Shenzhen failed to meet its economic growth target last year due to worse than expected results in key technology sectors but its mayor remains confident it did enough to overtake Hong Kong and join the ranks of the five biggest city economies in Asia for the first time in its history.
The south China boom town has been steadily making ground on Hong Kong in recent years, but its nominal gross domestic product in 2017 fell about US$3.4 billion short of a place among the giants of Tokyo, Seoul, Shanghai, Beijing and Hong Kong.
In 2018, Shenzhen’s GDP increased by 7.5 per cent to about 2.4 trillion yuan (US$352.71 billion), mayor Chen Rugui said at the opening of the annual municipal people’s congress on Friday. Its growth target was 8 per cent.
“The economic size [of Shenzhen] is among Asia’s top five cities,” he said.
Despite Chen’s confidence, Hong Kong’s 2018 figures, which will not be released until next month, are expected to show GDP growth of about 3.2 per cent to HK$2.86 trillion (US$364.6 billion), which would see it edging out its mainland neighbour once again.
The gap between the two cities’ economies is now so small that fluctuations in exchange rates and methods of calculation can sway the result, although both have sought to play down the rivalry.
Early last year, Shenzhen’s statistics agency even issued a clarification of the city’s nominal GDP figure for 2017, confirming it was still smaller than Hong Kong’s.
Shenzhen is known as China’s hi-tech hub and is home to many of the country’s biggest technology names, including Huawei and Tencent.
While its strategic emerging industries – which includes such fields as information technology, biotechnology and new materials – contributed 37 per cent of the 2018 GDP figure, the ratio was down from about 40 per cent in each of the previous two years. The result was also disappointing in terms of Shenzhen’s broader goals, having set itself a target to grow the sector to 42 per cent of GDP by the end of its current five-year plan period in 2020.
The combined GDP growth among strategic emerging industries slowed to 8.5 per cent in 2018, from 13.6 per cent the year before, although the city still managed to attract 3,000 new hi-tech firms, taking the total to about 14,000.
Shenzhen spent about 100 billion yuan, or 4.16 per cent of its GDP, on research and development last year – a slight increase from 4.13 per cent in 2017 – and this is targeted to rise to 4.25 per cent in 2020.
Its foreign trade in 2018 grew by 7 per cent year on year to about 3 trillion yuan – as output from firms with annual revenue of at least 20 million yuan gained 8.8 per cent – while retail sales increased by 2.5 per cent to 616.3 billion yuan.
As China continues to fight a trade war with the United States, Shenzhen, like most other cities and provinces in the world’s most populous nation, has cut its economic growth target for 2019, to 7 per cent. It has also lowered it new jobs target for the year to 80,000, from nearly 109,000 in 2018.
Chen said that the economic downturn had put a huge strain on the city’s growth prospects, while a lack of available talent in the field of research and development was stifling innovation and doing nothing to ease its over-reliance on imports for many core components and equipment.
He said the city remained committed to supporting the development of the Greater Bay Area by speeding up the Qianhai-Shenzhen-Hong Kong cooperation zone – part of the Guangdong free-trade zone – and the Lau Ma Chau Loop – a new innovation and technology park. It would also support the expansion of the Qianhai Cooperation Zone, he said, but did not elaborate.
Wang Hailong, a deputy to the Shenzhen People’s Congress and boss of a local telecommunication equipment company, said he was not surprised by the slower growth in emerging sectors.
“It’s essential to invest in innovation through research if Shenzhen wants to maintain its remarkable expansion,” he said. “But in the current climate, it’s not easy to attract top global talent.”
Guo Wanda, vice-president of the Shenzhen-based think tank China Development Institute, warned of a possible “hollowing out” of the local economy if the city government failed to support hi-tech companies during this difficult period as they may be lured away.
Source: SCMP
Image copyrightAFP/GETTY
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