Tag Archives: Shanghai

Shanghai as Shenzhen’s chief competitor?

SCMP has a long and winding report today comparing Shanghai and Shenzhen, posing the question of which will lead the country in the next stage of its growth, as both have been given new briefs recently to accelerate reforms. To our minds, such analysis misses a key point – that China is a big country. Two cities so far apart are likely to have very little overlap: Shanghai will drive the Yangtze River Delta (which still hasn’t come up with a sexier name like the Greater Bay Area), while Shenzhen will drive the Pearl River Delta.

The other major difference between the two is that Shenzhen has a better support team: Hong Kong to provide capital flows, Guangzhou to provide administrative drive, Dongguan to take overflowing high-tech manufacturing capacity, and the entire west bank to provide lebensraumfor the city’s expansion (see today’s high-speed railway story). Shanghai has cities like Nanjing, Ningbo, Hangzhou and Suzhou, for sure, but little of the integration work that has already gone into tying them together like has happened in the GBA. 

Shanghai has some way to catch up as an engine of growth for its own part of China without having to worry about competing with Shenzhen.

Moreover, whatever one might say about Shanghainese entrepreneurial spirit, it doesn’t have two things: Cantonese cultural ties with its neighbors, and, perhaps more importantly the bestowal of permission by Beijing to ramp up convertibility of the Renminbi (see our D-RMB story from yesterday).

Ask any Shenzhenrenabout competition from Shanghai and they will likely look at you incredulously. Guangzhou is the city they plan to stay ahead of, and Hong Kong is the city they plan to overtake. All in good time.

Stock Connect to include dual-class HK stocks

Stock exchange operators in Hong Kong, Shanghai and Shenzhen have agreed on conditions that will allow mainland investors to trade Hong Kong-listed dual-class shares of some popular technology companies, such as Xiaomi or Alibaba, through the Stock Connect programs, reports Caixin Global. 

Continue reading Stock Connect to include dual-class HK stocks

‘Open sesame’ for Stock Connect programs?

Plans are afoot to expand the “Stock Connect” programs that allow investors in Hong Kong, Shanghai and Shenzen to trade stocks on each others’ bourses. The Hong Kong Monetary Authority says it will expand the programs “at an opportune time”. Forgive our exuberance, if you will, dear readers, but that sounds like the language regulators often use instead of saying, “we have been told to get on with it”.

It would seem that pressure from Greater Bay Area investors is driving a more aggressive liberalization timetable. The Shenzhen-Hong Kong Stock Connect was launched in 2016, two years after the Shanghai version led the way. Quotas were quadrupled in May last year: RMB52 billion ($7.56 billion) for northbound trading links and RMB42 billion for southbound trading links. But there is clearly scope for more. The country is becoming bolder in opening its markets, not just because of pressure from the US-China trade war, but because of its own liberalization timetable. The Stock Connect programs are in the vanguard of reform. They are the best and most obvious way to keep prising open the treasure chest of China’s domestic consumer markets, as well as fund the country’s hi-tech boom that is well under way.

According to the Hong Kong Stock Exchange, as of November 15, 2018, total turnover of northbound trading had reached RMB8.77 trillion (US$1.31 trillion), with a net inflow of RMB614.8 billion, while HK$6.55 trillion was traded southbound, with a net inflow of HK$812.8 billion. Daily northbound trading reached a record RMB76.3 billion on April 8 this year. Southbound trading, however, has not surpassed the record of HK$43.8 billion set on February 6, 2018. 

Forgive the haze of stats, but what that adds up to is a fraction of the domestic numbers. There is huge upside potential here for foreign institutional investors. And it is becoming ever clearer from senior leaders’ public statements that foreign capital is going to play a strong supporting role, if not a leading one, in the next stage of the country’s economic development.

We are holding our breath.

Read more on Global Times. 

Shenzhen’s average salary exceeds RMB10,000

Shenzhen leads the country in average monthly salary levels, together with Beijing and Shanghai, which jumped nearly 8% YoY in Q1. The national average is RMB8,452, but Shenzhen’s is above RMB10,000. This compares with HK$16,892 for fresh graduates in Hong Kong. However, as any HR manager with experience will explain, once social-security costs are added in, those Shenzhen salary levels are much less competitive. 

The data comes from the country’s biggest online recruitment platform, Zhoapin.com. Its latest report shows that jobs with more than RMB8,000 monthly salary are 35.5% of all job opportunities, followed by RMB4,001-6,000 at 29.5%. Foreign-owned enterprises and listed companies are most generous, offering on average more than RMB9000 per month. 

Read more in Chinese. 

GBA Briefs: 14/6/2019

IPOs coming: Among the 122 companies that have applied for IPOs on Shanghai’s new tech board, 17 are from Guangdong, behind Beijing (26), Jiangsu (21) and Shanghai (18). Of the southerners, Shenzhen supplied nine, Guangzhou four, Meizhou two, and one each from Foshan and Huizhou. Read more.

Environmental injunction: A court in Zhuhai has allowed the province’s first injunction against a project on a claim of potential environmental damage. Read more.

U.S. Deals: Guangdong Vice Governor Ouyang Weimin recently led an economic and trade mission of more than 40 companies to Mexico and the U.S., where 13 new investment projects were signed for an undisclosed amount. Read more.

New route: The Boshen Highway that goes from Huizhou’s Boluo county (博罗) to Shenzhen’s Longgang district will be connected with the Conghua/Dongguan Highway via a Qingxi sideline in the Dongguan section. Got all that? Basically, it adds an alternative route between Dongguan and Shenzhen. Read more .

Hydrogen cars: Foshan will see 1,000 hydrogen-powered vehicles hit the roads this year and will build 30 hydrogen-recharging stations. In Q1, RMB50 billion has been invested here in the hydrogen energy industry, already 41.17% of the total that was invested in 2018. Read more.

Smarter Shenzhen: The city will increase its financial investment in higher education to RMB18 billion this year, 28.57% up on last year, third-fastest in the country behind Beijing and Shanghai. According to Shenzhen Education Bureau, the city is exploring how to “improve the investment mechanism on higher education”. Read more .

AI Cometh: China’s artificial intelligence industry is expected to grow by six times its current size to reach US$11.9 billion in 2023. To date, 19 provinces have issued 26 AI-related policies to boost its development across smart manufacturing, fintech, digital contents, new media, new retail and smart security. Read more .

Water-pollution cleanup: Shenzhen will issue a RMB16 billion bond, with half to be used in water pollution treatment projects in the Bao’an district and most of the rest on river-water pollution control projects in the Longgang district. Read more .

Konka Going to Chongqing: Shenzhen-based Konka Group is planning to build a RMB30 billion semiconductor and photoelectric industrial park in Chongqing with investment of up to RMB7.5 billion in the project’s first phase. Read more.

LG in OLED Project: LG Display, the world’s largest LCD panel maker from South Korea, has begun construction of an OLED panel production plant in Guangzhou, making it the first large-sized OLED panel production line in China. The first phase will cost RMB46 billion, producing larger TV displays. It will be LG’s third production line in Guangzhou. Read more 

Prices Spike: The Consumer Price Index (CPI) jumped to 2.7% nationwide in May, mainly due to surge in food costs. Although this was the largest increase since February 2018, it was still lower than the government’s price-regulation target of 3%. The Producer Price Index (PPI) rose 0.6% YoY. Read more.