Guangdong looks inland for next growth spurt
Peter Wong says a new wave of cooperation between Guangdong and Hong Kong, with the SAR offering its financial know-how, will help China upgrade to a consumer-led growth model
Guangdong today, like many of China's manufacturing centres, finds itself squeezed between its underperforming rural hinterland and an industrial heartland struggling to cope with rising wages at home and increased competition from abroad.
China's manufacturing-heavy provinces suffered the sharpest growth slowdown in the first quarter, and Guangdong was no exception. Guangdong has started to lose its regional top rank in terms of gross domestic product, a position it has held for more than two decades.
Faced with these challenges, local government authorities have come up with a solution which employs Hong Kong's expertise that might light the way for the rest of China's industrial centres. The way through may be to harness Hong Kong's services and investment know-how to fully unleash the potential for a new flood of economic growth from Guangdong's rural regions.
These rural "backwaters" largely missed out on the province's Pearl River Delta boom but they still have great potential for development. In the first half of this year alone, Guangdong's rural regions surpassed the delta and the provincial average in industrial added value, fixed asset investment and commodity goods retail sales.
The provincial government has devised a plan and budgeted more than 672 billion yuan (HK$847 billion) to develop rural areas over the next five years. The planned investment-led growth aims to turn 12 of the province's economically declining cities into new engines of growth and development. This will reposition labour-intensive manufacturing to rural regions to allow the increasingly overcrowded Pearl River Delta to climb the value chain into advanced manufacturing, hi-tech industries and modern services.
Poor infrastructure has long been a major roadblock for the economic development of the province's northern, eastern and western regions. This new investment will mainly focus on new transport infrastructure. There will be a lot of road and high-speed rail construction to be completed by 2020, with a plan to link all regions and increase the number of the major highways leading to neighbouring provinces. Once roads and railways are in place, the companies in the delta will move to rural areas.
Money will also be spent on new industrial parks, with the aim of doubling each county's industrial output. Included in the plan are several cities with populations of more than one million, and more with populations ranging from 200,000 to 500,000 people.
