China’s tech hub, Shenzhen, barely avoids economic contraction in first half of 2020

Stronger investment, particularly in fixed assets and infrastructure, offset sharp declines in exports and retail sales

But housing prices have surged in recent months as the city – China’s first special economic zone – approaches its 40th anniversary

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People exercise in front of a portrait of China’s former paramount leader, Deng Xiaoping, at a square in Futian district, Shenzhen – the city he designated as the nation’s first special economic zone 40 years ago. Photo: Sam Tsang

Published: 5:47pm, 29 Jul 2020Updated: 11:00pm, 29 Jul 2020

The city of Shenzhen, China’s tech capital that sits on the border with Hong Kong, barely avoided an economic contraction in the first half of this year, as a strong rise in investment offset weaker consumer spending and exports.

Transformed from a small village adjoining Hong Kong in the last four decades, the mainland city’s gross domestic product (GDP) rose only 0.1 per cent in the first half from the year-earlier period, its statistics bureau said on Tuesday. Shenzhen fared better than the nationwide contraction of 1.6 per cent in the first half.

Shenzhen also did considerably better than Hong Kong, which reported on Wednesday that its second-quarter GDP fell 9 per cent compared with a year earlier – barely better than its 9.1 per cent contraction in the first quarter, and the fourth consecutive quarter that Hong Kong’s economy has contracted, on a year-over-year basis.

Shenzhen’s statistics bureau did not provide the year-on-year growth for the second quarter alone, but the first-half figure implies a significant improvement in the April-June period from the year-on-year fall of 6.6 per cent in the first quarter.

This 0.1 per cent growth is not simple at all

Shenzhen Special Zone Daily commentary

The city’s industrial output fell 2.3 per cent in the first half while service-sector activity increased 1.7 per cent, the data showed.

“This 0.1 per cent growth is not simple at all,” according to a front-page commentary on Wednesday in the Shenzhen Special Zone Daily, the official mouthpiece of local authorities. “The quick reversal [from the fall in the first quarter] has shown the city’s strong economic resilience and also sent an active signal of high-quality development. Shenzhen must continue the momentum to uphold the banner of pioneer and pilot.”