Hi-tech hub Shenzhen gears up for steady economic expansion

Hi-tech hub Shenzhen gears up for steady economic expansion

People are seen in front of the Tencent company headquarters in Shenzhen, Guangdong province, China. (Reuters file photo)

HONG KONG: Shenzhen, China’s Silicon Valley and the richest city in southern Guangdong province, expects to achieve steady economic expansion through 2025 under a new five-year plan, helping cement the metropolis’ role as the “core engine” of the Greater Bay Area (GBA).

The city’s 14th five-year plan from 2021 to 2025, released by the Shenzhen government this week, expects the local economy to reach 4 trillion yuan (US$626 billion) by the end of that period, up from 2.8 trillion yuan in 2020.

Under that plan, Shenzhen’s per capita gross domestic product is forecast to hit 215,000 yuan in 2025, or US$33,629, to narrow the city’s wealth gap with neighbouring Hong Kong, which had a per capita GDP of US$45,176 last year.

The 130-page economic blueprint said Shenzhen will play a key role to help China’s “technology self-sufficiency” strategy and become the country’s “vanguard in innovation-driven development”. The city, according to the plan, will sharpen its focus in the fields of semiconductors, biomedicine, new energy vehicles and the digital economy.

In a broader context, the southern city will have a bigger role to play, as the hi-tech rivalry between the US and China intensifies, according to Guo Wanda, executive vice-president of Shenzhen-based think tank China Development Institute.

“What differentiates Shenzhen from other tech hubs in China is its vigorous ecosystem of tech companies, which the city expects to play a major role in driving innovation,” Guo said. “Unlike the traditional basic scientific research led by the government and universities, Shenzhen’s research and development initiatives target the requirements of industries and the general market.”

Under its five-year plan, Shenzhen will invest more than 700 billion yuan in hi-tech research and development to reinforce its position as China’s innovation powerhouse. That role has become more significant to China’s hi-tech ambitions after the US Senate passed on Tuesday sweeping legislation designed to strengthen Washington’s hand in its escalating geopolitical and economic competition with China.

Shenzhen, which covers a land area about twice that of Hong Kong, will upgrade 100 square kilometres of industrial parks and renovate another 100 sq kms of “industrial land”, according to its five-year plan, indicating the phase-out of low value-added factories and development of advanced hi-tech plants.

China’s leading chip maker Semiconductor Manufacturing International Corp has already entered into an agreement with the Shenzhen government to co-invest US$2.35 billion to build a new wafer fabrication plant in the southern tech hub, adding more capacity amid a global chip shortage.

The stakes are high for Shenzhen, home to about 14,000 hi-tech firms, amid the central government’s goal for the metropolis to become an engine of technological reform, giving it more freedom to recruit talent from around the world. Shenzhen, hand-picked by Chinese President Xi Jinping as a model “socialist” city, is also a central part of Beijing’s plans for the GBA – a scheme to link the economies of Hong Kong and Macau with nine cities in Guangdong.

As a testing ground for China’s market-oriented reforms, Shenzhen used to be infamous for its copycat culture and sweatshops. That has changed over the past two decades, as the city’s fortunes grew alongside the development of companies like telecommunications equipment makers Huawei Technologies Co and ZTE Corp, as well as internet giant Tencent Holdings, which operates the world’s biggest video gaming business by revenue and China’s multipurpose super app WeChat.

While Shenzhen will pursue advances in artificial intelligence and quantum computing under its five-year plan, efforts will also be made to boost the share of financial services output to 15% of the city’s GDP by 2025. Hong Kong, a long-standing international financial centre, generates about a fifth of its GDP from financial services.

The main airport in Shenzhen is expected to handle more than 70 million passengers by 2025, while the terminals that form the Port of Shenzhen will accommodate as much as 33 million containers in the same period.

In a gesture to solve its housing problem, Shenzhen plans to develop at least 280,000 public flats over the next five years, in addition to increasing investments in hospitals and kindergartens.