HK's little brother Shenzhen grows up

Shenzhen will set out a new five-year plan today, and it is expected to carry a message for Hong Kong: we're not your kid brother any more.

For years, Hong Kong has treated Shenzhen as its junior partner, a place for Hongkongers to offload unwanted industries and to shop for cheap fakes.

But the one-time fishing village that has become a municipal powerhouse after three decades as a special economic zone has been catching up. Its cheap food and entertainment have been getting more expensive. Its growing ranks of affluent young people now come to Hong Kong to shop for cheaper foreign imports.

It is home to some of the world's leading high-technology companies, putting it ahead of Hong Kong in the field, commentators say, and its ports and airport compete for traffic.

In the next five years, Hong Kong's lead is likely to narrow further. By 2015, Shenzhen's gross domestic product is projected to equal not 60 per cent of Hong Kong's, as it does now, but 80 per cent.

The Shenzhen Communist Party expects the city's GDP to grow by 10 per cent a year and reach 1.5 trillion yuan (HK$1.76 trillion) by 2015. (That was the size of Hong Kong's GDP last year. If Hong Kong maintains economic growth of around 6 per cent per year, its GDP will reach 1.89 trillion yuan in 2015.)

The party's target understates the changes ahead, says Dr Fang Zhou, assistant chief research officer at the Hong Kong-based One Country Two Systems Research Institute.

Priscilla Lau Pui-king, a Hong Kong deputy to the National People's Congress and an associate economics professor at Polytechnic University, said Shenzhen was no longer Hong Kong's backwater. The competition was now keen, she said.

'However, the structures of the two economies are very different so there is much room for the two cities to complement each other,' Lau said. 'Shenzhen has a large manufacturing sector, while Hong Kong mainly relies on the financial sector.'

In its five-year plan, Shenzhen vows to become China's key city for information technology and green energy. Its leaders want their city to be a global bio-industrial and logistics centre and expect strong support from Beijing, which plans huge investments in technology to make the mainland a science powerhouse by 2020.

How Hong Kong plans to benefit from these changes isn't clear. Fang said the city had been slow to take the lead on cross-border projects. For instance, in developing the new port of Qianhai into a world-class centre for service industries, Hong Kong is acting merely as a consultant.

Co-operation is likely to continue, though, with a HK$10 billion university hub to be built on the Lok Ma Chau Loop - land which belongs to Shenzhen but is managed by Hong Kong. The loop was carved from Shenzhen when the Shenzhen River was straightened in the 1990s; the hub is slated to open in the 2020s.

Despite such a grand plan there is a lack of zeal.

Guo Zhongxiao, a mainland internet commentator on Shenzhen affairs and now an editor at Hong Kong-based Asia Weekly, said neither city seemed enthusiastic about cross-border co-operation.

'It's clear that Shenzhen has developed its own hi-tech industries and unarguably surpassed Hong Kong in terms of new technologies and innovation,' Guo said.

By and large, Shenzhen brandishes its ties with Hong Kong to gain favorable treatment in the competition among mainland cities for central government resources, Fang said.

But Shenzhen increasingly needs less of Hong Kong's lustre to get ahead, Fang said. 'Actually, Shenzhen's attitude towards cross-border co-operation has significantly changed since 2003 after it no longer relied on Hong Kong for capital and technology support,' he said.

Shenzhen was clearly competing with Hong Kong in many areas, Fang said. Yantian Port is the second-largest deep-water container terminal in China and fourth-largest in the world, handling 22.5 million TEUs (20ft equivalent units) last year - very close to the Hong Kong port's handling capacity.

Shenzhen, once dependent on labour-intensive and export-driven manufacturing, is shifting to a more diversified economy. Mainland and foreign industrial experts say the city has made clear advances.

Huawei Technologies is the world's second-largest vendor of wireless network equipment after Sony Ericsson. Tencent, the company behind China's most popular instant messaging service QQ, is the world's third- largest internet firm by market share. BYD has morphed from a battery supplier to an electric-vehicle maker with investment from financier Warren Buffett. It is expected to benefit from Beijing's plan to invest 100 billion yuan to make the mainland a leading global force in electric-vehicle production.

Jeffrey Lam Kin-fung, chairman of the Legislative Council's economic development panel, believes Hong Kong will benefit from Shenzhen's growth. 'Shenzhen's enterprises may have rising demand for financial services from Hong Kong ... [As for] Qianhai, it will be up to Hong Kong to seize business opportunities there.'

Eye-watering

Whichever way you look at it, the border city's growth has been astonishing

Shenzhen's average annual rate of economic growth from 1979 to 2009: 25.8%

Shenzhen's gross domestic product as a proportion of Hong Kong's in 1979 was 0.3%. By 2009, the proportion was 57%

The number of times by which Shenzhen's population grew between 1979 and 2009: 300

Source: People's Daily