customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

knowledgeQuestion

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

Frank Chen

He Huifeng

The economic divergence between the two megacities of the Greater Bay Area – Guangzhou and Shenzhen – could not be starker in the first half of this year, despite being just 100km (62 miles) apart in the southern province of Guangdong.
Guangzhou’s gross domestic product grew by a mere 2.5 per cent year on year – a rate lower than Guangdong’s and the national average – to 1.43 trillion yuan (US$197 billion).
It also lagged other first-tier cities of Shanghai, Beijing and Shenzhen in terms of GDP and growth.
The tech hub of Shenzhen, though, revealed a glowing report card as its economy expanded by 5.9 per cent to 1.73 trillion yuan, ranking only after Shanghai and Beijing.
A divergence in economic performance was cited as one of the major challenges facing China’s economy in an official readout of July’s Politburo meeting, which was convened by President Xi Jinping on Tuesday to discuss boosting the economy and executing the reforms discussed during the third plenum.
“The adverse effects of the current external environment shifts are increasing, domestic effective demand is insufficient and economic operation is showing differentiation,” said the readout released by the official Xinhua News Agency.
Shenzhen’s new industries and hi-tech investment are growing rapidly, but Guangzhou and Foshan still rely heavily on traditional manufacturing
Guo Wanda, China Development Institute
Beijing has signalled its resolve to attain the around 5 per cent economic growth target for 2024.
Analysts, meanwhile, attributed the yawning gap between Guangzhou and Shenzhen to China’s mixed economic reality of an export boom, weak domestic demand and a slowdown in traditional manufacturing.
Guangzhou residents are now anxiously discussing if the city, the capital of Guangdong, would drop out of China’s top-tier cities.
Guo Wanda, vice-president of the China Development Institute – a government-backed think tank to the Greater Bay Area – said cities faced a combination of sluggish traditional industrial growth and rapid development of new sectors.
“Shenzhen’s new industries and hi-tech investment are growing rapidly, but Guangzhou and Foshan still rely heavily on traditional manufacturing and they need to expedite transformation,” Guo said.
“Shenzhen’s private enterprises are very dynamic and technology iteration is fast.
“The industrial chains surrounding Shenzhen’s hi-tech manufacturing, like electric vehicles, are very long, driving other industries such as electronics and information.”


Guangzhou, meanwhile, is grappling with headwinds on many fronts from investment, manufacturing, consumption to foreign trade.
Its fixed-asset investment in the first half grew by just 2 per cent, 1.9 percentage points below the national average, while its industrial output fell by 0.8 per cent, its exports declined by 4.1 per cent and its retail sales growth flatlined.
Shenzhen, though, fared better as it derived strong momentum from its sprawling manufacturing sector as industrial output grew 12 per cent.
Manufacturing-related fixed-asset investment, meanwhile, soared by 49.2 per cent in the first six months of the year.
Shenzhen, which has nurtured the likes of Huawei Technologies, Tencent and BYD, unseated Shanghai as China’s largest manufacturing city in 2022.
Already China’s largest exporting city, burgeoning foreign trade also propelled Shenzhen’s growth as its import and export volume soared by 31.7 per cent year on year in the first half of the year to 2.2 trillion yuan.


And as Shenzhen charges ahead, officials in Guangzhou are reflecting on the economic woes, blaming slow industrial upgrades and insufficient demand.
Guangzhou’s automobile industry provides a microcosm of the city’s challenges as its output – which is made up of more petrol-powered cars than electric vehicles – fell by 16.4 per cent in the first half of the year as major carmakers from Toyota to Honda have slashed production in Guangzhou.
“Many people in our casual chats mentioned the news that Honda is closing factories in Guangzhou. That was a big manufacturing base for the city that we used to be proud of,” a Guangzhou taxi driver said.
Honda announced in July it would close some production lines in Guangzhou in October.
Terence Chong Tai-leung, an associate professor of economics at the Chinese University of Hong Kong, said Guangzhou had been affected by domestic demand problems, while Shenzhen was more export-oriented.
Guangzhou’s manufacturing sector is more anchored at the domestic market and is thus not immune to China’s overall weak consumption
Terence Chong Tai-leung, Chinese University of Hong Kong
“Shenzhen is exporting mainly hi-tech products at a time the world is buying more from China,” he said.
“Guangzhou’s manufacturing sector is more anchored at the domestic market and is thus not immune to China’s overall weak consumption.
“Guangzhou can expect recovery in demand as Beijing’s supporting measures, rolled out after the third plenum, that range from rate cuts to fiscal policies, will stimulate consumption.”
Mounting export uncertainties may also alter the fortunes of Shenzhen and its hi-tech exports.
“Export growth in the second half could still maintain a certain speed. But the worries of American tariffs in an election year will rise,” said Ding Shuang, chief economist for Greater China at Standard Chartered.
“The uncertainty is increasing because new trade frictions are already there.”
In May, Washington proposed increasing tariffs on imports of Chinese semiconductors, electric vehicles, steel and batteries, drawing a swift rebuke from Beijing.
Additional reporting by Alice Li


Where now for China after economy lost momentum ‘across the board’ in August?

China’s ‘conscientious economist’ goes viral by speaking the truth

President Xi Jinping tones down focus on China’s growth targets as headwinds mount

China’s economy isn’t becoming Japanified, at least not yet

China GDP

China’s southern megacities dealt contrasting economic fortunes as hi-tech Shenzhen thrives

A behicle carrier vessel arrives at Xiaomo International Logistics Port in Shenzhen. Photo: Xinhua

Workers producing garments at a textile factory that supplies clothes to fast fashion e-commerce company Shein in Guangzhou. Photo: AFP

China’s Politburo pledges support, sending stronger-than-expected signal to boost economy

A construction team works on a store facade in Beijing. Photo: AFP

Pedestrians walk on the Bund in Shanghai. Photo: Bloomberg

How can China’s ultra-long-term special government bonds get its economic gears turning?

Some proceeds from China’s ultra-long-term special government bonds will be allocated for upgrading industrial equipment. Photo: Xinhua

As mainland China broadens yuan’s global appeal, Hong Kong may play larger role

Increased use of the yuan in global transactions suggests a larger role is on the horizon for Hong Kong as an offshore clearing centre for the currency. Photo: Bloomberg

Increased use of the yuan in global transactions suggests a larger role is on the horizon for Hong Kong as an offshore clearing centre for the currency. Photo: Shutterstock

China’s consumers dig deep amid economic concerns with splurge on gold bars, coins

Overall, Chinese consumers bought 523.8 metric tonnes of gold, including bars, coins and jewellery, in the first half of the year. Photo: AFP

Overall, Chinese consumers bought 523.8 metric tonnes of gold, including bars, coins and jewellery, in the first half of the year. Photo: Xinhua

Exports boost China’s industrial profits in first half, but recovery still looks patchy

Foreign trade has emerged as the single pillar buttressing profit growth of Chinese companies in the first half of the year. Photo: Xinhua

Customers at a discount clothing shop in Beijing. Consumer confidence in China remained depressed in the first half of the year. Photo: Reuters

Economy

Economic Indicators

China Economy

News

China

Divergence in economic performance was cited as one of the major challenges facing China’s economy by the top-level Politburo


Divergence in economic performance was cited as one of the major challenges facing China’s economy by the top-level Politburo.
