Shenzhen to be China’s ‘international city’

Mainland media are flush with news, analysis and commentary today about the State Council’s latest big plan for Shenzhen. Released over the weekend, the 4,000-character document is being spoken of in reverential terms, with some calling it an outline of Shenzhen’s mission to “complete” the so-called “China Model” or “Beijing Consensus” of economic and social development. 

At first glance, the document does indeed carry some guidance that suggests Shenzhen has been chosen to lead the entire country in the next stage of its development. The reforms it has been tasked with are unique, and once implemented successfully, will be replicated across the rest of China. Chief of these is the exploration of “political change”. 

It’s not political change as most Westerners might think of it. This type of political change will come about in Shenzhen with “the guidance of the ruling Communist Party”, the document makes clear. Nevertheless, the language is bold. Shenzhen is to be the first Chinese city to “demonstrate a fair and just environment for democracy and rule of law.” Yes, that’s right. It uses the D word. No mention of universal suffrage, of course, but that is beside the point. Until now, democracy has been a concept much-debated and much-theorized about in China. It’s a goal of the Constitution, but that document has much other aspirational language besides. This is the first time a city – not a village, but a major, first-tier city – has been told to experiment with political reform that considers some kind of democratic component. 

In other words, Shenzhen is no longer just a special economic zone, but a special zone, period. It will henceforth be joining a global conversation about the effectiveness of the “One Country, Two Systems” model of governance.

While you are taking a moment for that to sink in, dear readers, we will get to the rest of the details.

First, one needs to get past the boilerplate. Shenzhen’s new job is to:

  • Deeply execute the innovation-driven development strategy;
  • Capture the opportunity of building the Greater Bay Area;
  • Strengthen its role as a core engine for growth;
  • Become a “pioneering area of socialism with Chinese characteristics”;
  • Create an example of a “modern, powerful, socialist Chinese city.”  

This means Shenzhen must strive to become five things:

  • A model of high-quality development
  • An example of law and order 
  • An example of urban civilization
  • A benchmark for societal satisfaction 
  • A pioneer in sustainable development 

Still with us? The document has set three stages for reaching these goals:

  • By 2025: Shenzhen is to become a world-class city renowned for innovation, with special focus on public services and environmentally sustainable development. This will entail R&D investment to be raised and “innovative capacity” to reach the standards of global leaders. Along the way, the city’s cultural “soft power” will be vastly improved. 
  • By 2035:Shenzhen is to become China’s leading international showcase as the “world capital of innovation, creativity and entrepreneurship,” showing the world what a “modern, powerful, socialist Chinese city” looks like. 
  • By mid-century: Shenzhen is to stand among the world’s top cities, a benchmark of competitiveness, innovation and influence. 

It requires some reading between the lines, as well as some context, to understand that this document is essentially placing Shenzhen above every other city in China, even the three other Tier-1 cities of Beijing, Shanghai and Guangzhou, in leading the next stage of Reform and Opening. Moreover, much is being read into it by mainland commentators who postulate that Shenzhen is going to be favored over Hong Kong in thrusting China onto the international stage, especially in the way it is being talked about as a test bed for trading the Renminbi across China’s borders.

This is mostly hinted at, in the section on Shenzhen’s role as a tech innovator. Here it talks about Shenzhen playing a key role in the development of the Greater Bay Area’s “international scientific and innovation base,” with special emphasis on 5G, AI, cyberspace technology, life science and biomedicine. More importantly, it ties these goals to the development of the financial industry as well, saying it will push forward reform of the registration system for the ChiNext board in Shenzhen, and task the city with supporting the development of the country’s digital currency and mobile payments systems. 

Is something coming next on cross-border trade of the e-Renminbi via systems such as WeChat and Alipay? We don’t know yet, the document doesn’t say so specifically. That is for the government to know and the rest of us to find out when they are ready.

Yes, we can hear traders in Hong Kong gulping, too.

There is more. The document repeats previous assurances about the Greater Bay Area experimenting with the development of cross-border financial products. But it emphasizes how the central government will promote cooperation between Shenzhen’s financial markets and those in Hong Kong and Macau, as well as expanding financial regulation and “the portfolio of financial products available to trade bonds and foreign exchange”. That sounds a lot like China’s currency wall will be moved back behind the boundary of where Shenzhen meets the rest of the mainland – probably in Qianhai. No timeline, again, just a hint.

To get from here to there, the document recognizes that Shenzhen has shortcomings that must be addressed immediately. Chief of these are the lack of world-renowned universities and scientific research institutions, with basic research way behind where an “international city” ought to be. This is why Shenzhen has now been approved to build a “comprehensive national scientific center”, joining only three others in China that have this special status: Shanghai’s Zhangjiang district, Hefei, and Beijing’s Huairou district. 

However, even these three do not have the key gift that Shenzhen has now been given. It is to “explore securitization of intellectual property”, which will lead to building a “trading center for IP and scientific results”. 

Say what?

If we read this correctly, it means: enhanced protections for intellectual property, and groundbreaking experimentation with tradingIP rights. An exchange, perhaps? Mainland media has been rife with speculation recently about the central government wanting banks to stop being so picky about the need for hard assets as collateral for extending credit to the private sector, especially SMEs. Is this an extension of that? Again, let’s see. 

There is another tantalizing hint of groundbreaking reforms to come in the section on addressing the city’s education sector, where it talks about supporting Shenzhen to “trial the reform of the education system.” This would involve:

  • Granting higher education institutions’ “self-ruling rights”, to accelerate the building of world-class universities. 

Could this be alluding to the need to give universities something like Western-style academic independence?

In healthcare, meanwhile, it is clearly envisaged that Shenzhen can blow the door wide open to foreign participation, albeit via Hong Kong and Macau. This would involve:

  • Encouraging the building of high-quality medical institutions by private enterprises, especially Hong Kong or Macau-funded entities;
  • Building medical talent training programs in line with international standards;
  • Relaxing regulations for overseas doctors to practice in the mainland;
  • Trialing global cutting-edge medical technology.

All of this will involve the collection and use of “big data”, of course. The report stresses that the Greater Bay Area’s data hub will be located in Shenzhen.

There is good news for foreigners, too. Shenzhen has been told to work toward giving “citizen treatment” to Hong Kong and Macau residents who work there. Nothing new. But it has also been encouraged to allow “talented foreigners” with permanent residency to start businesses in the city.

At the end of the document, the main point of it all is hammered home in crystal clear language: Beijing is determined to make a success of Shenzhen’s new mission. This might sound like Party jargon to the untrained ear, but here it is:

  • All reforms, policies or measures mentioned in this document, if it requires the modification of existing laws, related parties should follow the legal procedure to bring the proposal to the Standing Committee of National People’s Congress. Once authorized or decided, it can then be implemented accordingly. For any changes related to the existing administrative regulations, the related parties should follow the legal procedures for the authorization and approval by the State Council and then implement.

In plain English: Get a move on! 

  • Strengthening governance by law, optimizing major administrative decision-making procedures and systems, enhancing the government’s ability to administer according to the rule of law, expanding people’s orderly political participation under the guidance of the party, while improving the work of the National People’s Congress.

In plain English: Go boldly forth!

The city government now has the unenviable task of drafting its own detailed laws and administrative regulations based on this document. Stay tuned for more. It will undoubtedly be coming soon.

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