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Beijing has another transformation in store for the region, one it hopes to turn into reality in a little over a decade.
The Chinese government yesterday unveiled its ambitious 12-year blueprint to turn the Pearl River Delta region from the country's main low-cost manufacturing base into a 'globally competitive' region better fortified against fluctuations in the global economy.
The government's efforts come at a time when the export-driven Pearl River Delta - a key engine of China's growth in the past three decades - faces its most severe challenge.
Between now and 2020, the Pearl River Delta should shift its focus to innovation, high-end manufacturing, high-technology, modern services and finance, according to a plan on its future development released by China's top economic planning agency yesterday.
To be carried out in stages, the National Development and Reform Commission's (NDRC) plan includes establishing 100 state laboratories for engineering innovation as well as research and development over the next three years.
By 2020, the region should have made the shift from light manufacturing to the auto, steel, petrochemical and shipbuilding industries, and have developed at least 10 China-based multinationals with annual sales of US$20 billion (S$29 billion), among other goals, the commission said.
The blueprint also called for the Pearl River Delta region to forge closer cooperation with Hong Kong and Macau to forge what the NDRC envisioned to be the Asia Pacific's 'most vigorous' economic area.
Construction will start this year on a long-delayed 29-km bridge across the mouth of the Pearl River linking the mainland municipality of Zhuhai, Hong Kong and Macau. Currently, only ferries connects the three cities.
The bridge will be the longest in the world when completed.
The central government will invest 5 billion yuan (S$1 billion) in the project, said Mr Du Ying, vice-minister of the NDRC.
The rest of the funding for the bridge, which is said to cost in excess of 40 billion yuan, will come from Hong Kong and Macau, and the private sector, according to reports.
The project, which was first proposed by Hong Kong tycoon Gordon Wu more than 20 years ago, had been dogged by wrangling over checkpoint locations as well as cost issues.
While there has been talk for years about upgrading and restructuring Guangdong's messy labour-intensive manufacturing industry - comprising thousands of small and medium-sized firms - the financial crisis and its severe impact on the region's exporters have underscored the urgent need for change.
The continued development of the Pearl River Delta is essential for the overall health of China's economy, given that the export-oriented region is the biggest driver of China's growth.
Together with the Yangtze River Delta further north, the Pearl River Delta occupies just 2.6 per cent of China's land area, but accounts for one-third of its gross domestic product (GDP) and 40 per cent of its fiscal revenues.
Although the NDRC plan is just 'playing catch-up' with what is already happening on the ground, 'when the Chinese government makes such an announcement, it is more than just empty words', economist Dr Yuwa Hedrick-Wong told The Straits Times.
'It has a very real, material impact. What it does is orient financial institutions to redirect lending into projects consistent with the policy direction,' added the economic adviser to MasterCard Worldwide.
The bridge link, for instance, will 'allow the financial services and related high-end services that have been developing in Hong Kong to spread out into a much wider metropolitan region, creating a massive hub for high-end services', he said. 'If things go according to plan, the Pearl River Delta, Hong Kong and Macau will be one very coherent regional economy and a force to be reckoned with.'
The release of the NDRC plan comes amid increasingly gloomy forecasts for the region's economic future.
A report by the Guangdong Academy of Social Sciences last week warned that the once-booming province was rapidly losing its competitive edge to other provinces.
Yesterday, Guangdong's Vice-Governor Huang Longyun said the province - where China introduced economic reforms 30 years ago - was facing a situation 'more serious than at any other time since the start of the decade, indeed since the Asian financial crisis'.
Guangdong's GDP growth last year was 10.1 per cent, down from 14.7 per cent in 2007, he said.
Export growth slowed to 5.6 per cent, a quarter of the pace in 2007.
Mr Huang also revealed that as many as 62,400 companies went bust last year.
Company closures also forced about 600,000 migrant workers to return to their hometowns.
In the first half of last year, more than 143,000 migrant workers left Guangdong. But by the end of October, the number had gone up to 500,000.
China's pearl of commerce
