which was designated China’s first “new space” 30 years earlier – for a similar goal.
The centrality of Shenzhen and Shanghai to China’s future growth couldn’t be clearer.
When China first created the Shenzhen SEZ, some questioned its judgment.
For instance, as a postgraduate pupil on the College of Cambridge within the 1980s, James Kai-sing Kung, now of the College of Hong Kong, requested why the federal government would select an unknown village like Shenzhen, slightly than an financial centre like Shanghai or Tianjin, to function an incubator for Deng Xiaoping’s “reform and opening up” technique.
The choice should, Kung concluded, be politically motivated; China’s authorities should have been making ready for the return of neighbouring Hong Kong, which was already a world monetary centre.
However, whereas it’s true that sovereignty over Hong Kong was formally transferred again to China in 1997, Hong Kong’s impression on Shenzhen’s growth was rooted much less in sovereignty than in proximity.
If introduced with an aerial view of Shenzhen’s Futian District and Hong Kong’s New Territories at this time, the latter areas, south of the Shenzhen River, would seem desolate. In the meantime, Shenzhen, with its bustling ports and glittering skyline, is clearly populated and affluent.
This isn’t to say that different areas of Hong Kong aren’t flourishing. The truth is, that’s the level.
Shenzhen’s growth alongside the border with Hong Kong displays the so-called city pileup impact: The buildup of densely urbanised clusters alongside the frontier with a extra developed space, enabling the much less developed area to grab cross-border spillover alternatives.
The identical phenomenon could be seen alongside the border between Mexico and Texas.
An aerial view of the area would reveal sprawling suburbs on the wealthier American facet – making it seem nearly barren – and dynamic, populous cities on the Mexican facet, the place native staff flock to jobs at American-owned manufacturing crops, amongst different alternatives.
As Deng predicted, Hong Kong, with its developed monetary system and financial dynamism, has had equally highly effective spillover results on Shenzhen.
The result’s a thriving metropolis, the place annual financial output will quickly attain three trillion yuan (US$456 billion) – one-third of the Guangdong province’s whole.
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MAJOR GROWTH ENGINES
Shenzhen is thus a serious engine of the Better Bay Space, which covers 9 cities across the Pearl River Delta in Guangdong province, plus Hong Kong and Macau. The area already accounts for about 13 per cent of mainland China’s GDP, and its share is rising.
Shanghai’s geographical location – on China’s east coast, close to the mouth of the Yangtze River – has been equally essential to its success.
But, removed from piggybacking on the dynamism of a neighbour, Shanghai has at all times led the event of the Yangtze River Delta area, and has been the beating coronary heart of the Yangtze River Financial Belt – which covers 9 provinces and two megacities – for the reason that belt’s launch in 2016.
Within the final 30 years, progress within the Pudong new space has bolstered Shanghai’s regional primacy, whereas additionally driving growth in an more and more built-in Yangtze River Delta.
At present, the Yangtze River Financial Belt accounts for greater than 46 per cent of China’s whole output. This area, along with the Better Bay Space, constitutes about 60 per cent of China’s whole output.
UNIQUE ROLES OF SHANGHAI AND SHENZHEN
So, Shanghai and Shenzhen are each very important to China’s financial future. However neither is extra vital than the opposite; every has a singular position to play.
Because the extra mature and developed participant, Shanghai has lengthy been a pacesetter in gear manufacturing. But its financial construction is way from stationary: Town is now being remodeled right into a analysis and growth hub and a middle of commerce, finance, and trendy providers.
Shenzhen, for its half, is on monitor to develop into China’s Silicon Valley. Within the final 20 years, this younger, dynamic metropolis has outpaced Shanghai in hard-technology growth, with dozens of world-renowned corporations – together with Huawei, Tencent, Ping An, DJI, BYD, and SF Categorical – concentrating there.
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To make certain, by way of total technological prowess, Shanghai nonetheless ranks first. However, slightly than changing Shanghai within the areas the place it leads, Shenzhen is turning into a form of laboratory for experimentation, not solely with expertise, but additionally with insurance policies that incentivise and facilitate innovation.
Shanghai can not play that position, as a result of it should proceed to function a predictable surroundings for international commerce and finance.
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Guiding the event of an economic system as massive and various as China will at all times be a tough problem.
However, by recognising and investing within the strengths of pioneering cities and areas, China has developed a strong mechanism for organising and advancing its financial transformation.
Judging by the super success of Shenzhen and Shanghai, it appears clear that China will proceed to reap the rewards of this strategy for many years to come back.
Zhang Jun is Dean of the Faculty of Economics at Fudan College and Director of the China Heart for Financial Research, a Shanghai-based assume tank.