The southern Chinese cities of Guangzhou and Shenzhen could be the biggest economies in the “Greater Bay Area” by the end of the year, overtaking Hong Kong and forcing it into third place.
US investment management firm Bernstein projected that Shenzhen’s GDP would rise to US$350 billion this year (or 2.32 trillion yuan), narrowly beating out a projected 2018 GDP for Hong Kong of US$345 billion (or 2.28 trillion yuan).
While Hong Kong has yet to release a growth forecast for this year, the city’s chief executive, Carrie Lam Cheng Yuet-ngor, said in November that Hong Kong’s GDP growth last year would exceed 3.5 per cent.
Shenzhen, once a sleepy fishing village, became the biggest economy in Guangdong province in 2016, after banking on research and development to expand its economy.
It officially took over top spot in the province from Guangzhou late last year when Guangdong’s statistics bureau revised up Shenzhen’s GDP figure for 2016 to more than 2 trillion yuan (HK$2.36 billion) from 1.95 trillion yuan, with growth coming in at 9.1 per cent.
The changes reflected the province’s decision to classify spending on research and development as fixed investment rather than an operating expense.
This year is the 40th anniversary of China opening up to the outside world and 38 years since Shenzhen became the country’s first special economic zone. In 1979, Shenzhen’s GDP was just 190 million yuan, but it has grown 10,000-fold since then.
“The gap in growth between the three will be even wider in the coming years if Shenzhen and Guangzhou keep up their remarkable expansion,” Guo said.
But he also said it was not fair to compare the cities based solely on GDP because they were of different sizes and had different populations.
“Hong Kong has kept its advantage in competition. It needs new migrants, new innovative industry and an economic hinterland to boost its economic growth. Integration into the Greater Bay Area is its only way,” Guo said.
Shenzhen and Guangzhou have fostered hi-tech industries, like biotechnology, new energy and new materials to spur their economies.
Since 2013, Shenzhen has invested more than 4 per cent of its GDP annually on research and development, while Guangzhou says it aims to plough 2.7 per cent of its GDP into R&D this year.
In October, Lam said Hong Kong would double its expenditure on research and development to 1.5 per cent of its GDP in the next five years to encourage innovation.