The Pearl River Delta National Independent Innovation Demonstration Zone was officially established on Nov. 12 as part of the an industrial cluster.
The cluster will have eight high-tech zones including Guangzhou, Zhuhai, Foshan, Huizhou Zhongkai and Jiangmen.
There are three main opportunities for the Pearl River Delta region under the 13th Five-Year Plan.
The first comes from the shift to a development model from a rapid-growth strategy.
Local authorities have allowed Guangdong to move one step at a time since opening it up to investment.
With its proximity to Hong Kong and Macau, the region is pursuing a trade model of “stores in front and factories behind”.
Between 1978 and 2008, the regional economy grew by double digits, up to 4 percentage points above Guangdong’s average growth rate.
The region has established itself as one of the world’s major manufacturing hubs and created a Pearl River Delta economic miracle.
As a result, Guangdong has become the nation’s largest economic powerhouse.
However, waning external demand and a shortage of resources have capped growth below 9 percent for the first time since 2009.
Last year, it shrank to 7.8 percent.
The Pearl River Delta region launched industrial restructuring in 2009 in line with the country’s move to an innovation-driven economy.
The second opportunity for the region comes from its own efforts to raise quality and efficiency, eschewing rapid expansion.
The regional economy was worth of 5.78 trillion yuan last year, 450 times bigger than it was before the opening up.
The figure is up 58.4 times from the early 1990s.
By contrast, the local government’s fiscal revenue rose 54.3 times during the same period.
That means for every fixed investment of 10,000 yuan, 29,000 yuan of new GDP was generated compared with 38,000 yuan previously.
The third opportunity comes from two-way investment flows and less reliance on foreign capital and technology.
However, the global economy is still struggling, without any sign of a new growth engine.
The Pearl River Delta region needs to allocate resources more efficiently.
That creates an opportunity to deepen its links with Hong Kong and Macau.
Most cities in the region have managed to stabilize growth despite the global slowdown.
Guangzhou and Shenzhen, the region’s two largest economies, reported GDP growth of 8.3 percent and 8.7 percent, respectively, in the first three quarters.
Both surpassed the 7.9 percent growth of Guangdong province.
Meanwhile, Zhuhai expanded 9.3 percent, making it the fastest-growing economy in the region. Foshan, Zhongshan, Jiangmen all achieved 8.3 percent growth.
The region’s manufacturing sector continues to develop toward the high end of the value chain.
Six cities and one district in the Pearl River West saw their equipment manufacturing investment expand by more than 20 percent. Added value rose 13.4 percent to 175 billion yuan.
High-tech manufacturing achieved added value of 580 billion yuan, up 9.8 percent from the year before, accounting for 26.7 percent of the industrial sector.
The service sector created more than 231,000 new jobs while traditional manufacturing laid off 240,000 employees.
The sector accounts for 66.1 percent and 59 percent of the economy of Guangzhou and Shenzhen, respectively.
This article appeared in the Hong Kong Economic Journal on Nov. 16.
Translation by Julie Zhu
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