22 July 2019
The Guangdong Free Trade Zone is among the various initiatives that will help the Pearl River Delta region move to the next level. Photo: Xinhua
The Guangdong Free Trade Zone is among the various initiatives that will help the Pearl River Delta region move to the next level. Photo: Xinhua

Why the Pearl River Delta has a bright future

In December, Beijing convened the Central Urban Work Conference for the first time in 37 years. During the years since the previous meeting, the city cluster in the Pearl River Delta region has witnessed tremendous growth.

In 1978, there were 3 cities and 32 towns in the region, but by 2014 the numbers grew to 16 cities and more than 320 towns. The urbanization rate of the region has surged to 84.12 percent from 26.56 percent during the period, equivalent to an annualized growth rate of 1.6 percent.

The city cluster in Pearl River Delta region has posted urbanization rate more than double that of the nation’s average in the period. It has become the “engine” of economic and social development in Guangdong province or even for the whole South China region.

However, rapid growth model based on traditional industrialization has led to various issues, such as traffic congestion, pollution, ecological degradation, slow industrial upgrade, loss of traditional culture and lagging public services.

The region has adopted an urbanization route centering around a total of 9 mega cities and super-big cities, which account for nearly 80 percent of town residents. There are another 5 big cities in the region with population of 500,000 to 1 million. If combined, these 14 cities represent 85.85 percent urban population in the region.

The Pearl River Delta region has fostered two mega cities, Guangzhou and Shenzhen, which have a population size of around 10 million. And they connect with a number of super large and extra large cities like Foshan, Dongguan, Zhuhai, Zhongshan, Huizhou, Jiangmen and Zhaoqing. This metropolitan circle has gathered over 86.4 percent of total rural population in the province.

As the region moves towards service economy and an innovation-driven model, it has generated massive traffic load among various cities in the region.

However, the transport infrastructure in the city cluster in the region has shown signs of slowing in recent years. For example, Guangzhou outlined 10 metro lines between 2011 and 2015. However, six lines have yet to start construction. The situation in the downtown area of Guangzhou has worsened.

To combat the problems, various cities in the Pearl River Delta region have accelerated their plans. Guangzhou intends to invest 314.8 billion yuan on 15 metro lines during the 13th Five-year Period. Shenzhen also stepped up efforts in building subway linkage with Dongguan.

The city cluster of the Pearl River Delta centered around Guangzhou, Shenzhen and Hong Kong had a combined GDP of more than US$1.29 trillion in 2014, accounting for over 13 percent of the nation’s total.

And the city cluster made up nearly 30 percent or US$625 billion of the nation’s exports, and 3 percent or US$1.15 trillion of the world’s total import and export. Obviously, the region has great significance for China or even the global economy.

However, traditional industries continue to dominate the economy of the region. In Shenzhen, hi-tech and emerging sectors have yet to take dominance, and there is still long way to go.

Guangzhou has recorded an economy of over 1.8 trillion yuan last year, mainly contributed by traditional manufacturing and trade. High-tech and emerging industries account for around 30 percent of the city’s economy. The city’s three pillar industries — automobiles, electronics, and petrochemicals — are all grappling with overcapacity and limited innovation.

Resources are set to flow more efficiently among various cities in the region as transport infrastructure improves in the future. In November, the State Council approved the Pearl River Delta National Innovation Demonstration Area, the nation’s second innovation demonstration zone centered around city cluster.

Guangdong province, meanwhile, has also outlined a blueprint to foster innovation industry, leveraging on the strength and advantages of Guangzhou and Shenzhen.

The plan will center around the two mega metros and improve links with other cities like Foshan, Zhuhai and Dongguan, as well as help deepen cooperation with Hong Kong and Macau. The move is set to beef up competitiveness of the whole region in the future.

This article appeared in the Hong Kong Economic Journal on Jan. 11.

Translation by Julie Zhu

[Chinese version 中文版]

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Associate professor, College of Economics, Jinan University

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