Tag Archives: Zones

GBA’s three big zones keep reform flame flickering

The provincial government has released a Five-Year Plan for the development of its three main special economic zones of Nansha (Guangzhou), Qianhai (Shenzhen) and Hengqin (Macau). It reads like a plan for a bygone age, but nevertheless makes clear that the GBA’s masterminds still see prospects for further “reform and opening” ahead.

The document is full of jargon, talking about the three zones being carefully aligned in their planning. In fact, they have missions that appear to be largely indistinguishable. The plan is for Nansha to be some kind of central point for the GBA, while Qianhai seems to be focused on working with Hong Kong, and Hengqin with Macau. Yet all three places already have major projects well under way that obviously overlap with each other in their objectives. For example, all three have so-called international arbitration centers; special incentives for Hong Kong people and companies; and a desire to be both “financial centers” and “talent magnets”. Nansha and Qianhai are major shipping hubs. All three love their tech plans.

Among the three, Hengqin seems to have the most realistic chance of success in the foreseeable future. Macau will pursue its “diversification” mission there with zeal for the next few years. Having lots of cheap land, plus a 15% personal and corporate income tax, should make it fairly easy to attract some big SOEs to set up subsidiaries in Hengqin. Adding another 600,000 residents should also be a cinch. Its office towers, now standing empty, should fill up quickly once Macau starts pulling in Chinese companies for smart manufacturing, medicine, and financial services (with a little help from Hong Kong). Its MICE industry, meanwhile, is sure to boom, as the casinos will be keen to sponsor events that enable attendees to receive special visas for Macau. And in the longer term, the casinos will likely be invited in to build more large-scale non-gaming resorts.

(GBI has a special 60-page report on Hengqin, which is distributed to consulting clients. Please get in touch if you are interested.)

Qianhai looks more like quicksand for Hong Kong investors. It is hard to see what the zone offers that cannot be done more efficiently in Hong Kong. The land is not that cheap, the arbitration center is still a work in progress that no serious international firm would use when they can rely on Hong Kong’s courts, and most financial firms are little more than admin offices. And there is no bullet train running there yet. Cross-border currency trading is already a thriving business in Hong Kong; why would banks and insurers need to set up in Qianhai as well?

Nansha, likewise, fancies itself as a future international financial center, with its Hengli “financial island”. But what is that besides a naked attempt to hollow out highly priced commercial real estate in Central? It might be in the geographic center of the GBA, but that also means that it is in the middle of nowhere. It is a long trip by MTR from downtown Guangzhou, and getting there by bullet train from Hong Kong is not yet easy. Nansha is a better bet as a hub for scientists, but even in this respect, it is hard to see it becoming international in a way that might draw resources from Hong Kong. Its real strength remains as a cutting-edge manufacturing hub, notably for electric vehicles, and as a port, for cargo running up to Guangzhou. In both areas it will compete hard with the expanded Qianhai, which now bleeds into Shenzhen’s hi-tech district next door.

In reality, China probably is long past the need for special economic zones. It should be conducting any experiments it deems necessary directly in the two Special Administrative Regions. Still, at least the provincial government is keeping the faith with the Reform and Opening agenda. It will be interesting to see how long its ambitions last under the country’s new twin drives of Dual Circulation Theory and Common Prosperity.

Knowledge City: Sino-Singapore dream realized

In the northeast corner of Guangzhou, a vision of the city’s future has been rising for nearly a decade. Thanks to some major investments announced recently, and as the project nears the halfway mark of its original 20-year development plan, an opportune moment has arisen to review its progress. Local media have been gushing about its potential.

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Qianhai – a new kind of experiment

The new special economic zone in Shenzhen, one of three designated by Beijing for the next stage of China’s Reform & Opening, has been slow getting going, but changes are being accelerated.

As far as special economic zones go, Qianhai is not meant to impress with its size. At just 18.04 sq km, the new zone in the western side of Shenzhen, facing the South China Sea, is relatively small, with not much room for future expansion – unless further reclamation work is done. But that is just fine for local and national officials, for now. What Qianhai is set to accomplish in the coming years, under the Greater Bay Area masterplan, is all about quality rather than quantity.

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Songshan Lake grows 11% in 2019

Dongguan’s premier tech district, clustered around Songshan Lake and anchored by Huawei’s massive R&D center, put in a sterling performance in 2019, growing 11% YoY, according to local media.

Without giving a number in yuan, the report said Songshan Lake will generate tax revenue of about 16.3 billion yuan, ranking first in Dongguan. Fixed-asset investment of about 23 billion yuan and industrial output of 540 billion yuan were also first in the municipality. Advanced manufacturing and high-tech manufacturing accounted for more than 90% of that output.

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Nansha grows 10%, but expects only 7.5% in 2020

Guangzhou’s special economic zone of Nansha has decided to follow a trend among the GBA’s economic growth engines to play down expectations for 2020. Following Dongguan and Shenzhen, which have said they expect growth in 2020 to be several basis points lower than 2019, the region’s fastest-growing major district has said its GDP will grow by only 7.5% in 2020, down sharply from more than 10% in 2019, according to a local media report.

The past year was a good one for Nansha, which has several major construction projects under way. Its GDP was expected to be about 160 billion yuan once official data is released, according to the local government. This would represent 10.3% growth over 2018, a significant surge from 2018’s 6.5% growth. 

Continue reading Nansha grows 10%, but expects only 7.5% in 2020

Nansha: From sand to fintech

Of all the places in the Greater Bay Area, Nansha probably has the grandest ambitions. Once little more than a site of large deposits of alluvial sand, at the mouth of the Pearl River, today Nansha is being spoken of as the one true “core” of the Greater Bay’s development plan. Finance, technology, scientific research, and shipping are all being clustered here with a view to building a New Area that can propel the next stage of the region’s – and the country’s – growth.

To say it has come a long way from humble beginnings would be an understatement. Nansha only became a district of the provincial capital, Guangzhou, in 2005, when it was separated from the larger Panyu District. Back then, it was known for not much more than being the source of the sand that laid the foundations – literally – of Hong Kong’s real-estate boom in the post-war period. But already, its potential was being measured due to its location on the southernmost tip of Guangzhou. The country was embarking on a wave of experimentation after joining the WTO a few years before, and it was designating national-level New Areas around the country to launch experiments in economic reform. Nansha was the sixth of these, tapped for future stardom in 2012. (read our explainer of what a New Area is.) 

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Qianhai’s office rent seen catching up fast

Qianhai has a lot of yet-to-be leased office space on the market, with vacancy rates at historic highs for a district in Shenzhen. Never mind, says international real estate consultancy Colliers, it will catch up fast and likely overtake the neighboring Houhai district.  

Thanks to policy support for the special economic zone, which is attracting a surge of investment, Colliers believes Qianhai will benefit from near-term and longer-term trends in the coming years. (Read our primer on Qianhai to understand more.) Subsidies are currently generous, making rents here less than 70% of what they are in other districts, while infrastructure is being put in place that will soon make the district easier to access from the rest of the city.   Continue reading Qianhai’s office rent seen catching up fast