Links with neighbouring Hong Kong have helped Guangdong to attract foreign capital
The key to long-term growth in Guangdong, China’s most populous province, could lie with its neighbour, Hong Kong. Harnessing services and investment know-how could unleash economic potential on the Mainland.
There has been strong economic growth over the past 30 years in Guangdong, on China’s south coast. Links with neighbouring Hong Kong have helped it to attract foreign capital. Manufacturing and export industries have grown. The Pearl River Delta, the central coastal part of the province directly next to Hong Kong, has grown particularly strongly.
Further boosting cooperation between Hong Kong and Guangdong is a vital part of the province's new development plan
But today the province’s manufacturers face increasing competition from lower-cost locations abroad as local wages rise. Guangdong may now be overtaken after two decades as the province with the highest overall GDP. However, the rural regions to the north, east and west of the Pearl River Delta, which have traditionally grown at a slower pace, still have significant potential for development.
Guangdong’s provincial government has budgeted more than RMB672 billion (around USD108 billion) to develop these rural areas over the next five years. They aim to revitalise 12 cities, encouraging labour-intensive manufacturing to move into the rural regions, and enabling the Pearl River Delta to develop advanced manufacturing, technology and modern service industries.
Poor infrastructure has long been a major roadblock for the economic development of the province's rural regions. New investment will focus on improving transport, including road and high-speed rail. Money will also be spent on industrial parks, with the aim of doubling each county's industrial output.
Hong Kong already plays a vital role in the economic success of the Pearl River Delta. Further boosting cooperation between Hong Kong and Guangdong is a vital part of the province's new development plan.
The plan calls for an integrated regional service industry, particularly financial services. Guangdong will benefit from broader international networks and better access to financial markets. Encouraging Guangdong’s continued growth and development will, in turn, support Hong Kong's competitiveness. Guangdong is also working with Hong Kong and Macau to build a free-trade zone.
On China’s south coast, bordering Hong Kong
More than 100 million people, the highest population of any Chinese province
“Mainland China’s greatest exporter”*, home to significant manufacturing industries
The cities of Guangzhou and Shenzhen have populations of more than 10 million each
*Stuart Gulliver, HSBC Group Chief Executive, Investor update 2013
We think it is important to support the evolution of Mainland financial services by creating a robust Guangdong-Hong Kong financial regional platform. Guangdong and Hong Kong can lead the way to high-quality growth, with benefits for both areas.
The Guangdong development plan mirrors the China-wide trend of labour-intensive industries moving inland as wages rise in the heavily developed coastal areas. It is also in line with the national goal of moving towards sustainable, consumption-driven growth.
A new wave of Guangdong-Hong Kong integration will upgrade Guangdong's service industry and increase its competitiveness, and could lead to the transformation of China's economy.