Shenzhen has been a magnet for talent ever since Reform and Opening got under way here in 1979 – not only from across the country, but from overseas, too. This much is well known about the city on Hong Kong’s border, which expanded its population by more than half a million last year alone (to 13 million), making it the fastest-growing city in the country.
However, all is not as idyllic as the picture would lead us to believe. According to a new series of books about Shenzhen’s reform and innovation, published by China Social Sciences Press and Shenzhen Academy of Social Sciences, the city faces serious challenges in raising the skills level of its workforce, too. Foremost of these is the high cost of housing in China’s most expensive real-estate market.
Indeed, unless measures are taken, it would appear that the city is facing an imminent brain-drain. A recent survey shows that Shenzhen’s ratio of housing prices to disposable income is the highest in the world, and that more than three-fourths of skilled workers in the technology industry are considering leaving the city because of unaffordable housing.
Since 2011, the number of so-called “talents” purchasing a home in Shenzhen has actually dropped. According to a survey conducted by Shenzhen Academy of Social Sciences among 2000 high-end skilled workers, less than half had purchased a home in Shenzhen.
Officials are aware of the problem. Shenzhen’s high housing prices have caused a lot of trouble for the city’s long-term industrial development, according to Zhang Siping, the former vice mayor. In an articlehe wrote this year, he noted Shenzhen’s ignominious global ranking for unaffordable living. Zhang even acknowledged how high home prices had caused young people to become “housing-loan slaves”. It wasn’t only home prices themselves, but the knock-on effect they had had on consumption prices in general. This, of course, had been felt also on the balance sheets of enterprises, especially in the manufacturing and logistics industry.
It’s not like Shenzhen doesn’t have a role model for its future development trends to look at, either. In a commentary written by renowned financial and economics columnist Yuan Gangong, he compared Shenzhen with Hong Kong, since their population density is similar. He wrote that the lack of job opportunities for white-collar workers – the largest part of the population – have divided residents into “gold-collar” and “blue-collar” workers, which is what has happened in Hong Kong, too. Yuan also compared Shenzhen to the Bay Area in San Francisco, pointing out an insufficiently diversified industrial base to support diversity in housing markets.
Here is the part where we get to what Shenzhen is planning to do. You didn’t think this government was sitting on its hands, or consulting with property oligarchs like its cousins across the border, did you? Shenzhen is planning to build no fewer than one million sets of “talent housing”, public-rental housing and low-price commercial housing. It is, combined, more than half of the total 1.7 million sets of new apartments planned to be built in the city over the remainder of the Greater Bay Area plan, 2018-2035.
Will Singapore replace Hong Kong as Shenzhen’s role model? It certainly seems to be heading that way.
To be sure, It would seem that the city’s focus, as it has been since 1979, is on moving upwards. Although living expenses are rising in Shenzhen, the city is still seen as having enormous upside potential thanks to its potent tech industry. This is a large reason why more than 70,000 overseas graduates have come to Shenzhen in recent years, and why another 8,000 plan to move in this year.
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