Humble Beginnings

Four decades ago, in 1979, it was an inconceivable idea that a tiny fishing-village could turn into a thriving advanced metropolis. Shenzhen, however, has achieved exactly that.

Shenzhen — established as one of China’s first Special Economic Zones in 1980 – has fostered a most friendly business environment which has encouraged foreign companies and joint ventures to set up their businesses at an unprecedented rate. As a result of its continuous reforms and opening-up, the city has transformed its economy and assisted the fantastic growth of a booming information technology sector, earning itself the title of “the nation’s Silicon Valley” on the international stage.

Incredible Development

The opening-up of Shenzhen ushered in a new era for the city. Huge amounts of capital, technological, and human resources quickly flowed into Shenzhen, and as a result, turned the city into one of the fastest-growing cities in the world. By the end of 2018, the mega-city covered almost 1,992 square kilometers and home to a massive population of nearly 13 million people. During the same period, GDP reached a whopping 2.4 trillion yuan, making it the third highest grossing city in China, behind only Shanghai and Beijing. Last year, Shenzhen’s GDP (HK$ 2.87 trillion) exceeded, for the first time, that of the Hong Kong Special Administrative Region (HK$ 2.85 trillion).

Shenzhen, reportedly spends almost 4.2 percent of its GDP on research and development, which is double that of the country average. The city also contributes more than 40% to the overall international patents filed by China, a number substantially higher than even that of Britain or France.

Currently, Shenzhen has the third-largest container port in the world and is home to more than 14,000 international technology companies, including home-grown tech giants, Tencent, Huawei, DJI, ZTE, and Foxconn.

Model City Plans

While keeping Shenzhen once again at the forefront of change, Beijing, on August 18th, 2019, announced plans to support Shenzhen build a pilot demonstration zone of socialism with Chinese characteristics, transform the metropolis into a model city for implementing deeper and bolder reforms based on socialism with Chinese characteristics. The project aims to further Shenzhen’s status as a world-class city with a particular focus on technological innovation, research and development, high-tech industries, public services, and the ecological environment.

The key idea behind this initiative is to encourage experimentation in order to bolster its “innovation-centric development strategy.” Guidelines issued earlier this month by Beijing emphasized that the latest step will be to reinforce the “one country, two systems” principle. Indeed, officials noted that this system is integral for the country in realizing the ‘great rejuvenation’ of the Chinese nation.

Although Shenzhen has achieved many accomplishments and has played an essential role in the country’s economic growth, it faces challenges in its ongoing development.  Guo Wanda, executive vice-president of China Development Institute (a Shenzhen-based think tank), announced recently that “a big problem for Shenzhen is the high land cost, which is not good for retaining enterprises”. He added, “the first issue that needs to be solved is how to deal with its high costs and high housing prices. The city should also further innovate its governance to improve efficiency and support the flow of goods, capital, information, and talent”.

According to the city’s master development plan, to achieve innovation-driven development, the city will focus on the critical high-tech sectors, including financial technology, artificial intelligence, and 5G communication. Shenzhen also plans to invest significant resources into the research of digital currencies and e-payment applications.

Additionally, Shenzhen will establish state-level science centers, along with crucial innovation incubators across several fields, including, 5G, artificial intelligence, internet science and technology, life information, and biomedicine. Moreover, in order to build Shenzhen into a model city and support its continued growth, the city will receive substantial backing from the central government. The aim of this ambitious project is to create a fair, stable, and transparent legal business-climate aligned with the rule of law. It is expected that these changes will make it increasingly attractive for businesses in the city.

Shenzhen also seeks to implement a more streamlined and favorable immigration policy in order to entice overseas talent. The city will also assist international contributors with the permanent residence to commence their scientific and technological enterprises in the city.

Moving ahead, the initiative of making Shenzhen a model city fits with the long-term strategy of developing the Greater Bay Area. This scheme aims to join the Hong Kong-Macau Special Administrative Regions with nine other surrounding municipalities including Dongguan, Foshan, Guangzhou, Huizhou, Jiangmen, Shenzhen, Zhaoqing, Zhongshan, and Zhuhai. This region, with its huge size of almost 56,000 square kilometers and an enormous population of around 70 million people, already contributes nearly 12% of China’s GDP.

A government paper released earlier this year on the Greater Bay Area, revealed an ambitious project to transform the Pearl River Delta into a ‘mega-hub’ driven by ground-breaking innovation, and economic development.

This project fits with Shenzhen’s primary aim of regional integration, and pro-active involvement in the country’s Belt and Road Initiative. This particular focus on regional integration is to facilitate the seamless flows of human resources, capital, information, and technology. The cities involved in this regional integration effort will also conduct joint cultural activities to preserve and strengthen their cultural heritage and sense of unity.

This year marks the 70th anniversary of the founding of the People’s Republic of China and the 41st anniversary of the country’s reforms and opening-up policy. Given the government’s vision and Shenzhen’s track record so far, it appears that the city will once again prove to be a role model in promoting deeper and bolder reforms, not only for China but also for the rest of the world.

Rachana Gupta, China Focus’ contributor.

Editor: Jamie Leigh Wright, Liana