Guangdong moves into the future as it builds a post-industrial society

The forces that once boosted Guangdong’s dramatic economic boom – industrialisation, booming world trade, cheap labour and low-cost manufacturing – are fading. With the slowest growth pace in 25 years, economic anxiety is said to be spreading. That standard narrative is part of the story, but not the full story.

Today, Guangdong’s economy is a dual story about the demise of industrialisation and the rise of the post-industrial society. If the focus is on the former, the story is about decline. If it’s on the latter, the story is about rejuvenation.

The real narrative has two sides, however. Last November, the US-China Joint Commission on Commerce and Trade convened in Guangzhou. In December, the leading Israeli technology institute laid a cornerstone for the first Israeli-Chinese University in China, with the support of Guangdong, Shantou municipality and a US$130 million donation by business magnate Li Ka-shing. These developments reflect Guangdong’s new strategic importance in China’s innovation-driven development strategy.

Since last March, the province has intensified efforts at industrial transformation and upgrading, while seeking to establish several industrial belts. It benefits from the Pearl River Delta economic zone, which covers nine major cities (including Guangzhou, Shenzhen, Zhuhai and Dongguan).

Guangdong leads the way in moving up the value chain from light industry to high-end manufacturing. Ranked in terms of value added, its key industries feature information and communication technology (22 per cent), but it is also strong in electrical machinery (9 per cent), chemicals (5 per cent) and automobiles (5 per cent).

Guangdong accounts for over a quarter of China’s total utilised foreign direct investment. It is home to telecom giants Huawei and ZTE. It is where corporate titans such as Lenovo, TCL, BYD, Apple, IBM, Philips, BGI, Lucent and Olympus house their manufacturing bases, research and development, and design capabilities.

When it comes to innovation, Guangdong is a trendsetter. In China, innovation – as measured by R&D per GDP – has climbed to 2.1 per cent (which, despite the huge population, is higher than that of France, the UK or Australia). In Guangdong, the comparable figure is close to 2.5 per cent but in Shenzhen it is estimated to be 4 per cent – not far from the world leaders, South Korea (4.4 per cent) and Israel (4.2 per cent).

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