China’s tech hub Shenzhen set to hit 2019 growth target after surprising fourth quarter rebound amid trade war

Shenzhen’s gross domestic product (GDP) is estimated to reach over 2.6 trillion yuan (US$374 billion) in 2019, a growth rate of 7 per cent

But the home of technology giants Tencent, Huawei, and DJI is set to lower its 2020 growth target to 6.5 per cent from 7.0 per cent in 2019

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Shenzhen’s gross domestic product (GDP) was estimated to reach over 2.6 trillion yuan (US$374 billion) in 2019, which would meet the growth target set by the central government. Photo: Xinhua

Published: 6:03pm, 9 Jan 2020Updated: 9:24pm, 16 Feb 2020

Shenzhen’s economy is set to have expanded by 7.7 per cent in 2019, with a surprising rebound in the fourth quarter helping the home of technology giants Tencent, Huawei, and DJI reverse a rapid deceleration earlier in the year to meet its target, according to the mayor of the southern Chinese city.

The city’s gross domestic product (GDP) was estimated to reach over 2.6 trillion yuan (US$374 billion) in 2019, which would meet its growth target, the city’s mayor Chen Rugui told the annual local legislature meeting that began on Wednesday.

At the same time, Shezhen lowered its 2020 growth target to 6.5 per cent from 7.0 per cent in 2019.

In 2018, the city’s GDP reached 2.42 trillion yuan, surpassing Hong Kong for the first time, however, for most of 2019, Shenzhen’s economic growth fell faster than the rest of China. In the first nine months of last year, Shenzhen’s GDP grew by 6.6 per cent year to date.

Local governments do not release quarterly year-on-year growth figures, but economists from China International Capital Corporation said Shenzhen’s economy grew 5.2 per cent in the third quarter of 2019 having grown 7.6 per cent and 7.2 per cent in the first two quarters.

The sharp fall raised concerns that one of China’s frontline areas of innovation and opening up was losing its growth potential and escalated concerns over the country’s overall economic performance for the coming year.

Shenzhen is heavily reliant on trade to boost its economy, and in 2018 the total value of its trade was 1.23 times its overall GDP, meaning the city has been particularly vulnerable to the trade war between China and the United States.

During the first three quarters of last year, Shenzhen’s exports increased by 4.8 per cent, having declined 2.4 per cent in the same period of 2018, according to official data.

Shenzhen is very integrated into China’s [and the global] supply chains of manufacturing and tech products, so changes in the macro climate can have a visible impact on Shenzhen’s economy

Aidan Yao