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Guangzhou, Shenzhen consolidate GDP lead over HK

Guangdong’s resilient urban centers tided over US-China trade war, spillover effect from Hong Kong protests

Guangzhou and Shenzhen are set to consolidate their lead over Hong Kong in annual economic output for 2019 as the two economic dynamos charge ahead while anti-government protests continue to plague the former British colony.

The two cities in the neighboring Guangdong province are in the process of releasing preliminary statistics for 2019. Cadres there are heaving sighs of relief as the economy has shown resilience to tide over the US-China trade war as well as the spillover effect of Hong Kong’s social turmoil.

Shenzhen’s gross domestic product expanded by 7% to 2.6 trillion yuan (US$374 billion) last year, ranking only after Shanghai and Beijing. Shenzhen is the largest city economy in the Greater Bay Area, which is a geo-economic megapolis pooling Hong Kong, Macau and nine cities in Guangdong.

Shenzhen mayor Chen Rugui said in a report to the municipal people’s congress that the city’s economy, heavily dependent on export, had largely reversed the downward pressure and started to accelerate after booking a 6.6% growth rate in the first three quarters.

Shenzhen officials previously worried that the United States’ 5G iron curtain blocking Huawei, slackening export, an exodus of manufacturers as well as the economic contagion from Hong Kong’s protests could deal a crippling blow. But the city’s economy has apparently fared better than expected in the final quarter. Shenzhen was just anointed by Beijing last year in a grand masterplan to build a world city to showcase the virtues of China’s social and economic systems.

While Shenzhen is picking up steam, Hong Kong, having just been outstripped by its neighbor for the first time in a fierce GDP race in 2018, is descending further into recession with officials warning of a 2.9% contraction for the first three quarters of 2019. The city’s already tepid export and transshipment amid the US-China trade crossfire have taken a further beating since June when mass protests and widespread vandalism repeatedly brought business to a standstill.

Now all eyes are on Guangzhou’s report card for the year, after the city’s GDP growth outpaced Shenzhen in the first three quarters, prompting observers to wonder if the provincial capital and home to 15 million is poised to redeem its position as the No. 1 city economy in the region, after losing that title to Shenzhen in 2018. Some expect a draw in the rivalry as Guangzhou’s figure is also forecast to be around 2.7 trillion.

Guangzhou is on a spree constructing more metro lines, expanding its airport and container terminus and tearing down tenement blocks to make room for new business districts, in view of Tencent’a promise to keep the operation base of its ubiquitous WeChat social networking app in the city and Alibaba’s plan to build a new southern China headquarters there. The city is also home to China Southern, Asia’s largest air carrier by fleet size, and the site of Toyota’s and Honda’s largest plants in China.

College graduates and startups are also finding that Guangzhou offers cheaper and bigger homes with better work-life balance, education and healthcare compared with other first-tier Chinese cities.

Guangdong’s provincial authorities are pinning high hopes on Guangzhou and Shenzhen to form synergy to further spur growth, with a slew of policies to integrate the two urban centers that are just 130 kilometers apart into an “economic centrifuge” of business and investments to serve the rest of the bay area when Hong Kong’s preeminence in the region is on the wane.

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