HK cap­i­tal, ex­per­tise help­ing fuel growth

Coastal city opens arms to ad­vice and in­vest­ment

China Daily (Hong Kong) - - ZHANJIANG - By ED ZHANG in Zhan­jiang, Guang­dong edzhang@chi­

Pri­vate in­vest­ment, first of all from Hong Kong, will be treated as an im­por­tant so­cial as­set in the next stage of eco­nomic de­vel­op­ment in the city of Zhan­jiang, Guang­dong prov­ince.

All ef­forts will be made to pro­vide the city’s fu­ture in­vest­ment and trade part­ners with a much bet­ter busi­ness en­vi­ron­ment, said Liu Xiao­hua, leader of the Com­mu­nist Party’s lo­cal com­mit­tee in the sea­side city in western Guang­dong.

Hong Kong’s cap­i­tal and ex­per­tise in run­ning mod­ern ser­vice in­dus­tries are of par­tic­u­lar value in the city’s at­tempt to build its mod­ern ur­ban econ­omy.

In ad­di­tion to all the avail­able national and provin­cial poli­cies, Zhan­jiang is ready to con­cede more fa­vor­able terms to Hong Kong in­vestors in the ser­vice sec­tor, Liu said in an in­ter­view with China Daily im­me­di­ately fol­low­ing the provin­cial au­thor­i­ties’ de­ci­sion to speed up the de­vel­op­ment in the eastern, western and north­ern cor­ners of the largest Chi­nese prov­ince in eco­nomic power.

Zhan­jiang is lo­cated at the south­west­ern tip of Guang­dong. The city boasts not only unique po­ten­tial for mod­ern in­dus­try and ser­vices, but has also been “a fer­tile land to nur­ture pri­vate en­trepreneur­ship”, Liu noted, al­though many of Zhan­jiang’s pri­vate en­trepreneurs are op­er­at­ing else­where due to his­tor­i­cal lim­i­ta­tions.

Hong Kong has a com­mu­nity of al­most 10,000 mi­grants from Zhan­jiang in­clud­ing a num­ber of suc­cess­ful busi­ness­peo­ple who the lo­cal folks can name.

But agri­cul­ture long re­mained a main busi­ness in Zhan­jiang as the Pearl River Delta, or the cen­tral part of Guang­dong, was quickly trans­formed into a new in­dus­trial area in the 1990s.

The lo­cal mar­ket was small, and in many as­pects cut off from the global net­work, and has up to now ben­e­fited only in a limited way from over­seas in­vest­ment.

But all this is soon to be a thing of the past, said Liu.

The city is go­ing to em­bark on a num­ber of ma­jor de­vel­op­ment projects to be­come a new pow­er­house in Guang­dong’s econ­omy — from pub­lic in­fra­struc­ture shop­ping ar­cade in the wa­ter­front

As lo­cal lead­ers were busy pre­par­ing for a road show of their projects for the busi­ness com­mu­ni­ties in Hong Kong, Liu wel­comed pri­vate en­trepreneurs orig­i­nally from Zhan­jiang to par­tic­i­pate in their home­town’s eco­nomic take­off.

“Con­di­tions have changed. Po­ten­tial re­turns are easy to see. And there are al­ready promis­ing ex­am­ples,” said Liu, the 53- year- old chief of­fi­cial of Zhan­jiang.

Fresh op­por­tu­ni­ties

“Pri­vate in­vestors are dis­cov­er­ing fresh op­por­tu­ni­ties. They can tell that the lo­cal govern­ment has now be­come com­pe­tent in de­liv­er­ing pub­lic ser­vices,” he said. “And even the streets are cleaner than be­fore. There is no rea­son to not trust one’s own eyes.”

To­day the non-State sec­tor, in­clud­ing com­pa­nies funded by over­seas and do­mes­tic pri­vate cap­i­tal, makes up 58 per­cent of all busi­nesses in Zhan­jiang and gen­er­ate 53 per­cent of the city’s to­tal busi­ness sales. Pri­vate cap­i­tal’s con­tri­bu­tion to the lo­cal econ­omy is “in­dis­putable”, Liu said, has­ten­ing to add that Zhan­jiang wants still more, much more.

He said the next thing to come is an in­te­grated “in­dus­trial plat­form” to en­cour­age more pri­vate in­vest­ment, im­prove the city’s in­vest­ment en­vi­ron­ment and chan­nel new cap­i­tal to­ward larger and tech­no­log­i­cally more so­phis­ti­cated projects.

Hong Kong is al­ready the largest source of fi­nance for

the city re­ceived a to­tal of $2.4 bil­lion in for­eign di­rect in­vest­ment, in which Hong Kong’s share was 70 per­cent.

The city has some 150 lo­cally reg­is­tered com­pa­nies owned by Hong Kong in­vestors and re­ceives about 70,000 vis­its by tourists from Hong Kong an­nu­ally.

In trade, Hong Kong re­mains its sec­ond-largest part­ner. In 2012, when ex­porters around China were com­plain­ing about dwin­dling or­ders and ris­ing costs, Zhan­jiang still man­aged 19 per­cent growth in its ex­ports to Hong Kong, which to­taled $163 mil­lion.

Tra­di­tional ties

Hong Kong is also the near­est global ship­ping and lo­gis­tics ser­vice cen­ter. Last year it han­dled 140,000 con­tain­ers from Zhan­jiang.

Zhan­jiang’s ties with Hong Kong are tra­di­tion­ally close, al­though as seen by lo­cal of­fi­cials, still not strong.

In­deed, Liu said, the city’s ex­ist­ing ties with Hong Kong are far from enough to help the city fully uti­lize its nat­u­ral en­dow­ments and re­al­ize its am­bi­tion for faster eco­nomic trans­for­ma­tion than ever be­fore.

Ge­og­ra­phy alone con­trib­utes con­sid­er­ably to the city’s de­vel­op­ment po­ten­tial.

The city is ac­tu­ally a national sup­port cen­ter for off­shore oil­field de­vel­op­ment, es­pe­cially the pump­ing of oil and gas from the South China Sea.

But few peo­ple likely know that Zhan­jiang ac­tu­ally has one of the best of the few deep­wa­ter har­bors in China.

The Zhan­jiang port pro­vides to China’s vast south­west­ern in­te­rior re­gions ready ac­cess to the global mar­ket and can still be used for the im­port and ex­port of much larger quan­ti­ties of en­ergy and min­eral re­sources.

Its ge­o­graphic lo­ca­tion also makes it the clos­est seaborne trade hub be­tween China and South­east Asia.

In its near-term de­vel­op­ment pro­gram, Zhan­jiang aims to build a 400 bil­lion yuan econ­omy with a pop­u­la­tion of more than 8 mil­lion, that trans­lates into 48,000 yuan (about $8,000) in per capita GDP.

The plans call for Zhan­jiang’s ship­ping fa­cil­i­ties to have a through­put of 300 mil­lion tons, to rank among the 10 largest com­mer­cial ports in China by that time.

Fu­ture co­op­er­a­tion

In the changes that Zhan­jiang ex­pects in the next three to five years, the mu­tu­ally com­pli­men­tary fea­ture be­tween the city and Hong Kong will grow even more and its cap­i­tal and ex­per­tise will play a much stronger role in Zhan­jiang’s trans­for­ma­tion, Liu said.

Ties with Hong Kong will ex­pand sub­stan­tially to en­com­pass trade, in­vest­ment and fi­nan­cial ser­vices, ship­ping and lo­gis­tics, tourism, and also so­cial de­vel­op­ment and the hu­man­i­ties.

In broad terms, Hong Kong’s cap­i­tal and ex­per­tise can help Zhan­jiang build a more de­sir­able struc­ture of its in­dus­tries, Liu said, by re­bal­anc­ing the rel­a­tive weight of agri­cul­ture, man­u­fac­tur­ing and ser­vices.

Agri­cul­ture, in­clud­ing pro­duc­tion of fruit and aquatic foods, is Zhan­jiang’s tra­di­tional ad­van­tage. It still ac­counts for nearly 20 per­cent of its whole econ­omy.

Man­u­fac­tur­ing makes up al­most 42 per­cent. Though still weak in ab­so­lute terms, the sec­tor al­ready has a few ma­jor national-level projects in the pipe­line, in me­tal­lur­gi­cal and petro­chem­i­cal in­dus­tries.

By com­par­i­son, a myr­iad of de­tails are still to be worked out to an­swer ques­tions like how to make the new in­dus­tries serve the lo­cal so­ci­ety, and how to at least pre­vent them from pol­lut­ing Zhan­jiang’s pre­cious re­sources for tourism. An equally strong ser­vice sec­tor is needed to help the city find its so­lu­tions. Zhan­jiang is an old port city, its an­nual cargo through­put is no more than 400,000 con­tain­ers. There is much room for port up­grad­ing and the de­vel­op­ment of var­i­ous fi­nan­cial ser­vices that a mod­ern con­tainer power re­quires.

Right now the ser­vice sec­tor con­trib­utes only 37 per­cent of the lo­cal econ­omy. In con­trast Hong Kong’s var­i­ous ser­vices ac­count for more than 90 per­cent of its GDP. Liu was can­did enough to point out that Zhan­jiang “has a lack of bright spots” in its ser­vice sec­tor and has an “ur­gent need” for im­port­ing new cap­i­tal and man­age­ment ex­per­tise from Hong Kong.

There is al­most “un­lim­ited po­ten­tial” in Zhan­jiang’s fu­ture eco­nomic co­op­er­a­tion with Hong Kong, Liu said.


Liu Xiao­hua, Party chief of Zhan­jiang

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