Tag Archives: Focus

Shenzhen’s new stats intriguing

Shenzhen has just released its latest Economic and Social Development Statistical Communique, which sheds new light on the city’s development. As is already known,

Shenzhen’s GDP hit RMB2.4 trillion in 2018, up 7.6%, surpassing Hong Kong. But it is still RMB846 billion behind Shanghai, a city with a much bigger population. Shenzhen remains the richest city in the country in per-capita GDP terms, although its growth in the past five years has been gradually slowing.

Despite Guangdong’s overall imports falling, Shenzhen’s are booming: up 19.4% last year to RMB1.37 trillion. Exports fell slightly, down -1.6% to RMB1.63 trillion.

Perhaps the most interesting are those related to the tech economy. The tech sector accounts for more than one third of GDP, led by computing, telecommunications and electronic manufacturing, and sales were up 9% to RMB925.4 billion last year.

Not all districts in the city are growing equally. The biggest, Nanshan, saw its GDP break the RMB500 billion mark, although YoY growth was just 4.5%, behind Longgang, Longhua, and Pingshan – which were all above 10% – and Futian’s 7.4%.


As reported previously, Shenzhen attracted 498,300 more permanent residents last year, ranked number one in China. Here is a collection of other key indicators:

  • Public budget revenue – taxes plus dividends from SOEs – was RMB353.8 billion, up 6.2% and more than double Guangzhou’s RMB163.2 billion. The city recorded a deficit on total expenses of RMB428.25 billion, which were down -6.8%.
  • Shenzhen saw 228,600 patent applications, and 140,200 were approved, up 29.1% and 48.8%, respectively.
  • Manufacturers saw their profit overall dip -4%, although average worker productivity was up 19.1%
  • More than 300 million mobile phones and 20,000 robots were produced. New energy vehicles led sales of all products in terms of YoY growth.
  • F&B sales rose 8.4% to RMB74.4 billion.
  • Real estate investment rose slightly, although completed projects fell by more than 30%, reflecting government restrictions on the market.
  • Total savings stand at RMB7.26 trillion, nearly RMB2 trillion more than Guangzhou’s.
  • The average resident is RMB150,000 in debt, while residential mortgages total RMB2 trillion. Residents spent roughly 30% of their salary on mortgages or rent.
  • Air transport increased 10% to 1.08 million tonnes, while waterway and railway transportation decreased.
  • Train arrivals jumped 16.4%, while airport passenger throughput rose 8.2% to 50 million. The metro carried 1.89 trillion passenger-trips, up 14%.
  • There is roughly one car for every fourth resident (3.36 million total).
  • There are more than two mobile phones for every resident (29.78 million total).
  • There are 650 libraries and 50 museums (Guangzhou has only 31), although it only has 139 hospitals. Shenzhen also has 973 parks, having added 31 last year.
  • Despite a tight land supply, Shenzhen has 59,100 pigs, although this was down -15.7%.

Read more in Chinese.

Guangdong GDP up 6.6%, better than expected

Amid a tough external trading environment, Guangdong has managed to hold up its economy in the first quarter, with GDP up 6.6% year-on-year. This was despite a sharp slowdown in exports and imports.

The provincial statistics bureau said the first quarter’s results were 0.1% higher than its previous forecast, indicating a good start to the year. This was largely due to strength in the services sector, which grew 7.1%. Bright spots were seen particularly in new energy vehicles, up 252.1%, followed by mobile communication base station equipment, up 154%. Retail sales overall were up 6.9%.

This was despite a gloomy mood among exporters and importers attending the Canton Fair, as reported last week. Their pessimism is understandable: exports from Guangdong in Q1 were up just 1.8% YoY, while imports plunged -4.8%. Exports to countries participating in the Belt and Road Initiative rose 4.5% during the period.

Read more in Chinese.

Canton Fair to kick off next week

China’s oldest and largest trade fair, Canton Fair (officially named China Import and Export Fair) is to kick off on Monday next week. This latest edition of the biannual event (in Spring and Autumn) is set to exhibit a record number of new generation products, according to the organizer.

Covering 1.2 million square meters of display space, the famous trade fair will feature more than 25,000 exhibitors throughout its three phases. Phase 2 and Phase 3 of the fair will bring more innovative, high-end, unique and diversified products in the consumer products and textiles zone.

Home appliance leaders such as Haier, Midea, TCL, Gree and Changhong will showcase their latest product innovations and technological breakthroughs designed to meet customer needs in the IoT and future 5G era. The gathering will also be joined by global companies including Cascade, Time Lab and NUC, who will display smart home functions and digital services.

Serving as a gateway for international companies to explore the Chinese market, the International Pavilion will feature more than 600 companies from 50 countries and regions showcasing their products. For the first time, the Fair will also highlight the establishment and development of the Greater Bay Area with various exchange meetings to promote trade cooperation.

When: April 15-19, April 23-27, May

Where: China Import and Export Fair Exhibition Hall, Pazhou, Guangzhou

More info here.

PLUS:

Places to wine, dine and party It’s that time of the year again in Guangzhou. Whether you’re a visitor to the city or a local looking to try something new, That’s Guangzhou has rounded up a selection of spots to visit over the course of this season’s Canton Fair. It doesn’t matter if you’re looking for epic local eats, a healthy Western meal, a boozy night on the town, or even delicious Mexican food, this list has you covered! Read more.

Banks to help with Qianhai company setup in HK

Shenzhen’s Market Supervision Administration announced that it has partnered with a number of Hong Kong and Shenzhen banks to launch a new service that will allow investors to conveniently register a new company in Shenzhen’s Qianhai district.

The so-called “Shenzhen-Hong Kong Easy Connect, Easy Registration”(深港通注册易) scheme will rely on Bank of China, ICBC, China Merchants Bank and Chong Hing Bank to provide company registration services, in addition to opening bank accounts. The service will not only save on travel time between Hong Kong and Shenzhen, but also make the process a lot easier for a Hong Kong resident who may not be familiar with procedures involved in cross-border investment.

The scheme will start in Shenzhen’s Qianhai Free Trade Zone, which is not far from the Shenzhen Bay bridge connecting to Hong Kong, and later expand to other districts.

Philip S.M Fung, deputy chief executive of Chong Hing Bank, said the new service has “taken down geographic barriers” while also setting an example to push forward increased connectivity among GBA cities while exploring new models for financial services development.

Hukou reforms under way

Here is an interesting follow-up to yesterday’s announcement of reforms to China’s hukou system. The central government announced changes to lift household registration restrictions for people who live and work in some second- and third-tier cities. The easing policy has, in fact, been signaled since October 216 when the State Council released a proposal to allow 100 million migrant workers with countryside hukou to settle in smaller cities. In February this year, the National Development and Reform Commission suggested eliminate household restrictions for farmers-turned-urban workers in all cities except the few mega-cities.

In the GBA, Zhuhai, Huizhou, Jiangmen and Zhaoqing have been gradually relaxing their hukou policies to attract more skilled workers. The new policy means these cities will no long require yearly minimum social security contributions and can fully open their doors, according to the 21st Century Business Herald.

Major cities such as Dongguan and Foshan with populations above the 5 million level and mega cities such Guangzhou and Shenzhen with population well over 10 million will also have space to further ease their restrictions, apparently. Currently Guangzhou extends its hukou to bachelor-degree holders under 40 while Shenzhen entices all fresh college graduates. The two cities in 2018 attracted 406,000 and 498,300, respectively, new permanent residents.

In 2018, for the four consecutive year, more than million people, or 1.77 million to be precise were given permanent residency status in Guangdong province, topping the charts in China. This showed Guangdong’s reliance on the inflow of talent is greater than the other Chinese provinces. How to keep these skilled workers and turn them into the province’s permanent assets will be a priority for the development of the Greater Bay as a whole.

Zhou Zhonggao, deputy director of the Research Institute of Talent Development at the Guangdong Academy of Social Sciences, said that the State Council’s latest announcement will help rio the system of obstacles for more efficient labor allocation. The new policy will also help increase the population volume in the smaller cities surrounding the major urban cluster, further strengthen the capability of population aggregation and improve the overall competitiveness. This, coupled with the supporting policies for industrial developments as well as public services, will positively affect the GBA’s comprehensive competitiveness.

Read more here (in Chinese).

Caixin Global explains the hukou system and its social impact here.

Car policy on HZMB

We may have confused some readers in explaining yesterday how the HK Transport Dept handles permits for driving on the HK-Zhuhai-Macao Bridge (HZMB). It is a fiendishly complicated topic. So, to further clarify:

There are two ways to drive on the HZMB: 1) With a single, HK-issued, license plate under the Park-and-Ride scheme; and 2) With a dual-plate issued by the governments of Guangdong and HK, under the Cross-Boundary Private Car License scheme.

Yesterday’s story was about the second scheme. Cars with dual plates that have been going from Hong Kong into Guangdong via Shenzhen Bay, Lok Ma Chau, Man Kam To, and Shau Tau Kok can now go in via the HZMB. But there is a quota for this, and so they need to apply for their existing Closed Road Permit to include the HZMB. This quota has been raised by 4,500, effective April 15, so it is highly likely that everyone who could be bothered to apply for the HZMB will be approved. (Most drivers would likely still prefer to go via Shenzhen because it’s quicker that way to reach the eastern side of the Bay.)

Approvals under this scheme, for those who had been driving via Shenzhen Bay, will start being handed out on April 29. Users of the other three crossing points have been using the bridge since February 25.

The first scheme, Park and Ride, is completely different. It involves signing up via the HKTD website, as explained yesterday, but only allows Hong Kong cars with single plates to go across as far as the Immigration Island on the Macau/Zhuhai side. There, they can park in the 3,000-place car park. Yes, they can only do that if they have already reserved a place in that car park. They must get out at that point, pass through immigration controls, and take public transport into Macau and/or Zhuhai. We are going through the 24-page explainer document provided by the HKTD and will update further soon. Suffice to say at the moment that it requires Herculean strength of will and Stoic patience to get through this.

Shenzhen bourse launches GBA indexes

The Shenzhen Stock Exchange launched two new indexes Tuesday to track innovative businesses in the Greater Bay Area as the central government pushes broadly to enhance financial links in the region, reports Caixin Global.

The two indexes will track listed companies registered or headquartered in the Greater Bay Area and shares traded in Hong Kong, Shenzhen and Shanghai that are qualified for the stock connect program, a cross-boundary investment channel linking China’s mainland stock exchanges and the Hong Kong market.

As part of China’s Greater Bay Area development plan, the launch of the two new indexes is aimed to reflect business performance in the region and diversify investment options, the exchange said.

The Bay Area Innovative 100 index includes 100 companies that are in emerging sectors including advanced manufacturing, services, marine business and other strategic industries. Companies listed by the index need to meet certain criteria such as market value, innovative capacity and market share.

The 10 largest stocks tracked by the index include Tencent Holdings, Ping An Insurance, Hong Kong Exchanges and Clearing Ltd. and China Merchants Bank.

The second, broader new index is the Bay Area Composite Index. Both indexes will start from a base of 1,000 and will track stock performance starting June 30, 2017.

 

Guangdong puts focus on sustainable development

Guangdong is reviewing a proposal by the National Environmental Protection Supervision Committee to make environmental protection a top priority in the development of the Greater Bay Area. According to Chinese media, the provincial government will now work to compile and implement relevant policies, although the proposal suggests that a “centrally coordinated” body be set up among the 11 GBA cities, including the two SARs of Hong Kong and Macau.

The eco-environment within the Greater Bay Area still has some catch-up work to do compared to other Bay Areas around the world, the proposal pointed out. Here, every US$10,000 of GDP consumes 214.47 cubic meters of water, 30% more than the Tokyo Bay Area. Energy consumption per unit of GDP, meanwhile, is at least twice its peers in Japan and the US.

Moreover, local residents probably don’t need to be reminded that air quality around the GBA falls far behind its global counterparts, with an average annual concentration of PM2.5 roughly three times the international standard. And although great strides have been made in tackling water pollution in recent years, toxic water still accounts for nearly 10% of the GBA’s surface water.

The proposal calls for the development of a “world-class quality” eco-environment within the GBA.

 

Hengqin gets State Council blessing

The State Council’s approval for the Hengqin New Area to become an “International Leisure and Tourism Center” has been in the works for some time, so the announcement yesterday came as little surprise to anyone who has been following its development. Nevertheless, the endorsement from Beijing has shone a spotlight on this big island opposite Macau, where cranes are hard at work on a massive new development that will capture global attention very soon.

At the end of this year, the Hengqin Railway Station opens. It will be similar to the West Kowloon Station in Hong Kong, with immigration facilities for both the mainland and Macau housed in the same building. It will also be a similar size, with the capacity to handle 80m visitors a year (Macau received 35m last year). The opening will likely be the spark that ignites a frenzy of media attention for this island, one of three special economic zones in Guangdong (together with Guangzhou’s Nansha and Shenzhen’s Qianhai).

No date has been set for the station to open, but it is widely assumed to be on or near the December 20 anniversary celebrations for Macau, marking two decades since the SAR’s return to Chinese sovereignty. President Xi Jinping is expected to attend that event. We would not be surprised if he pops across to Hengqin for the new station’s opening as well. Hengqin is a project close to his heart, as he launched it while still Vice President back in 2011 with the “Guangdong-Macao Cooperation Framework Agreement”. Hengqin was also the first stop on his whirlwind visit to Guangdong in October last year.

Readers might realise that we know a thing or two about Hengqin. In fact, we are preparing a 30-page report on the subject that will be available soon. Anyone interested in knowing more, please email us and we will keep you updated.