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China economy

Guangzhou is banking on this international forum to get an edge on Shenzhen, Hangzhou

Guangzhou authorities hoping event run by Fortune magazine and attended by international business leaders will help it stand out from its rivals

PUBLISHED : Sunday, 03 December, 2017, 7:31pm
UPDATED : Monday, 04 December, 2017, 2:15pm

The city authorities in Guangzhou are leaving no stone unturned – quite literally – as they prepare for a major international forum that they hope will give them an edge in the ferocious competition between mainland Chinese cities for exposure and investment.

Security checks at subway stations have been stepped up, walls repainted and even the paving stones have been dug up and replaced as part of the preparations for the biennial forum run by Fortune magazine that will bring a host of global business leaders to the city of 14 million people starting on Wednesday.

The guests will include Bill Ford, the chairman of Ford Motors, Stuart Gulliver, the chief executive of HSBC, and leading tech entrepreneurs including Pony Ma, the chairman of Tencent, and Jack Ma, founder of Alibaba, the e-commerce firm that also owns the South China Morning Post.

The hope among the local authorities is that the line-up of big name executives will help put Guangzhou, the capital city of the southern province of Guangdong, on the radar of global investors at a time when China as a whole is struggling to woo foreign direct investments.

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The city – once known as Canton – was an ancient maritime entrepot and between 1757 and 1842 it enjoyed a monopoly on foreign trade. More recently the Canton trade fair, which began in 1957, was the only venue where foreign businesses could trade with China until Deng Xiaoping opened the country up to the outside world in early 1980s.

The city was a shining spot on China’s economic map in 1980s and 1990s when its surrounding towns in the Pearl River Delta boomed thanks to cheap labour from inland provinces and capital investments from neighbouring Hong Kong, which shared its language and culture.

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However, while Guangzhou’s economy has grown in absolute terms to put it on a par with Singapore, and given it a GDP per capita equal to that of Saudi Arabia, the city’s status within China has declined as Beijing, Shanghai and even the neighbouring Shenzhen became the new darlings.

Faced with an urgent need to reinvent itself and find a position in the national and even global economic landscape, its successful bid to stage this year’s Fortune Global Forum fits into this ambition, according to officials and economists.

Lin Jiang, a professor from Lingnan College in the Guangzhou-based Sun Yat-sen University, said the city was losing relevance as talent was concentrating in Beijing, Shanghai, Shenzhen and even Hangzhou, where Alibaba is based.

“Guangzhou needs to show its advantages and to boost its influence,” said Lin. “The Fortune forum will be a good chance for Guangzhou to display its efficiency and good business environment.”

The municipal government of Guangzhou, which spends 4.5 billion yuan (US$680 million) a year promoting the city abroad, has commissioned CNBC Catalyst to produce a 60-second video to promote the city’s image as a business-friendly and inclusive place.

The mayor of the city, Wen Guohui, who led the organising committee for the conference, has attended“road shows” in Silicon Valley, New York, London, Paris, Hong Kong, Tokyo, Singapore and Munich to promote the city and the conference.

This year’s event will host about 2,000 delegates from 120 countries, according to the organisers.

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Sources have previously told the South China Morning Post that President Xi Jinping will not show up at the forum even though it was widely expected he would be there.

However, Vice-Premier Wang Yang, the Communist Party chief in Guangdong between 2007 and 2012, will attend the event and give a speech.

While Xi’s no-show will be a disappointment, the city is still determined to show off the best it has to offer.

Peng Peng, an economist and the vice-president of the Guangdong-based South Nongovernmental Think-tank, said Guangzhou “was enthusiastic about hosting big international events because it needs the attention of the international community”.

The city has shown a special preference for wooing big-name investors, such as Foxconn, the world’s biggest iPhone assembler, Peng added.

The municipal government of Guangzhou successfully persuaded Terry Gou, the founder of Foxconn, to set up a US$9 billion display plant in the suburbs of the city early this year by offering cheap land and tax breaks.

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Gou will be one of the key speakers at the forum. Other speakers include Terry Branstad, the US ambassador to China, and Henry Paulson, the former US secretary of the treasury, to discuss themes such as “openness”, “innovation” and “globalisation”.

The city’s quest to attract global capital is part of a broad effort by Guangdong and China in general to move up the global value chain and to attract foreign investments at a time when labour-intensive businesses such as shoemakers and toy manufacturers are retreating from the Pearl River Delta to cheaper Asia countries or to Africa

Guangzhou is particularly keen to replace them with new hi-tech firms to fulfil its vision of becoming an international scientific and technological innovation centre – but so are many other Chinese cities.

As Lin put it: “Guangzhou hope to be home to advanced manufacturing and new industries. But it’s facing fierce competition with cities nearby.”