No More Beijing or Shanghai: the Pearl River Delta is Taking the Crown

28/06/2019

China’s Greater Bay Area is “stealing” both the national and international interest from historical showcases like Shanghai. But compared to first-tier cities, what makes the Pearl River Delta so competitive?

 

If developing a nation as big as the People’s Republic might sound difficult and slow, the Dragon relies on some well-structured plans, which are all intertwined to reach the one and only goal: to become a global hi-tech superpower and a major player on the international stage.

Together with the Made in China 2025 project and the Belt and Road Initiative (BRI), the plan to organize the country’s economic development and urbanization strategy into 19 city clusters has been one of the main factors that have led the PRC to reach so many successes so fast.

Among the 19 clusters, China’s Greater Bay Area (GBA) is actually leading the country’s hi-tech innovation from the Pearl River Delta region. And its group of big and smaller cities has now become not only a worthy competitor of national major hubs such as Beijing or Shanghai but it now also aims to overtake the world’s three major bay areas, namely New York, San Francisco, and Tokyo.

The Chinese Government wants to build the Pearl River Delta as the largest bay economy by 2020 and if the project is developed according to the plan, the region will turn from the “factory of the world” to the leading center of innovation and services with a GDP of $4.62 billion by 2030.

 

Pearl River Delta - hong kong - cifnews

© Unsplash. Hong Kong. The GBA covers a total area of 56,000 sq km with a combined population of approximately 70 million, which is greater than the Tokyo Metropolitan Area and twice the population of Canada.

 

The concept of the Guangdong-Hong Kong-Macao Greater Bay Area dates back to 2011 when the “Action Plan for the Bay Area of the Pearl River Estuary” was released by officials and it was then reinforced at the beginning of Xi Jinping’s 13th Five Year Plan in 2016. This led to a framework agreement to build the cluster in Southeastern China.

Beijing’s mission is to transform the region into a new technology and innovation hub based on the Silicon Valley model with the aim to overtake the world’s three major bay areas. Therefore, to build the largest and richest cluster of world-class cities for work, life, and leisure, which will enhance the overall economy.

This Southeastern cluster is thus composed by Hong Kong, Macao, as well as the nine municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing in the Guangdong Province.

It accounts for less than 1% of China’s territory and 5% of its population but generates nearly 12% of national gross domestic product (GDP). In 2017, it was about $1.58 billion GDP, more than the Australian one and about the same as South Korea or Russia. It also doubles the value of the annual contribution made by the San Francisco Bay Area.

 

Last February, a new Outline Development Plan for the Greater Bay Area was released providing instruction and guidance for the evolution of the region, confirming Hong Kong, Macao, Shenzhen, and Guangzhou as the four key cities of the bay area and the core engines for regional progress.

 

Nevertheless, the Greater Bay Area is not the only cluster China is betting on. The country’s city clusters plan includes three “super” clusters, which are the Yangtze River Delta, the Beijing Tianjin Hebei cluster, and of course, the Pearl River Delta. The central government prioritizes these three “super” regions to become world-class clusters by 2020, meaning that they will be the most innovative and internationally competitive, driving national economic development.

However, compared to these three “super” regions and all the other 18 clusters, the GBA has some extra kicks. In addition to two special administrative regions such as Hong Kong and Macao, the area also includes two of the country’s major first-tier cities, which are extremely important for both the cluster’s development and China’s economic growth.

Both Hong Kong and Macao serve as international financial hubs. Guangzhou, instead, in addition to being one of the busiest ports in China, will become an international transport hub while Shenzhen is China’s hi-tech innovation capital. It is currently home to over 3 million businesses, including tech giants such as Tencent, Huawei, and DJI. Therefore, investments in research and development here will continue to be one of the world’s highest.

And while the neighboring Shenzhen is known as China’s Silicon Valley, cities like Dongguan in Guangdong Province are quickly becoming new first-tier cities mostly thanks to the large presence of high-end factories.

 

Pearl River Delta is Taking the Crown - cifnews

© Lincoln FOK The Education University of Hong Kong. Guangdong-Hong Kong Macau Greater Bay Area Physical Geography. The size of Pearl River Delta’s populations in 2020.

 

To cement the alliance among cities, the Bay Area’s strategy draws an equally ambitious infrastructure program. An example is the Hong Kong-Zhuhai-Macao bridge, inaugurated last October. Costing $15 billion dollars with its 55 kilometers, it is the longest sea connection in the world. The plan also includes the expansion of Macao airport, the construction of connections to the Hong Kong airport, and the strengthening of Guangzhou and Shenzhen as hubs for international flights.

Moreover, construction sites will open to expanding ports, warehouses, and highways to inland regions, where data centers of dozens of multinationals from Apple to Dell are located. Then a high-speed rail line will minimize connections between the east and west coasts of the Pearl River Delta, ensuring that people, goods, and services would be able to flow freely within the region and beyond.

The GBA’s strength compared to first-tier cities is that the Pearl River Delta alone includes 11 mega-cities, 70 million people, 270 industrial districts, and 330 specialized markets. Then, in order to achieve a high level of competitiveness, the Bay Area plan is going to finance the creation of coworking, startup incubators, and innovation centers, favoring talents exchange and strong cooperation among the cluster’s cities, people, and markets as well.

 

The GBA idea is to strengthen cooperation between cities in the region by focusing more on their competitive advantages and distinctive strengths, to create a system in which each city can be complementary to the others. Consequently, this will allow maximizing synergy between cities.

 

Compared to other important regions, this area already was the main engine of the Dragon’s first development. In Shenzhen, Deng Xiaoping introduced its concept of the socialist market economy for a new China and the Guangdong has historically been the subject of industrial reshoring – the practice of bringing manufacturing back to China from overseas.

Now, a more interconnected and open GBA will lead to greater development of every single city within the cluster. For example, the completion of the key infrastructure projects mentioned above will enable middle-class consumers to visit Macao and Zhuhai for the weekend.

Moreover, it will also benefit from both national and international interest. The Pearl River Delta is already the most international region in China, with 26% of Chinese trade and 28% of Chinese exports in Guangdong province alone. Because they are attracting increased domestic and international investments, the economic growth of some of these cities is even higher than that in top-tier cities.

 

Pearl River Delta takes crown - china - globe - cifnews

© Unsplash. GBA, BRI, and Made in China 2025 together describe the Dragon’s extraordinary ambitious long-term goal: to become a major player on the international stage.

 

Therefore, compared to China’s most important cities such as Beijing or Shanghai, the GBA cluster leverages a large number of investments and projects, which are strongly linked with national priorities like the Made in China 2025 plan and the BRI as well. In addition, the region benefits also of a high attractiveness for both domestic and international companies mostly due to regional policies and infrastructures, which also allow a larger flow of people.

But the Pearl River Delta competes with first-tier cities mostly with its high-level of regional cooperation, although it still needs to overcome the lack of integration between some of its cities, especially the one between the Guangdong province, Macao, and Hong Kong.

Currently, the region is a less integrated system than the European Union but the GBA plan is to lead each individual city in the region to be able to prioritize the benefits of the area over the individual ones. A goal that differs from other first-tier cities’ priorities but that will lead the Pearl River Delta to be the largest economy among global bay areas by 2020.

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