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China: Tale of two
deltas
By Sam Ng
HONG KONG -
The competition for economic primacy of China is largely
between the Pearl River Delta that surrounds Hong Kong
and the Yangtze River Delta, the hinterland that
surrounds Shanghai, China's largest city and, until the
Communists took over in 1949, the country's commercial
capital. It was the Pearl River Delta, and particularly
Guangdong province, that became the focus of the late
supreme leader Deng Xiaoping's initial experiment to
wean China away from a command economy to a market one
and open the country to the West.
The two are by
far China's two most important commercial regions. In
2002, the Pearl River Delta's gross domestic product
(GDP) reached US$113 billion, with export values of
$112.5 billion - 9.2 percent and 34.6 percent of China's
totals respectively. The Yangtze River Delta boasts much
larger GDP, at $230.1 billion, with proportionately
smaller exports, valued at $92 billion, representing
18.7 percent and 28.3 percent of the national total
respectively. Shanghai covers less than 0.1 percent of
China's land mass and nonetheless provides 5.2 percent
of the country's GDP and 9.8 percent of export value.
The mainland government in recent weeks has
clearly set in motion provisions that are designed to
hasten the economic integration of Hong Kong into the
Pearl River Delta, even as its political integration has
been put on the back burner as a result of massive - and
so far successful - demonstrations against sedition laws
that the administration of Hong Kong Chief Executive
Tung Chee-hwa attempted to put into effect at the end of
June.
Among these economic provisions is the
Closer Economic Partnership Arrangement (CEPA), the
free-trade agreement enacted between China and Hong Kong
Special Administrative Region (SAR) in June. Customs and
immigration regulations also have been loosened
dramatically to allow mainland Chinese to visit Hong
Kong for longer periods and to spend more money. A
29-kilometer bridge has been mooted between Hong Kong,
the former Portuguese colony of Macau and Zhuhai, the
region that abuts Macau.
Businessmen and
academics have begun meetings on the implications of
CEPA in terms of the relationship between the two
regions. A recent Yangtze River Delta CEO (chief
executive officer) Seminar on the Future Development of
the Pearl River Delta, held recently in Guangzhou, found
that about 80 percent of the CEOs in the two deltas
found that there is considerable scope for cooperation,
especially in the fields of human resources and
developing complementary industries.
In many
respects, the two regions seem headed towards
competition, with the two delivering up aggressive
slogans such as "CEPA helps the Pearl River Delta catch
up with the Yangtze River Delta" and "Great Pearl River
Delta rivals Yangtze River Delta", etc.
There is
no doubt that the two are competing to become the dynamo
of China's economic development in the 21st century,
openly or with subtle gestures. The reality, however, is
that the two regions seem to be complementary partners
rather than live-or-die opponents.
According to
a survey by business groups of many industries such as
trading, logistics, manufacturing, high technology,
property and medicine, more than 50 percent of
interviewees think the Yangtze delta's geographic
location is better, while 61 percent perceive the Pearl
delta's policies are better suited to enterprise
development.
The survey indicates that some
enterprises believe local government economic
cooperation in the Yangtze delta is better, allowing
businesses to run more smoothly, and that there is a
richer supply of manpower. But others believe that Pearl
delta market is more mature, since it opened so much
earlier. Thus, with a good environment for investment,
the market has a wider scope for exploration.
The survey shows that the two enjoy distinct
advantages in different sectors. Votes for the Yangtze
delta's advantage in automobiles, real estate and
finance account for over 50 percent, while the Pearl
delta's advantages lie in home appliance, food, daily
chemical products and information-technology industry.
Votes for home appliances reached 84.6 percent.
The survey result conforms to reality. Lujiazui
in Shanghai misses few financial giants home or abroad,
and Guangdong boasts all the famous brands of home
appliances, such as Midea, Kelon and Galanz.
According to the survey, 42.9 percent of
respondents recognize a continuing trend of shifting
manufacturing industries from the Pearl River Delta to
the Yangtze area. Some regard it as normal since the
latter provides a better environment for enterprise
development. At present, the Yangtze River Delta is
regarded as more hospitable to research and development,
thus providing a better atmosphere for
technology-intensive manufacturers.
The survey
also shows that the Yangtze area-based firms have little
enthusiasm for investing in the Pearl River Delta. They
are unfamiliar with the region. Second, with such
industries as real estate comparatively better developed
in the Pearl River Delta, the Yangtze area interests see
no advantage in competing with local giants. They also
see more opportunity at home for investment than in the
comparatively mature Pearl River Delta market.
Conversely the Yangtze area's better living
environment and cultural fundamentals, coupled with more
perceived potential, have whetted the appetite of Pearl
River Delta firms to penetrate the market, viewing it as
a paramount part of their strategy for national
development.
The survey finds that both deltas
face bottlenecks. Some 57.1 percent of interviewees say
the most worrisome factor in Pearl River Delta
investment is the quality of human resources, followed
by financing, whereas the Yangtze River area's
unsystematic industrial chain tops the list of worries.
About 64.3 percent of privately run enterprises
in both places list manpower shortages as a temporary
impediment while another 21.4 percent tick the
difficulty in sustaining their enterprises.
Historically, the Pearl River Delta opened up
earlier and its capability to run and check markets is
greater, while the Yangtze River Delta has been
developing rapidly in recent years.
(Copyright
2003 Asia Times Online Co, Ltd. All rights reserved.
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