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The rise of Shenzhen has helped lessen Beijing’s reliance on foreign technology

byMorgan Phillips
October 21, 2020
in WORLD
Shenzhen’s rise from a fishing village to China’s model city has helped lessen Beijing’s reliance on foreign technology

Source: Tyrone Siu, Reuters

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Shenzhen’s policies have been implemented throughout the country and become the foundation of China’s developmental strategy.

On October 14, in a speech marking the 40th anniversary of Shenzhen becoming China’s first “Special Economic Zone,” President Xi Jinping said the tech-hub city had “blazed a trail” four decades earlier.

Xi said Shenzhen, often deemed China’s Silicon Valley and home to tech giants Huawei and Tencent, made “historic leaps” and “achieving miracles” by demonstrating China’s capacity for economic reconstruction.

The leader then called on the city to become a principal innovator and model for growth, citing new challenges China faces amid the pandemic.

Despite the confidence Xi illustrated, the landmark speech left some unsure of the future of neighboring Hong Kong as China appeared to relegate the once global financial hub to the back burner.

Yet, Hong Kong leader Carrie Lam asserted the need for Hong Kong and Shenzhen to “collaborate,” stating both cities will benefit from working in harmony. She reemphasized this point by delaying her annual policy address – which many view as her most important political event of the year – to instead travel to Shenzhen and Beijing.

Whether or not this address marks a turning point in China’s relationship with Hong Kong is uncertain. Still, it is apparent that China is placing more emphasis on Shenzhen’s development than it has in recent years.

“Shenzhen must strive to attract world-class talent to ensure its future development,” asserted Xi.

Shenzhen’s history

Formerly a modest fishing village, Shenzhen is now home to around 13 million people and yields a gross domestic product (GDP) that surpasses neighboring Hong Kong’s. The city manufactures much of the world’s electronics following its transformation in 1980 by then-leader Deng Xiaoping after he designated it a “Special Economic Zone.”

In layman’s terms, this title simply means that the region’s business and trade laws differ from those of the rest of the country. This classification allowed Shenzhen four decades of market research and development that proved fruitful.

Since then, Shenzhen’s policies have been implemented throughout the country and become the foundation of China’s developmental strategy. China sees these policies as a divergent model that combats the United States’ capitalist and democratic agenda.

Xi said the city’s prosperity demonstrates “the boundless power of China’s reform and opening up as well as the bright prospects for socialism with Chinese characteristics.”

The Chinese president’s speech comes after Xi revealed the new five-year plan for the city on October 11. He disclosed his hopes of relaxing regulations, bringing in foreign workers and lessening bureaucracy within the biotech and telecommunication fields. He also plans to roll out China’s first digital tender.

Still, Shenzhen remains one of China’s most contentious cities, with Huawei, the city’s largest technology company, experiencing growing tension with the US government.

In 2019, Shenzhen’s GDP rate slowed to 6.7%, far below the city’s average yearly growth rate of 25.8% in its first 30 years. 

Challenges for China

President Xi has recently emphasized China’s need to separate itself from foreign technology in response to increased global tension. The risks for China are apparent. The country faces mounting debt, worsening productivity and a dwindling employment rate, all of which have been propelled by the coronavirus pandemic.

For example, in the first quarter of 2020, China’s economy reportedly contracted 6.8%, during which about 460,000 Chinese firms closed. This marked the first recorded contraction of China’s economy since the era of Mao Zedong, the founding father of the People’s Republic of China.

Unemployment within China also spiked to 6.2%, a figure that does not take into account rural unemployment with critics believing that this number could be triple, or higher, than what China is reporting.

With the addition of political tension that has led to US sanctions, China faces critical hurdles for the continued growth of its economy.

Wu Junfei, deputy director of the Tianda Institute, a Hong Kong think tank, fears the US will continue to place sanctions on China, denying the country access to vital technologies. Wu believes Shenzhen could act as China’s solution to manufacture these technologies domestically.

“In its latest Shenzhen plan, Beijing has clearly given a green light for Shenzhen to deepen and widen its capital market to support its technology development needs,” Wu said. If successful, he added, Shenzhen could become a powerhouse for research and development in China.

In an effort to make this come to pass, China has granted the city greater autonomy to experiment with better market practices.

Even still, Li Weisen, an economics professor at Fudan University in Shanghai, argues that Xi’s push is absent of the freedom of thinking.

“An important prelude for Deng to try Shenzhen as a special economic zone was the third plenary session of the 11th Party Congress when the party decided to emancipate thoughts, with free discussions tolerated and even encouraged,” Li added.

“This helped to form an atmosphere of economic reform,” said Li.

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