From: John
Sent: Tuesday, 13 October 2020 10:20 am
Subject: Letter From Shanghai No 557 - Interpreting Xi's tour of Guangdong
| As usual, nothing happens in China without a reason, so we should look at the signals emerging from President Xi’s current tour of Guangdong. For those of you without a map, the coastal province of Guangdong (population 114 million in 2018) borders Hong Kong and Macau and is the 4th largest non-nation economy in the world. It is at the heart of the Pearl River Delta Economic Zone which simply put is the formation of a single “megalopolis” by the binding together the adjacent cities of Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Jiangmen, and parts of Huizhou and Zhaoqing into one cohesive unit. Interestingly, although close neighbours, Hong Kong and Macau are currently not part of the economic zone. We also should not overlook the former name of Guangzhou the capital of Guangdong is Canton, giving rise to the familiar Cantonese which is spoken across the province and in Hong Kong, and different to Mandarin which is derived from northern and southwestern China. It is not the purpose of this note to stray into regional politics, but even a casual glance can see from a Chinese perspective Xi’s journey at this time is rife with meaning.
Hong Kong’s immediate neighbour, a 40 min ride on the metro, or faster if you take the high-speed connection is Guangdong's largest city Shenzhen, (population 13 million in 2018) it is the de facto Chinese silicon valley. For those of you without a history book, following a visit by the then paramount leader Deng Xiaoping in May 1980, the Central Committee designated Shenzhen as a Special Economic Zone, in reality, it became an experimental petrie dish for the development of market capitalism guided by the ideals of "socialism with Chinese characteristics." The blueprint that emerged in Shenzhen is what guides China today.
It is impossible to describe the beast that is Shenzhen. In 1980 it was a minor fishing village on the Chinese side of the border of Hong Kong. It then became one of the fastest-growing cities in the world in the 1990s and the 2000s, a trajectory so steep it was recently ranked by Lonely Planet as the number two in the "top ten cities in the world to visit in 2019." To my shame, when working in London in the late 80’s I was invited by a customer to visit his head office in Shenzhen, I declined, as I could not find Shenzhen on a map.
Xinhua, the state news agency has forwarned us to expect an “important address” tomorrow at a ceremony in Shenzhen to commemorate the 40th anniversary of the establishment of the Shenzhen SEZ. Under the theme “seize the opportunity” it could include major policy initiatives. Certainly, Xi will be looking to channel the “opening up” spirit of Deng Xiaoping to carry him into the Fifth Plenum of the Nineteenth Communist Party Congress in Beijing (October 26th to 29th ) which will cement the five-year plan for 2021-25, and a so-far unpublished long term strategy currently called the “2035 vision." The world may watch the US presidential debates, but in China, investors make sure they are lock-step with government thinking. Xi's speech will have an attentive audience.
Have a good day
John
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