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Transcript of THE TRANSFORMATION OF GUANGDONG PROVINCE - J MILSTEIN
The Transformation of Guangdong Province China’s Approach to Capitalism
Joseph M. Milstein
New York University April 1, 1998
The Transformation of Guangdong Province China’s Approach to Capitalism
Joseph M. Milstein
Thesis Submitted in Fulfillment of the Requirements
for the Master of International Business and International Relations
New York University April 1, 1998
Advisor: Elisabeth J. Wood
Table of Contents
Chapter Page
I. Introduction....................................................................................................................1
II. The Mao Years...............................................................................................................6
III. Economic Reform and the Special Economic Zones...................................................11
IV. The Transformation of Guangdong .............................................................................16
Foreign Direct Investment, Hong Kong and Shenzhen ...............................................16 Migration in Guangdong..............................................................................................38 Guangdong’s Economy................................................................................................43
V. Is Growth Sustainable? ................................................................................................49
Questions of Sustainability ..........................................................................................49 Arguments for Sustainability .......................................................................................57
VI. Conclusion ...................................................................................................................71
Data Appendix ...................................................................................................................73
References..........................................................................................................................84
List of Charts
Chart Page
1. US Trade Balances with China and Japan .....................................................................2
2. Foreign Direct Investment in China.............................................................................17
3. Foreign Investment in China by Location ...................................................................19
4. Sources of Foreign Direct Investment in China...........................................................21
5. Growth Rates in China and Guangdong ......................................................................23
6. Average Growth Rates in China and Guangdong Vs. The Asian Tigers ....................24
7. Economic Development of China................................................................................28
8. Total FDI from Hong Kong in China and Guangdong ................................................30
9. Hong Kong’s Share in Total Intake of FDI by China and Guangdong .......................31
10. Hong Kong’s Total Exports .........................................................................................32
11. Hong Kong’s Total Imports .........................................................................................33
12. Reasons for Migration in Guangdong..........................................................................39
13. Annual Income Per Head of Selected Chinese Cities..................................................40
14. Real Income Growth by Province................................................................................44
15. Per Capital GNP by Province ......................................................................................45
16. Distribution of Economic Structures, 1980 .................................................................47
17. Distribution of Economic Structures, 1993 .................................................................47
18. Composition of Industrial Production in China and Guangdong ................................62
19. Extrapolating US and Chinese Growth Paths ..............................................................67
20. US’ Imports from Asia.................................................................................................68
21. Top Commodities Imported to the US from China .....................................................69
List of Maps
Map Page
Special Economic Zones....................................................................................................13
Guangdong Province..........................................................................................................20
Shenzhen ............................................................................................................................26
China ..................................................................................................................................55
"Let China sleep, for when she wakes the world will tremble." --
Napoleon Bonaparte
I. Introduction
It is clear that China (PRC) is one of the fastest growing economies in the world.
It has also become a focal point of international relations, global economics and world
trade. Though still in the developing stages and principally an agricultural nation, within
the last two decades, China has been propelled into the international market faster than
most analysts would have thought possible. With growth rates increasing about 10
percent per year, China is the fastest growing large country in the world, competing with
Japan (perhaps surpassing it) and the United States. In fact, China will likely soon pass
Japan to become the largest source of the US trade deficit (Chart 1). This is a startling
statistic considering that contemporary neoliberal economic culture is predominantly
capitalist, and the fastest growing nation is communist.
The reasons, however, behind this phenomenon are a bit ambiguous. Most
international attention is on China’s capital, Beijing, for domestic and foreign policy, and
Shanghai, because of its rich history and commerce. However, in the shadows of these
two key cities, lies Guangdong Province in South China. Guangdong is the largest
province in southern China with a population of about 67 million people, covering
-1-
Chart 1 Source: Data Appendix Table 1
US Trade Balances with China and Japan
-70
-60
-50
-40
-30
-20
-10
0
10
1980 1982 1984 1986 1988 1990 1992 1994 1996
Year
$Bill
ions China
Japan
178,000 square kilometers. There is no doubt that Guangdong Province has played a
major role in linking China to international markets. “Looking at exports by province
across China, for example, Guangdong stands out as the premier exporter, contributing
[about 50] percent of China’s total exports.” (Prime 1994, p. 1) Since Guangdong lies
on the South China Sea, directly across the Pearl River Delta from a very developed
Hong Kong, it was targeted by the government as a conduit to the world outside.
Until the late 1970’s, throughout the Mao Zedong era, Guangdong was basically a
rural province with a closed economy, not dissimilar from other neighboring provinces
throughout China. However, in 1980, Deng Xiaoping appointed 4 Special Economic
Zones in southern China, 3 of which are in Guangdong. Their purpose was to promote
foreign trade, economic growth and introduce an open door policy in the PRC. It is
because of these Special Economic Zones (SEZs) and their geographical significance that
makes Guangdong arguably the most important province in China. Guangdong’s
transformation and development over the last 20 years is irreversible. And during this
period China has experienced spectacular growth.
China has grown faster economically than any other large economy in history -
fully matching the smaller “Asian Tigers1” stride for stride. At the heart of China’s
growth is Guangdong Province, an area with the population of France squeezed onto
about half of France’s territory. (Overholt 1993, p. 183, Cowley 1991, p. 11) It is the
goal of this project, first, to present and examine the development of Guangdong and
1 Hong Kong, South Korea, Taiwan, Singapore; also referred to as the 4 Dragons.
-3-
illustrate how instrumental and vital Guangdong, and its SEZs, was, and is, to continued
development in China. Guangdong alone has experienced growth rates fifty percent
greater than China as a whole and has evolved into a region with it own sophisticated,
modern economy. This thesis will pay special attention to Guangdong’s Shenzhen
Special Economic Zone, as it is the largest and most significant of the 4 SEZs.
More importantly, however, the central argument of this thesis is that Guangdong
and China’s growth is sustainable, despite claims that the future is questionable. These
claims maintain that because of the lack of privatization, possible regional splits by the
more developed coastal regions like Guangdong Province, and allegations of severe
corruption and pollution, Guangdong and China’s growth and development will cease.
The objective of this study is to provide evidence supporting the view that Guangdong
and China, by-and-large, will continue to grow barring a major world crisis such as the
Great Depression and hence, China will become more economically and politically
powerful.
The argument of this thesis relies on statistical data summarized in the Data
Appendix, and illustrated in a series of charts inserted throughout the body of text. The
data will hopefully demonstrate to readers how and why Guangdong’s economy is
growing more rapidly than the rest of the mainland and that it transforming into a
sophisticated economic region.
This thesis also draws on my own observations in Guangdong, China and Hong
Kong on many business trips I have made to the region since 1991.
-4-
II. The Mao Years
Throughout the Mao years2, Guangdong was one of China’s poorer provinces.
The province was primarily a collection of backward villages and rice paddies.
“[Guangdong] was starved of infrastructure investment by a Beijing leadership whose
allegiances were firmly to the interior.” (Vogel 1989, p. 36) Moreover, the infrastructure
Guangdong once had earlier was repositioned to interior points of China. This was done
by Beijing because the government claimed that the nation’s security needed its
important assets inland, far from coastal Guangdong, to avoid the “imperialists.” (Vogel
1989, p. 36) Hence, Guangdong’s main asset was a network of Chinese businessmen
who relocated to other parts of the world, but still had roots and ties to their homeland.
(Overholt 1993, p. 185)
Because Guangdong’s primary industry was farming and agriculture, reliable
statistics about the province’s economy through the 1970s are not readily available or are
gravely flawed. Growth was flat at best and entrepreneurship was practically non-
existent. Until the 1970s, even the most model factories shown to visitors had old
machinery that was not always working. Factory grounds were poorly maintained, with
little regard for safety and work was often stopped because of shortages of equipment,
supplies, and energy (much like the rest of China). (Vogel 1989, pp. 1-3) In
Guangdong’s factories and offices, most managers possessed little specialized training,
2 Mao Zedong came into power in 1949 and died in 1976.
-6-
and employees lacked any energy or motivation in their work. (Vogel 1989, p. 1) And
since there was a national self-sufficiency policy, where the manager of every business
controlled the allocation of output, this often resulted in despairing economic conditions.
(Wall 1992, p. 198) “In Guangzhou, the province’s capital and largest city, also known
to foreigners as Canton, goods were transported mostly by smoky diesel tractors or in
carts pulled by bicycles. Large, locally made trucks also hauled goods and people and
there were few buses and almost no cars. Many stores were not operating, and the few
items available for sale were simple and of poor quality.” (Vogel 1989, p. 1) Also,
universities had not been operating regularly since 1967. (Vogel 1989, p. 1)
Guangdong had virtually no signs of construction. “In the industrial sector there
was widespread duplication of production facilities, with each province trying to be self-
sufficient in heavy and light industry.” (Wall 1992, p. 198) For example, in a commune
called Pingzhou, most of the work was done by hand. It had a few small factories, like an
agricultural machinery repair shop, but were not significant to Pingzhou’s industrial
output. Similarly, in the countryside of Guangdong, primitive means of transportation
were ubiquitous. Most goods were delivered by diesel tractor, water buffalo, or the
stereotypical carrying pole, and the roads were generally not smooth enough even for
bicycles. (Vogel 1989, p. 1) The people in the province had little contact with foreigners
and were frightened to be seen with them or talk to them. (Vogel 1989, p. 1)
Guangdong, like the rest of mainland China, employed an import substitution
industrialization trade policy (ISI). This inwardly-oriented strategy sought to spur
-7-
industrialization through policies that replaced imports with domestically produced
manufactures. “The Chinese government had high levels of protection for domestic
manufacturing, and direct controls on imports and investments...” (Lardy 1996 1, p. 5)
“The premises of the import substitution strategy dictated the character of government
interaction in foreign trade.” (Lardy 1996 1, p. 5)
Under Mao Zedong trade was limited to ‘gap filling.’ “Imports were restricted to
essential foodstuffs, raw material and intermediate goods. Exports were limited to what
was necessary to pay for them.” (Wall 1992, p. 198) The door was ‘kept closed’ by the
small number of central government agencies which controlled all international
transactions. Under Chairman Mao, “the policy of extreme self-reliance was encouraged
at the provincial and municipal levels as well as on the national scale.” (Wall 1992, p.
198)
By 1980, there was still little noticeable change in Guangdong. The average
income and standard of living remained relatively unchanged from the preceding decade.
“In 1978 the average annual per capita rural income was only 193 yuan, scarcely more
that $100, and for urban residents it was only 402 yuan. In 1980, almost 80 percent of
the province’s population was still rural.” (Vogel 1989, p.1) These statistics are not
much different than Guangdong in the 1970s. Relative to China’s other provinces,
Guangdong was amongst the poorest and offered few advantages. All of this was a result
of the turbulent era that began in 1966. “By the time the Cultural Revolution3 was over,
3 The Cultural Revolution was from 1965-1969.
-8-
it had derailed the modest reforms of the early 1960s4, mobilized thousands of youth,
created mass warfare, terrorized the vulnerable, disrupted the economy, and
fundamentally altered the course of Chinese development.” (Vogel 1989, p. 15) During
this time period, Guangdong’s border with Hong Kong was carefully guarded against the
province’s hungry peasantry. (Overholt 1993, p. 191)
In Ezra Vogel’s sociological study of Guangdong, he describes life before
economic reform:
The policy...by the early 1970s was cautious: to grow enough rice to avoid starvation...Pork, chicken, fish and sugar rations allowed each person only a few ounces a month...The attention to rice ensued that there was basically no starvation...When the amount of consumer goods began to increase after the Cultural Revolution, the quality of even the simplest products was still marginal. Light bulbs flickered, clothes had tears, plates had chips, and hot water bottles leaked. (Vogel 1989, pp. 29-30)
Simply put, until 1980, Guangdong, similar to the rest of its hinterland, was still severely
underdeveloped.
Regarding the governance of Guangdong during the pre-reform years, specific
information is not readily available. However, it can be surmised that the province was
poorly managed and ill-equipped. The communist leaders were inexperienced in
complex administrative, educational, and productive tasks. The leaders had grown up in
a disordered society as part of a generation imbued with a raucous nationalism. (Vogel
1969, p 4) The leaders were from the more privileged layers of society and their
4 External trade with China, which had begun to revive following the Second World War, collapsed. Increasing interference through a centralized bureaucracy and a vertical administrative socialist system of economic control stifled local and provincial initiatives. (Hook 1996, p. 35)
-9-
commitment was not to politics as a vocation but to Communism and to China as a cause.
(Vogel 1969, pp. 4-6)
In addition, the ideological center during pre-reform China was definitely not in
Guangdong, but in inner China. As China closed its doors to the capitalist world, and
turned inward, there was no role for a go-between with the outside world. The
Communist leaders brought to Guangdong the same political structure, the same policies,
the same campaigns they brought to the rest of the nation. (Vogel 1989, pp. 4-5) Not
only was the economic investment in the 1960s and 1970s directed toward inner China,
like Beijing, but politically as well China became more introspective and nativistic.
People who were too Westernized or too capitalistic, were suspect and on the defensive.
(Vogel 1989, pp. 4-5) No province was better suited as a target for criticism than
Guangdong, and “[n]o province was more completely wrenched by China’s closing to the
outside world.” (Vogel 1989, p. 5)
-10-
III. Economic Reform and The Special Economic Zones
After presenting such a bleak, grim description of China, Guangdong in
particular, it seemed hopeless to expect any major changes or developments especially
under a communist regime. Traditionally, the economic values of socialist, or communist
nations, like North Korea and the Soviet Union, were insular and supported protectionist
ideals. In traditional communist countries, trade decisions were heavily regulated by
their governments and were rigidly centralized and monitored, thus limiting its potential.
Deng Xiaoping realized that in order for China to be economically and politically
sound and to compete on any global level, an open-door trade policy was essential for
survival. The Deng era marked a significant change in China’s attitude toward the
outside world, and this had been especially important economically. Deng wanted China
to be an active player in the world economy. No doubt, the successes of Taiwan and
South Korea, for example, influenced Deng’s decision to revise China’s inward looking
polices. “Foreign trade was no longer seen as a means of balancing shortages and
surpluses.” (Mackerras, et al. 1994, p. 91) Abandoning Mao Zedong’s views on self-
reliance and economic self-sufficiency, Deng and China embarked on a new experiment:
an open-door policy.
Among the policies for export promotion in post 1978 China, “the most radical
was the establishment of four special economic zones (SEZs) in the southern provinces of
China.” (Wang 1993, p. 99) The key part of China’s new open-door policy was the
-11-
establishment of these SEZs in 1980, three of which (Shenzhen, Zhuhai and Shantou) are
in Guangdong Province and the fourth (Xiamen) is in Fujian (See Map of Special
Economic Zones).5 This effort sought to invigorate the economy by stimulating trade
with western countries.
““To get rich is glorious,” proclaimed Deng Xiaoping, and no area of China has
taken the leader’s exhortation more to heart than the Pearl River Delta [the 4 SEZs], the
most recent of Asia’s industrial revolution.” (Edwards 1997, p. 12)
Deng Xiaoping described SEZs as “windows for technology, management,
knowledge and foreign policy to better serve China’s moderni[z]ation program[].”
(Mackerras, et al. 1994, p. 92) The SEZs, which were granted special tax concessions
and cheap land leases, were expected to help improve the quality and quantity of
manufacturing and service industries, acting as a channel for the transfer of accumulated
knowledge and experience to the inland industries. “The SEZs marked the boldness of
China’s break with the inward-looking strategy of the Maoist period and its eagerness to
be involved in the world economy.” (Segal 1990, p. 100) Thus, SEZs were intended to
serve as 1) sources of foreign exchange earnings, 2) devices for technology transfer, 3)
devices for managerial skills transfer, 4) a means of allaying the fears of the people of
Hong Kong, and 5) laboratories for economic reform. (Mackerras et al. 1994, p. 92,
5 In April 1988, all of Hainan Island was declared a Special Economic Zone, thus becoming the fifth and largest zone. However, by that time there had been many developments in the opening up policy.
-12-
Oborne 1986, p. 69, World Bank 1994, p. 223, Hook 1996, pp. 39-40)
Perhaps the most important departure from China’s isolationist past is that
investment and technology were expected to play key roles in SEZ development and
operation. “SEZs were conceived as segregated enclaves designed to attract foreign
investment and technology in order to boost China’s foreign exchange earnings through
exports.” (Mackerras et al. 1994, p. 92) Moreover, the SEZs were to be a “special case of
foreign investment where foreigners could reside and enjoy many of the advantages of
the world beyond the Chinese borders. The Chinese themselves were determined to
make the four zones models of development practice.” (Oborne 1986, p. 69)
The SEZs are also equipped with a unique political system. Regarding the
political structures of the Shenzhen Special Economic Zone:
There have been attempts to design an administrative system that meets the requirements of Shenzhen, more suited to the changing circumstances. The executive is elected by the local people’s congress and confirmed by the centre. The SEZ itself is under the formal authority of the State Council, and not the Guangdong provincial government. It should not be assumed, however, that the local Shenzhen officials are without a degree of power and influence. They have lobbied regularly to allow greater autonomy for the SEZ and have met with considerable success. This applies not only in the strict economic sphere where power of decision-making has rapidly devolved, but also to other areas of administration. The process culminated, after intense lobbying in Beijing..., in the granting of legislative powers to the Municipal People’s Congress, a privilege hitherto reserved to provincial governments. Examples of where Shenzhen is pressing for a different set of legislative procedures, include: stock market rulings more attuned to the West [and] the further easing of border controls with Hong Kong...Much of the pressure for change has come from the business and finance communities in Shenzhen who have transmitted their demands to the local authorities and through then to Beijing. (Hook 1996, p. 41)
-14-
Therefore, the Special Economic Zones have a political system distinctly different from
other regions of the country.
-15-
IV. The Transformation of Guangdong
Foreign Direct Investment, Hong Kong and Shenzhen
Since their inceptions, Fujian and Guangdong, and all four of the SEZs, have
contributed to the phenomenal growth of China. “The Chinese side of the delta [SEZs]
has exploded into China’s biggest export producer, turning out goods worth 36 billion
dollars a year...and has mushroomed into a world export center.” (Edwards 1997, p. 9)
China as a whole has experienced a tremendous surge of foreign direct investment
(FDI) in the last decade or so (Chart 2). “FDI into China has escalated to a level of
nearly $40 billion a year [1995], making China a leading target of FDI, second only to
the United States.” (Mastel 1997, p. 15) “In 1995, China received six times as much
investment as second-place developing country recipient of FDI, Malaysia.” (Mastel
1997, pp. 16-17) Moreover, just comparing 1990 to 1995 (Chart 2) inward FDI into
China was less than $4 billion in 1990 and grew to $38 billion by 1995. (Mastel 1997, pp.
16-17) This nine-fold increase is perhaps the most dramatic facet of the Chinese miracle
of growth and development. The causes of this dramatic increase of FDI into China are
varied, but “[t]he most compelling feature of China as an investment site is the rapid
growth of the Chinese economy and the enormous market that it promises to become in
the future.” (Mastel 1997, pp. 15-16) For many firms, China, with its low-cost, high-
-16-
Chart 2 Source: Data Appendix Table 2
Foreign Direct Investment in China
0
5
10
15
20
25
30
35
40
79-'82 83 84 85 86 87 88 89 90 91 92 93 94 95
Year
$Bill
ions
0
20
40
60
80
100
120
140
160
$Bill
ions Actual FDI
Cumulative FDI
Actual Cumulative
skill work force, has also developed into an attractive site for assembly manufacturing.
(Mastel 1997, p. 15-19, Ming, et al., 1994, pp. 42-44)
China as a whole has certainly encountered impressive growth within the last two
decades. However, it is in Guangdong Province where the growth and development has
been most significant. More specifically, it is the Shenzhen Special Economic Zone, the
largest of the province’s SEZs, where the growth and economic success is most
prevalent.6 Looking at total FDI across China (Chart 3), one can see that the province
that was the largest recipient of FDI was Guangdong. (Mondejar 1994, pp. 30-31) This is
due, in large part, to Shenzhen’s proximity to Hong Kong (See Map of Guangdong).
Most industrialized countries have taken part in the investment surge into China,
but clearly no country can compare to Hong Kong (Chart 4). Referring to the standard
characterization of the Hong-Kong-Guangdong relationship, senior government officials
of Guangdong have said, “Hong Kong is the shop window. We are the factory floor.”
(Overholt 1993, p. 183) Similarly, as an old saying goes, “Hong Kong and Guangdong
are as close as lips are to teeth.” (Edwards 1997, p.13, Economist 1991 1, p. 22)
Foreign investment from neighboring Hong Kong has driven the explosive
growth in the region (which will be explained in detail later). Taking advantage of cheap
labor in China, Hong Kong has moved most of its manufacturing capacity into
Guangdong and
6 Although specific investment statistics for each of the SEZs probably exist, they were not attainable for this project.
-18-
Chart 3
Source: Data Appendix Table 3
Foreign Investment In China by Location, 1979-1991
$-
$5.00
$10.00
$15.00
$20.00
$25.00
Guangdong Fujian Hebei (Beijing) Shanghai Liaoning Jiangsu Hainan
Top Recipients of Investment
$US
Bill
ions
Chart 4 Source: Data Appendix Table 4
Sources of Foreign Direct Investment in PRC, 1995Taiwan
9%
Japan9%
Other11%
Hong Kong56%
USA8%
UK2%
Singapore5%
Total Investment, 1995: $US 37.52 Billion
mostly into Shenzhen.7 “Today [1997] more than 80,000 Hong Kong related enterprises8
operate in Guangdong Province.” (Edwards 1997, p. 13) Since China’s economic
reforms and implementations of the SEZs, Guangdong, largely because of Shenzhen,
with Hong Kong management, finance, technology and marketing, has achieved an
average annual real growth rate of over 13 percent (Chart 5) which is more that 4 percent
greater than the national average. This growth also betters the rate of Singapore, South
Korea, Taiwan and Hong Kong during the same time period (Chart 6), and even during
their hey day a decade earlier (roughly 10 percent) plus the rate of a reasonably good year
for the US economy. (Overholt 1993, pp. 183-189, Vogel 1989, pp. 129-131, Hook 1996,
pp. 152-156)
The Shenzhen SEZ towers so far above China’s other three economic zones that
“for some Chinese as well as for foreigners it alone became virtually synonymous with
SEZs.” (Vogel, p. 129) As a ‘reform laboratory’, Shenzhen was to provide the economic
planners of China with new ideas on economic management. The idea was that the
insulation of Shenzhen would create an economic sub-system, where many economic,
and perhaps political, ideas still regarded by many within China as ‘revisionist’ could be
tried for future application more generally. “The institutional characteristic of central
7 This is widely documented. For example, see Hook 1996, Overholt 1993, Ming 1994, Mondejar 1994 8 Hong Kong related enterprises denotes businesses and companies that are either jointly owned with the Chinese government, primarily or heavily funded by Hong Kong or, wholly owned by Hong Kong.
-22-
Chart 5 Source: Data Appendix Table 5
Growth Rates (GDP) in China and Guangdong
0
5
10
15
20
25
79-'85 1985 1986 1987 1988 1989 1990 1991 1992
Year
Perc
ent G
row
th
ChinaGuangdongChina Mean (8.97%)Guangdong Mean (13.28%)
Chart 6 Source: Data Appendix Table 6
13.28
8.97
7.06
7.887.29
7.60
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Ave
rage
Per
cent
Gro
wth
Guangdong China Hong Kong S. Korea Singapore Taiwan
Average Growth Rates in China and Guangdong Vs. The Asian Tigers, 1979-1992
planning were to be dismantled in the Shenzhen SEZ, and replaced by institutional
arrangements necessary for a market economy.” (Mackerras, et al. 1994, p. 98-99)
When the zones were first established, the two other SEZs in Guangdong, Zhuhai
and Shantou, covered only 6.8 and 1.6 square kilometers respectively, compared to
Shenzhen’s 327.5. (Vogel 1989, p. 129, Oborne 1993, p. 119) The Shenzhen SEZ is the
most developed of the four SEZs. Its location, adjacent to the New Territories of Hong
Kong, makes it an ideal location for Hong Kong investment (See Map of Shenzhen).
“The Shenzhen zone was the first to have actual foreign investment...It was, in some
ways, the pilot of the SEZs.” (Oborne 1986, p. 118) Three times larger than Hong Kong,
and with a mandate to liberalize far faster than the rest of Guangdong, Shenzhen was to
be converted into an industrial power center. (Overholt 1993, p. 189)
As a result of economic reforms, it is in Shenzhen, more than in any other SEZ, where Chinese leadership is juggling how to make the official communist system work with capitalist-like elements, and yet limit the possibility of losing face. Shenzhen is the only open zone that has practically been taken over by Hong Kong, with quasi-official blessing of the Chinese authorities, a phenomenon not possible to duplicate due to geopolitical reasons in any of the other zones. (Mondejar 1994, p. 58)
In 1986 alone, Shenzhen’s total industrial output was slightly more than the three other
SEZs combined.9
9 3.5 billion yuan in Shenzhen, compared to Xiamen’s 2.6 billion, Zhuhai’s 0.7 billion, and Shantou’s 0.2 billion. (Vogel 1989, pp. 128-129) More recent exact data was unavailable, but the ratio between
-25-
Because it bordered on Hong Kong to its south, Shenzhen had an immediate
‘political’ significance and a nearby economic stimulus far beyond that of Zhuhai, which
bordered Macau, or of Shantou and Xiamen, which bordered only on the Pacific Ocean
further up the coast. Shenzhen became the main site visited by Beijing leaders evaluating
zone policy, by foreign capitalists considering investing and by leaders from other
socialist countries contemplating reforms in their own systems. (World Bank 1994, pp.
221-222, Vogel 1989, p. 129)
An additional idiosyncrasy of the Shenzhen SEZ was its multipurpose goals.
Unlike other export processing zones, (in Taiwan or S. Korea, for example) with largely
industrial operations, or even the other SEZs in China which advertised industrial and
service sector goals, Shenzhen set out to be a zone of fully integrated, market-type
sectors. “This multisectoral goal is in fact largely possible through the planned
complementarity with the Hong Kong economy.” (Oborne 1986, p. 119) Thus,
“Guangdong was to be an airlock through which China dealt with the outside world,
Shenzhen would be Guangdong’s airlock to Hong Kong, and Hong Kong the direct
window to the outside world.” (See Chart 7) (Overholt 1993, p. 189)
By the early 1990s, the economic integration of socialist Guangdong and
capitalist Hong Kong was largely complete. During the last two years (1996-1997),
Hong Kong represents roughly 80 percent of the overall foreign investment into
Guangdong, almost 72 percent in Shenzhen. (Lindsey 1997, p. 3, Hook 1996, pp. 178-
6.5-7.5 to 1.
-27-
182) Stated simply, looking at Chart 8, the role of Hong Kong as a source of capital
reveals that Guangdong absorbed 42 percent of all foreign direct investment flowing
from Hong Kong into China during 1985 to 1992. (Hook 1996, pp. 178-184, Thoburn
1992, p. 220) Viewed differently, Chart 9 illustrates that Hong Kong was the immediate
origin of 84 percent of Guangdong’s total FDI intake during the same time period. (Hook
1996, pp. 178-184) Hong Kong similarly has a large role in the foreign trade of both
Guangdong and China as a whole since 1985. There is an increasing trend in the
provincial share of national exports to the Territory, reaching 41 percent in 1992. (Hook
1996, p. 179) Likewise, In the same year, 84 percent of Guangdong’s exports were
shipped to Hong Kong. (Hook 1996, p. 179)
Of equal importance is Hong Kong’s dependence on Guangdong and China for its
own thriving economy. Chart 10 distinctly illustrates that China is the largest recipient of
Hong Kong’s exports, with 34 percent of the total. (Hong Kong Trade Development
Council 1998) Similarly, looking at imports into Hong Kong (Chart 11), China is the
origin with the largest hare, 38 percent. (Hong Kong Trade Development Council 1998)
Guangdong’s dependence on its colonial neighbor and Hong Kong’s dependence
on its Chinese provincial partner emerges clearly from these statistics.10
10 The reference of Hong Kong as a ‘colonial neighbor’ denotes pre-June 1997; the return of Hong Kong to PRC. Although Hong Kong is now officially part of China, economic structures remain basically intact and the relationships between Hong Kong and Guangdong have seen little to no change.
-29-
Chart 8 Source: Data Appendix Table 8
Total FDI from Hong Kong in Guangdong and China
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1985 1986 1987 1988 1989 1990 1991 1992
US$
Mill
ions
Total China Guangdong
Guangdong Receives an Average of 42% of all HKG FDI in PRC
Chart 9 Source: Data Appendix Table 9
Hong Kong's Share in Total Intake of FDI by China and Guangdong
49%
59%
68%65%
62%
56% 57%
70%
64%
87%
93%
84%
91%
82%
70%
79%
89%
84%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1985 1986 1987 1988 1989 1990 1991 1992 Mean
Year
Perc
ent
Total ChinaGuangdong
Chart 10 Source: Data Appendix Table 10
Hong Kong's Total Exports, 1997
China34%
United States22%
European Union15%
Japan6%
Singapore3%
Taiwan3%
S. Korea1%
Others16%
Chart 11 Source: Data Appendix Table 11
Hong Kong's Total Imports, 1997
China38%
Japan14%
United States8%
Taiwan8%
S. Korea5%
Singapore5%
European Union4%
Others18%
Primarily because of Hong Kong’s foreign investment in Guangdong, specifically
Shenzhen, Guangdong has evolved into a thriving metropolis. The ‘experiment’ of the
SEZs worked! Progress has exceeded even the most enthusiastic expectations of the
policy’s creators. Shenzhen has become a mini-Hong Kong. It has tall buildings,
factories that saturate US markets with clothes and shoes and toys, streets full of Audis
and Mercedes Benzes, people wearing clothing with designer labels, and a surplus of
London and New York investment bankers. (Overholt 1993, p. 189, Economist 1991 2, p.
19) A rather amusing new maxim in China is that “[t]here is nothing a Pekingese
(Beijing) won’t say, nothing a Shanghainese won’t wear, nothing a Cantonese won’t eat,
and nothing a Shenzhenese won’t earn.” (Hook 1996, p. 40) Through March 1997,
Shenzhen alone had approved fourteen thousand ventures from 60 countries and regions
to open businesses there, actually utilizing US$12 billion. (AsiaInfo Services 1997, p. 1)
At present, over 150 world famous enterprises have entered Shenzhen including Pepsi
Cola, IBM, Dupont, Compaq, Hewlett Packard, Whirlpool and Exxon. (AsiaInfo Services
1997, p. 1)
Approximately half of Guangdong’s industrial workforce is employed by Hong
Kong companies. Seventy-five percent of Hong Kong companies have operations in the
region, comprising some 23,000 joint ventures. And, as mentioned earlier, if one
includes wholly-Chinese owned companies that live primarily off contracts from Hong
Kong firms, there are 80,000 Hong Kong related firms located in Guangdong. Moreover,
-34-
five out of six employees (over 3 million people) of Hong Kong companies were in
China, most of which in Guangdong. (Overholt 1993, p. 191, Thoburn 1992, p. 219)
Even more remarkable is the fact that money flows the other way too. “Some
1,800 mainland Chinese companies have set up shop across the border into Hong Kong.
Thus, giving China, still ruled by the Communist Party, major stakes in the construction,
shipping, and trade industries of capitalist Hong Kong.” (Edwards 1997, p. 13) Today,
The Bank of China and Shanghai Bank are all over Hong Kong. Likewise, two of
world’s the largest shipping companies, COSCO (China Ocean Shipping Company) and
OOCL (Orient Overseas Container Lines) have great stakes and influence in the port of
Hong Kong. Both Chinese shipping companies have established large satellite offices in
Hong Kong and have a significant presence in the territory.11 Remember, just a
generation earlier the two societies had lived in tense, armed isolation from one another.
Pragmatism and profits overcome ideology in this powerful economic alliance.
If one visits Shenzhen today, it is truly hard to believe that the city has gone from
a farm town to a bustling 24-hour city of three million people.12 The army of newcomers
to Shenzhen includes large numbers of workers from the interior. “The rural folk make
city driving a hair-raising trial with their panicked attempts to cross the high-speed
roads.” (Edwards 1997, p. 11) For the peasantry of Guangdong, this growth brought an
instant leap into modern consumerism. “An underemployed population with little
mobility suddenly [finds] itself with plenty of jobs [mostly working for Hong Kong
11 Information readily available from the Journal of Commerce.
-35-
companies], and with essentially unlimited opportunities for the energetic.” (Overholt
1993, p. 191) “[A]s China’s leader, Deng Xiaoping, sought to stimulate the economy, he
sanctioned a development strategy called “socialism with Chinese characteristics.””
(Edwards 1997, p. 9) Would-be entrepreneurs soon divined what that meant:
capitalism...and capitalism spread fast.
“In half a generation good food, decent housing, nearly universal television,
motorcycles, and cosmetics replaced hunger, exposure, dreary blue suits and the trudge to
work.13” (Overholt 1993, p. 191) In fact, it is inevitable that media moguls, like Rupert
Murdoch, will have access to China’s 300 million homes with television sets, the world’s
largest potential market.14 (Faison 1998, p. 13) Though Guangdong is not yet Hong
Kong’s double in terms of quality of food, construction and architecture, it is surely
catching up. Regarding Shenzhen, not only is the city of three million people15 brimming
with factories, but, copying Hong Kong, it also “sends up office and apartment buildings
in bold configurations: sloped, stair-stepped, beveled, barreled, double-barreled...One
tower sours to 68 floors.” (Edwards 1997, p. 14) Shenzhen has certainly had a ‘face-lift.’
A billboard in the city declares, “Love Shenzhen as your home,” an acknowledgment that
almost all residents came from somewhere else. (Edwards 1997, p. 14) In Shenzhen you
12 I have visited Shenzhen several times over the last 6 years for business purposes. 13 Throughout Guangdong Province, but most noticeably and dramatically in the urban areas. 14 The project is still on hiatus but Mr. Murdoch has put well over $1 billion into a satellite television network, Star TV, which broadcasts in several Asian countries and is intended to be the News Corporation’s route to China. 15 Figures estimate that the floating population in a given work day could be close to double.
-36-
never see an older person sweeping the sidewalk, a common sight in traditional China.
Shenzhen is a place for the young - the average age is probably 25-27.16
It is apparent, based on the illustration presented in this section, that Guangdong
has had explosive growth and its economy is growing more rapidly than the rest of
China. The assertion also being made here is that this growth is instrumental to sustain
China’s future development.
16 Own observation and general estimates from various sources. For example, see Edwards 1997, Lindsey 1997.
-37-
Migration in Guangdong
An analysis of Guangdong can not be complete without addressing the impact of
migration on the province. The boring routine of state factories outside Guangdong has
driven many ambitious workers to Shenzhen. However, it is the opportunity for money
that is the main attraction (See Chart 12). Workers earn as much as 1,500 yuan a month,
which is about $200. This may not be much by American standards but considering that
20 years ago they would need two years to make that amount, it is quite incredible. Also,
it is more money than a professor at Beijing University currently gets paid and about five
times more that the income of the nation’s average urban worker.
“A middle-level manager’s pay [in Shenzhen] might be $400 a month, plus a
comfortable apartment for only a token rent.” (Edwards 1997, p. 15) Guangdong has
attracted many professionals; about 1.3 million of them have permanently moved to
Guangdong between 1985 to 1992. (Ming, et al. 1994, p. 45) Turning to Chart 13, one
can distinctly see that the cities of Shenzhen and Guangzhou, Guangdong’s capital, have
the highest level of annual income per head throughout China.
Guangdong has experienced labor migration on a mass scale since 1978
especially since 1990. In 1990, migrants in Guangdong amounted to 4.17 million and it
was estimated that the migrant population clustered in the Pearl River Delta alone
reached 4 million in 1990 and 5 million in 1991. (Hook 1996, pp. 123-124) By 1993
there were about 10 million migrants working in the region. (Ming, et al. 1994, p. 45)
“Occupational
-38-
Chart 12
Source: Data Appendix Table 12
Reasons for Migration In Guangdong
Business Reasons60%
Job Change/Job Allocation11%
Job Training5%
Join Families8%
Miscellaneous16%
Chart 13 Source: Data Appendix Table 13
4,205
2,906
2,737
2,334
2,295
2,040
710
- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Chinese Yuan (RMB)
Shenzhen
Guangzhou
Xiamen
Shanghai
Haikou
Beijing
Rural China Average
Annual Income Per Head of Selected Chinese Cities, 1991
mobility implies the possibility of geographical mobility.” (Hook 1996, p. 123) This is
due partly to the liberalization of the labor market, and partly to reforms in the rural areas
which allow surplus peasant labor to take up other occupations or move to other
localities. (Hook 1996, p. 123)
“About 80 percent of the migrant workers in Guangdong came from within the
province while the rest were of other provincial origin and by the early 1990s there were
about 2 million migrant workers from other provinces...” (Hook 1996, p. 123) In
Shenzhen, the most distinctive ’migrant city’, the migrants make up for over two-thirds
of the population.17 Shenzhen has a migrant population of about 1.7 million and an
internal population of about a million. (Hook 1996, p. 123-124) This ratio is especially
interesting considering that in pre-reform Shenzhen, the total population was less than
500 thousand and almost none were migrants.18 (Vogel 1989, p. 166)
The ratios in other urban cities in Guangdong are even higher.19 (Hook 1996, p.
124) According to a labor bureau in Guangdong, the ratio of outside workers to local
workers was about 58 percent and can reach up to 82 percent in certain urban sites in
Guangdong.20 As the migrants are mostly temporary residents who cannot bring along
their families, the labor participation rate of the migrant population is consequently much
higher than that of the local Guangdong residents. Chart 12 shows that among the
17 As mentioned earlier, Hong Kong also accounts for over three million people residing in Guangdong. 18 Exact figures are unavailable. 19 In the urban cities of Foshan and Dongguan the ratios are higher than 50 percent. 20 This information taken from the Labor Bureau of Dongguan. A city which had its own ratio of 82 percent.
-41-
migrants, most migrated for business reasons, but still many migrated for job change or
to join families that had already migrated earlier.
-42-
Guangdong’s Economy
Given the above illustration of Shenzhen, and Guangdong as a whole, it is hard to
argue that the province’s growth is anything short of sensational. And although there are
skeptics to the viability and sustainability of this growth, which will be addressed in the
next chapter, Guangdong appears to be on a continuous growth trend that may be
irreversible. Because of the aforementioned variables, Guangdong has had GDP growths
averaging 13 percent per annum with some years souring over 20 percent (Chart 5).
(Hook 1996, pp. 153-154, Engardio 1992, p. 42, Cowley 1991, p. 11) Shenzhen has
experienced growth rates of 45 percent (1994), a dizzying rate of growth possibly
unmatched anywhere else in the world. Moreover, in just a six year period (1985-1991)
Guangdong’s real income growth was 108 percent (Chart 14); not bad considering
Shanghai experienced a mere 3 percent real income growth for the same time period,
Hubei (Beijing’s Province) just 30 percent, and China as a whole showing 62 percent
growth. (Overholt 1993, pp. 107, 185) As Chart 15 demonstrates, Guangdong also is the
province with highest per capita GNP.21 And, as noted earlier, total foreign investment in
Guangdong is roughly five times that of Shanghai or Beijing (Chart 3). (Segal 1990, p.
148, Mondejar 1994, pp. 30-31)
The province has also enjoyed rapid progress in industrialization. The claim being
made here is that Guangdong is the first region of China that has transformed itself away
21 By 1994 the per capita GDP in and around Shenzhen reached 14,239 yuan (roughly US$1700) - the highest by far in the country. (Sinonews, 1997)
-43-
Chart 14 Source: Data Appendix Table 14
Real Income Growth by Province, 1985-1991
14
15
62
19
27
30
38
39
44
48
49
50
50
52
55
55
57
58
59
66
66
67
68
77
82
107
108
112
115
0 20 40 60 80 100 120 140
USA (GNP)
UK (GDP)
China
Anhui
Shanxi
Hubei
Liaoning
Tibet
Jilin
Qinghai
Jiangsu
Sichuan
Hunan
Helongjiang
Guizhou
Gansu
Henan
Inner Mongolia
Jiangxi
Ningxia
Hebei
Zhejiang
Shaanxi
Shandong
Guangxi
Yunnan
Guangdong
Fujian
Xinjiang
Percentage
Chart 15 Source: Data Appendix Table 15
Per Capita GNP by Province, 1991
164
196
197
210
213
215
221
224
238
241
254
264
275
276
290
293
300
301
317
340
344
377
385
399
440
505
519
0 100 200 300 400 500 600
Guizhou
Anhui
Guangxi
Gansu
Henan
Yunnan
Sichuan
Jiangxi
Hunan
Shaanxi
Tibet
Ningxia
Shanxi
Inner Mongolia
Hebei
Hubei
Qinghai
Hainan
Jilin
Fujian
Shandong
Xinjiang
Helongjiang
Jiangsu
Zhejiang
Liaoning
Guangdong
US Dollars
from an agrarian economy. The ratio of the three industries (agriculture, manufacturing,
and services) has changed considerably. Chart 16 and Chart 17 depict the evolution of
economic structures of the province where the portion of agriculture is dramatically
falling and service rising.22
Both the national and provincial estimates show that under the impact of new economic priorities..., the contribution of agriculture to GDP increased between 1978 and 1982. Thereafter, this trend was reversed-but much more sharply in Guangdong than in the rest of the country. The contraction in the agricultural share reflected a major expansion in those of both Guangdong and China, although much more pronounced in the former. The rapid expansion of the service sector is another striking feature of structural change in Guangdong throughout the post-1978 reform period. (Hook 1996, pp. 159, 162)
The agricultural industry, though diminishing, has gradually improved in terms of
quality, output and revenue generation. (Ming, et al. 1994, pp. 42-44) Along with the
ongoing development of toys, textiles and instrument industries, electronics and home
appliances have evolved into two of the region’s principal industries, in response to high
demand. (Ming, et al 1994. p. 43, JOC, 1998)
With figures like these I find it convincingly plausible that China, with
Guangdong’s continued growth, will be the world’s largest economy by the start of the
21st century, surpassing the United States. According to recent economic figures, by the
year 2012 China’s economy will grow to about $US 8,600 billion compared to the United
22 Mostly due to Shenzhen and the Pearl River Delta (SEZs). Guangdong as a whole still has a substantial agricultural industry, though shrinking.
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Distribution of Economic Structures In Guangdong
1980
A g r ic u ltu re2 6 %
S e rv ic e s2 9 %
M a n u fa c tu r in g4 5 %
Source: Data Appendix Table 16
Chart 16
---------------------------------------------------------------------------------------------------------------------------------------------
1993
A g r ic u l tu re9 %
S e rv ic e s4 0 %
M a n u fa c tu r in g5 1 %
Source: Data Appendix Table 17
Chart 17
States’ economy which will be about $US 8,500 billion.23 Furthermore, by the year
2015, China’s economy should grow to about $US 11,900 billion while the US’ will be
around $US 9,000 billion.
23 The Economist estimate of China’s 1991 GDP was adjusted by applying the IMF’s real GDP growth rates for 1992-1994. For 1995-2015, a growth rate of 2.5% was assumed for the US economy, and 9% growth rate was assumed for China. This follows the Economist estimate, which assumed China’s growth rate would annually be 6.5% higher that the US growth rate. (Mastel 1997, p. 14)
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V. Is Growth Sustainable?
The Future: Questions of Sustainability
As the evidence discussed in the previous sections suggests, China’s growth and
China’s future development appears to be secure. Yet, despite all of these figures and
supporting evidence, there is still some serious concern and doubt as to the validity of the
information, the likelihood of Guangdong’s (hence China’s) future growth and
uncertainty towards the overall state of China’s economy. Some analysts believe that,
although the immensely increased presence of foreign capital and foreign trade in China
has certainly put it prominently on the world business map, there are serious
shortcomings to China’s future. Most notably, Nicholas Lardy and Gerald Segal, are two
of the foremost and well known critics of China’s economic development. 24
With regards to the state of Guangdong Province, many studies present an
impression that something is amiss in Guangdong. Nineteen ninety-six was the first year
in many that the province’s GDP growths fell short of the national rate. Also, the growth
rates for exports, fixed asset investment and foreign investment in 1996 were a little
lower than in the nation as a whole. (EIU, Business China 1997, p. 8) By contrast, in
1995, Guangdong’s GDP growth of 15 percent exceeded the national rate by five points
24 Nicholas Lardy is a Senior Fellow at the Brookings Institute Foreign Policy Studies program. Gerald Segal is a Senior Fellow at the International Institute for Strategic Studies and Editor of the Pacific Review.
-49-
and in earlier years, at the height of ‘China-fever’, when China’s economy peaked
(1993), Guangdong’s GDP growth rate was nine points higher than the country’s.
Other issues contributing to a possible slip in Guangdong’s leadership position in
China are: gradually rising labor and property costs, some loss of legal and policy
advantages, and an under-educated labor force compared to Shanghai and Beijing. (EIU,
Business China 1997, p. 8) More precisely, “higher costs in some parts of Guangdong,
notably the Shenzhen SEZ, mean that the province is losing some if its comparative
advantage in light exporting processing industries, the engine of growth for the past 15
years.” (EIU, Business China 1997, p. 8) Also, the legal and policy advantages
Guangdong enjoyed in regard to attracting foreign investment and pursuing economic
reform have spread to other regions of the country. (EIU, Business China 1997, p. 8)
Moreover, Guangdong lags behind other areas, like Shanghai and Beijing, in workers
with university or graduate degrees. This might impede efforts to attract technologically
more advanced industries. (EIU, Business China 1997, p. 8) In addition, there is the
allegation that the province is experiencing inefficient investment. “During the
investment boom of the 1990s, Guangdong poured vast sums into overbuilding urban real
estate and ill-considered infrastructure projects. Funds locked into these money-losing
projects are unavailable for productive investment elsewhere.” (EIU, Business China
1997, p. 8)
There is also the belief that China’s growth is limited and that the nation’s “time
is running out.” (Lee 1996, p. 19) According to this view, “China’s recent success will
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be short lived and that in the long run, China’s many woes will destroy its facade of
capitalism.” (Lee 1996, p. 19) This theory proposes that “for all the brave talk about
bullish long-term prospects for direct investment in China [i.e.: Guangdong] the plain
truth is that China is a very good bet only for the next five years or so. After the year
2000, its long-term problems arising from corruption, lawlessness, deadly pollution and a
push for a democracy could bring pause to the tremendous growth.” (Lee 1996, p 20)
Corruption at high, as well as low, levels seems to be growing especially in developed
areas like Guangdong. For example, regarding government procurement:
[I]t is not terribly surprising that bribery and corruption seem to play a role in government procurement decisions. Reportedly, the princelings are frequently involved in government procurement decisions. Privately, some Chinese officials also complain about the regulation of government procurements. They explain that it is more a problem of corruption than an effort at protectionism. Companies with friends on the “inside” win procurement contracts while other Chinese companies, Chinese government, and ultimately Chinese citizens pay a heavy price. (Mastel 1997, p. 111)
And although the current government made examples of top officials accused of
wrongdoing [1995-1997], “this was done more of a political settling of accounts than an
all-out purge of corruption figures.” (Lee 1996, p. 20)
The trend is bad according to this point of view. “The ethos have changed from a
slogan of ‘Save the People” to “Get it while you can” ... or maybe to: Breathe the air and
drink the water while you can.” (Lee 1996, p. 20) This may be a legitimate concern.
Due to its growth, industrializing areas of China have ignored environmental concerns in
the name of development. Air and water pollution levels have reached alarming levels
and may intensify with new industries being projected. Likewise, “agriculture is already
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threatened by acid rain from industrial cities like Shenzhen, and arable land is being
developed for real-estate projects at a quick pace. If not dealt with, environmental
degradation will threaten foreign investors’ ability to carry out their plans.” (Lee, p. 20)
Regarding population, China is growing by roughly 14 million per year despite its
reports of forced abortions. This startling fact combined with economic growth, and land
misuse could lead to a food crisis and some speculators estimate that in 30 years, the
world might not be able to supply enough grain to feed China. Thus, based on this
argument, for a few more years there will still be a great deal of money made. However,
shortly after the year 2000, serious problems could arise from pressures for continued
reform, resulting in the halt of China’s growth.
Referring to China’s privatization rate, a chief concern is that China has not
privatized enough of its state-owned firms, especially in the banking sector. “The
economic dynamism generated by foreign capital and trade has largely bypassed China’s
state-owned industries, which remain inefficient and overprotected.” (Lardy 1996 2, p.
10) The banking system continues to be dominated by state-owned banks. This is true
throughout China, including Guangdong. These state-owned firms vastly understate
losses or overstate profits. They do this because they do not have to report the interest
they have to pay on bank loans, therefore, debt ratios are huge. “These state-owned firms
are highly leveraged.” (Lardy 1996 1, p.13) Chinese banks are forced to extend loans to
keep state-owned firms operating efficiently. It is estimated that over one-third of these
loans are non-performing. These are loans that private banks would not offer and now
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these state-owned banks are now at risk of insolvency. Chinese banks must be
recapitalized by a massive infusion of government funds and then reformed to operate on
a sound financial basis. (Lardy 1996 1, p.13) Ultimately, according to this hypothesis,
the recapitalization and restructuring process will lead to a much lower growth rate for
China. China, to date, has not made much progress in creating systems to allocate capital
more efficiently. (Lardy 1996 1, pp. 13-20, Lardy 1996 2, p. 10) Allegedly, this will
make it extremely difficult to sustain rapid growth in the years ahead. Unless reform
begins soon to extend to industrial restructuring, the phenomenal growth of trade and
investment is likely to slow, leaving China to lag behind the high-performing economies
of East Asia. (Lardy 1996 1, pp. 13-20, Lardy 1996 2, p. 10) And this would be most
prevalent in more advanced urban areas such as Guangdong.
Another major, if not paramount issue is the question of domestic discord
between the provinces of China. An interesting point is that because of the spectacular
growth in Guangdong and other more advanced areas, there is strong potential for a
regional split from the rest of mainland China. “As coastal China, such as Guangdong,
grows so much faster than the interior, a form of east-west split is evident...Regionalism
poses major challenges for [China] especially as interprovincial tensions...rise.” (Segal
1994, pp. 44-46) Historically, friction between the coast and the interior has sometimes
been serious. “For a while after post-1979 reform it appeared that tension between the
coast and the interior would once again become explosive.” (Overholt, p. 102) Coastal
Guangdong reveled in its prosperity, but on the Hunan/Guangdong border (See Map of
-53-
China) there were frequent demonstrations by Hunanese trying to stop the ‘export’ of
Hunan’s raw materials to fuel the growth of Guangdong, which reaped all the foreign
exchange benefits. (Goldstein 1992, p. 77) For a long period, Hunan people demanded
that Guangdong’s special privileges be taken away. Chart 15, displaying per capita GNP
for different provinces, shows that there are surely differences between the incomes of
different provinces, and that the interior provinces are indeed generally poorer than the
coastal ones. (Overholt 1993, p. 104-105)
Skeptics thus argue, that the economic boom in Guangdong is a mixed blessing.
In addition to the fact that the “[p]oorer provinces have increasingly felt that
Guangdong...is sucking in resources at their expense...at the same time, the gross value of
industrial output (GVIO) has shown increasing disparity between the regions.” (Hook
1996, p. 60) If China is divided into three broad regions, namely the coastal region,
central region, and western region, the share of GVIO is 61 percent, 26.55 percent, and
12.55 percent, respectively. (Hook 1996, p. 66) Hence, there is also the
-54-
chance that the national economy will be endangered by provincial defiance of Beijing’s
macro-economic policies. If this ‘split’ escalates, Beijing could lose power in the
booming southern provinces (Guangdong) and even lead to a civil war, which is a
genuine concern of Chinese officials. If this occurs, it could greatly alter the growth and
future of China.
-56-
Arguments for Sustainability
The several arguments summarized above, challenging the sustainability of
Guangdong and Chinas’ growth, make some interesting and legitimate points. However,
many of these issues can be attributed to one general statement which, I believe, may
dispel much of the skepticism. “Guangdong and the rest of its hinterland are still going
through some ‘growing pains’ that will be overcome.” These growing pains are short-
term dilemmas or issues that need not impede future growth. They are merely segments
of the developmental process. Remember, economic reform in China is still less than 20
years old. It is impossible to have growth without some repercussions.
Addressing the argument of Guangdong specifically, “Guangdong is still in a
structural adjustment period, in which the main tasks are to upgrade to more capital-
intensive industries, rationalize investment - especially in infrastructure - and improve
the quality of the labor force through increased spending on education.” (EIU, Business
China 1997, pp. 6-10) The goal of structural adjustment has two components. One is
macroeconomic reform, or ‘stabilization’ policy changes to achieve internal and external
balances in the short term to medium term. The other is ‘adjustment’ proper, or reforms
to free up market forces to promote long term growth. (Lall 1995, pp. 2019-2031)
Structural adjustment can take on many forms but share a common set of premises:
“unleashing markets so that competition can help improve the allocation or resources,
getting price signals right and creating a climate that allows businesses to respond to
these signals in ways that increase the returns to investment.” (Lall 1995, pp. 2019-2020)
-57-
Based on this definition, Guangdong, no doubt, has been successful in employing an
effective structural adjustment program. Recent signals also suggests that the new
Guangdong government with newly appointed governor, Lu Ruihua, is committed to
structural adjustment as well as the continued growth of Guangdong. For example, in
1996 Guangdong resisted Beijing’s efforts to strip away its economic privileges and tax
revenue. (EIU, Business China 1997, p. 8-9)
Barring a deep crisis in the world economy that dramatically affects US demands
for imports, Guangdong very likely will sustain its growth based on its transformed
industrial structure. Analysts have probably exaggerated the negative impact of higher
costs, especially labor. This is because Guangdong has become very efficient at tapping
the vast pool of unskilled labor from the interior provinces. “Labor-flow agreements
with several neighboring provinces enable it to import millions of workers on contracts.”
(EIU, Business China 1997, p. 9) With all the gloomy talk, it is necessary to recall that
Guangdong remains far and away China’s richest province with an average urban per-
capita spending power well above the others which is a figure that includes the provinces
poor areas that understates the wealth in the Pearl River Delta region. A survey done
recently showed that both Shenzhen and Guangzhou ranked well ahead of Shanghai and
Beijing in terms of monthly household income (Chart 13). (EIU, Business China 1997,
p. 9, Mondejar 1994, p. 59) There is no evidence that the flow of migration into the
region is slowing down; it continues to accelerate at alarming rates.
-58-
Clearly, for foreign companies looking at China, Guangdong will remain one of
the first ‘ports of call.’ Its economy may be undergoing various readjustments but gains
realized over the last decade have enabled it to become one of the country’s few regions
that looks like it possesses a viable economy in its own right with all of the resources
necessary to continue to advance.
Corruption, lawlessness, pollution and population control are all real issues facing
Guangdong and Chinas’ future growth. But how many nations, developed, developing or
undeveloped, did or do not face one or all of these problems, and then some, including
the US. Should South Korea, Taiwan and Japan not have tried to develop in previous
years in order to avoid or curtail these problems? I think not. And all of these ‘now-
developed’ nations have generally been successful in sustaining their growth, at least
until recently. The benefits of development outweigh the dilemmas, exponentially.
Though genuine problems, these are all part of the growing process which even
developed nations are now faced with.
China is actually fortunate to have witnessed the already successful growth of its
neighboring Asian nations and therefore, can learn how to address these issues.
Regarding corruption, South Korea and Taiwan have gone through this messy transition.
Both were “once known for the outstretched hands of their officials.” (Overholt 1993, p.
80) “China is better off than Indonesia in this respect, and definitely better off than the
Philippines.” (Overholt 1993, p. 80)
The lesson of other Asian countries is that, if the government can maintain control and press through to a largely market economy, [which I assert
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China and Guangdong are doing], then the disciplines of competition take over and businesses that are too corrupt cannot survive. Government officials come to make better salaries and can eventually prosper without corrupt income. Business necessity and popular demand force the development of a relatively modern legal system. (Overholt 1993, pp. 80-81)
Therefore, these issues are unlikely to hinder China’s growth.
Moreover, at least China is trying some form of population control, as unpopular
as it may be, by implementing a ‘one child’ policy. India and Brazil, for example, have
similar population concerns and have really no population-control policies in effect,
whatsoever.
Addressing the recurring issue of pollution in Guangdong:
The expansion of transport and construction has led to high levels of noise pollution in Guangdong’s cities. Efforts to control noise pollution with fines on a provincial-wide scale began in 1991...Compared with other provinces, management of the environment appears to have been relatively good in Guangdong’s urban areas. Guangzhou, which established its environmental protection organization, is proud that it has been able to maintain more or less steady levels of pollution as it experienced considerable economic growth during the 1980s. As elsewhere in China, Guangdong has tried to initiate an environmental responsibility system in recent years: government officials must meet certain environmental targets or risk losing their jobs. Attempts to fine polluters have been stepped up. (Hook 1996, p. 95)
And recently China has imposed new laws to begin fueling automobiles with unleaded
gas versus leaded and diesel fuel in an attempt to further address air pollution concerns.25
These issues are unlikely to alter China’s growth. China is in no worse shape than
other developed/developing nations, and is even in a better position to enjoy continued
and effective growth.
25 Reported by the Bank of China.
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Regarding the crucial issue of China’s privatization rate, it is a fact that China has
been slow to privatize its state-owned firms. However, it is just as much a fact that
China, again, is still in early stages of development. Much of China is not yet practicing
and enjoying free-market oriented policies and even many of the urban areas, like
Guangdong, have remnants of ISI policies which overprotect some industries and banks.
However, this is only a short-term issue which should not impede China’s grow. As
China continues to move rapidly towards free trade policies, China will be forced to end
state-sponsored industries. As Chart 18 exhibits, Guangdong already features a major
shift in industrial production moving from state-owned enterprises to private and joint
forms.26 While state enterprises accounted for almost two-thirds of the total industrial
value in Guangdong in 1980, their share was reduced to just over one-third by 1989, a
sign that state-owned businesses are becoming less significant and less omnipotent. As a
result, new dynamic free-market enterprises will be created throughout China, and even
26 Joint enterprises include joint ventures of state-owned and collective enterprises, or collective and private enterprise. 1989 is the latest comparative data I was able to attain regarding privatization.
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Chart 18 Source: Data Appendix Table 18
63%
27%
9%
2%
53%
31%
12%
5%
41%
31%
16%
12%
38%
29%
16%18%
56%
36%
5%4%
0%
10%
20%
30%
40%
50%
60%
70%
Guangdong '80 Guangdong '85 Guangdong '88 Guangdong '89 China '89
Composition of Industrial Production by Type of Ownership in Guangdong and China
State-ownedCollectivePrivateJoint
more so in the more developed areas like Guangdong. This will balance and eventually
offset the drag of state-run industries, hence, making non-performing loans and the
recapitalization of banks only a short-term dilemma, and ultimately China will continue
its pattern of growth. According to the New York Times:
Zhu Rongji, the new Prime Minister of China, laid down ambitious benchmarks today for sweeping social change, pledging to make ailing state-owned industries solvent, overhaul the country’s banking system and redesign the Government...all within three years...Through mergers, staff cuts, bankruptcies and improved management, certain major state companies are to be reshaped as modern, globally competitive conglomerates. More companies are to sell public shares...In the banking plan, Mr. Zhu intends for the central bank to assert stronger control over the provincial banks, creating on a regional basis a system modeled on the American federal reserve system. Commercial banks are to begin operating independently of the political controls that have forced them to make bad loans to state companies. This will largely be achieved by the end of 1998, Mr. Zhu said. (Eckholm 3/20/98, p. A1, A8)
Addressing the key concern of a ‘split’ between the urban developed areas, such
as Guangdong, and the rest of China, though definitely detrimental to China’s future if it
occurs, is highly unlikely and not too plausible. Guangdong, as well as the other
developed areas of China, and its interior brethren rely too heavily on each other for
survival that a split would be disastrous to both. The interior points, including Beijing,
depend too much on Guangdong’s economy and industry for their own modernization
and progress. It would be suicide not to continue to accommodate and assist Guangdong
in its development. It is true that many interior provinces are growing more slowly than
dynamic Guangdong, and from a much lower base, “but they are growing faster than any
Western country ever managed to grow.” (Overholt 1993, p. 104) As Chart 15 points
out (Per Capita GNP), the differences between the provinces are important but not
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overwhelming. People in the interior are still very poor, “but the issue is no longer
whether there is food and clothing but rather the search for more fashionable food and
clothing.” (Overholt 1993, p. 104) “Travelers in the interior...report that the women
working in the rice fields frequently have permanent hair-dos - a small thing but an
unimaginable luxury a decade earlier.” (Overholt 1993, p. 104) Today, even in the
poorest areas, people seem well fed and have decent housing. Televisions are ubiquitous
and clothing in the many cities are colorful and fashionable.27
In fact, the interior provinces are making a good deal more than minimal progress.
Chart 14, which displays total real GNP growth over a six year period, shows that the
image of a rapidly growing Guangdong alongside a severely stagnating interior is not
entirely true. For example, Xinjiang province, an Uygur minority, an area as far from
Guangdong as a province can be, is the fastest-growing. Another interior minority area,
Yunnan, north of Myanmar (Burma), is third.28 And although the coastal provinces of
Guangdong and Fujian are second and forth, respectively, four of the next six are interior
provinces. The disparities have also led the poorer regions to seek greater investment in
their infrastructures by the central government. “They have asked to set up Special
Economic Zones of their own and have attempted to bargain with the richer provinces for
higher prices and greater investment.” (Hook 1996, p. 60) “This has had a major impact
upon the unfolding relationships between central government and Guangdong province.”
(Hook 1996, p. 60) Also, Guangdong relies so heavily on cheaper labor of the interior
27 Own observations
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provinces that it too must accommodate some of the interior demands. The Guangdong
government, for example, has already supported a tax reform (1993) that imposed a
unified nationwide system and removed the preferential status Guangdong had previously
enjoyed. (EIU, Business China, p. 8) Furthermore, both the developed areas and the
interior have much to gain by cooperating so as to enhance intra-China or inter-provincial
trade within the nation. Guangdong needs political support from Beijing and the interior
to sustain ‘its’ own growth. Mutual interest has led to a major surge in cooperation,
although within a competitive framework, between Guangdong, Beijing and the poorer
provinces.
Even though Guangdong possesses a powerful regional identity, what is certain is
that Guangdong is not looking towards the break up of the sovereign state as some have
suggested. Evidence for such a preference simply does not exist. “There is a large
difference between a powerful regional identity, opposed to undue interference from the
center, and a full-blown attempt to break away from Beijing.” (Hook 1996, p. 63) It only
makes sense for all parties and provinces concerned to collaborate toward greater
achievements, which, I think, seems certain. Therefore, not only will there not be a
‘split’ by Guangdong which allegedly could choke the economy, but the province has
stimulated trade and growth with inland provinces which enhances China’s probability of
sustained future development.
28 One may argue, however, that Yunnan should be set aside because much of its growth comes from Burmese drug trade.
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Collectively, China seems geared to maintain steady growth rates. If China’s
economy merely continues at a rate of 8 percent and other economies grow at their
present rate, China will become the world’s largest economy by the beginning of the next
century (Chart 19).29
Finally, I am confident of Guangdong and China’s future growth simply because
of its recent trading relationship with the United States. This is a point that none of the
‘doubters’ address. A mutual dependency has arisen between China and the US within
the last decade or so. As Chart 20 illustrates, China represents 19 percent of all imports
into the United States from Asia (Guangdong is 50 percent of China’s total) (1997).
(Journal of Commerce, 1998) And if one includes Hong Kong into this figure, the ‘new’
China depicts a staggering 44% of total imports from Asia into the US (1997).30 This is a
figure that can hardly be overlooked. Furthermore, looking at commodity inflow to the
United States from China (Chart 21), it is clear that many of Americans’ everyday
products were manufactured in China, and much of that in Guangdong. This fact not
only indicates that China’s future is promising but that China, especially Guangdong
29 The Economist estimate of China’s 1991 GDP was adjusted by applying the IMF’s real GDP growth rates for 1992-1994. For 1995-2015, a growth rate of 2.5% was assumed for the US economy, and 9% growth rate was assumed for China. This follows the Economist estimate, which assumed China’s growth rate would annually be 6.5% higher that the US growth rate. (Mastel 1997, p. 14) 30 China represents about 5.5% of total global imports in the US. It is the 4th largest supplier of US imports (1991-1997 collectively) behind Canada 14%, Japan 10%, Mexico 5.6%. (Office of Trade & Economic Analysis 1998)
-66-
Chart 19 Source: Data Appendix Table 19
Exptrapolating US and Chinese Growth Paths
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Year
Bill
ions
of 1
990
$US
United StatesChina's Adjusted GDP
Chart 20 Source: Data Appendix Table 20
Origins of United States' Imports from Asia, 1997
Hong Kong25%
China19%
Japan15%
Taiwan12%
S. Korea6%
Thailand5%
Indonesia4%
Malaysia3%
India3%
Philippines2%
Singapore2%
Other4%
Guangdong represents one-half of China's exports to the USChina represents about 5.5% of the US' total global imports
Chart 21 Source: Data Appendix Table 21
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Perc
ent o
f Tot
al C
hina
's E
xpor
ts to
the
US
Toys Footwear E-Goods Apparel Xmas Decs. Plastic Goods Furniture Lighting Dept. StoreMerch.
Computers
Commodity
Top Commodites Imported to the US from China, 1997
Province, can no longer be perceived as simply an agrarian economy. With influence and
dependence on the United States, despite trade imbalances, China’s growth seems
secure.31
31 This, of course, assumes that US and Chinese markets remain in tact. If any market crashes, then the need for imports and/or exports could be altered significantly.
-70-
VI. Conclusion
I predict that this new flourishing ‘open-economy’ will have a dramatic effect on
China’s political system, as do many other analysts. China’s growing free-market
economy has introduced a new lifestyle to its people; the seeds of entrepreneurialism
have been planted. This entrepreneurial spirit and traditional communist economic
values are diametrically opposed.32 Hence, there is little doubt that Communism in China
will, at the very least continue to greatly change, or cease to exist. The outlook for a
prosperous China and a growing Guangdong, as the evidence here illustrates, seems
almost certain. As argued in this thesis, the Special Economic Zones proved successful.
And as China’s economy grows, so too will the presence of new economic zones
throughout the nation.
Complementing the existing SEZs in Guangdong, like Shenzhen, China has quite
recently established economic zones of various types in its coastal areas. For example,
Pudong district, which is just opposite the Huangpu River from Shanghai, and the ports
of Tianjin, Qingdao, and Dalian are already enjoying privileges similar to the SEZs.
These economic zones have fostered a sense of economic vitality that has helped energize
the country as a whole and will surely remain in the forefront of Chinese economic
development and will be central to sustaining China’s growth.
32 This point is based on my general basic knowledge of Chinese Communist economic values. This includes protectionism and extensive government interaction and intervention in the economy. For more
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In Mandarin, the word ‘China,’ pronounced ‘Zhong Guo’ means ‘middle
country,’ alluding to the Chinese’ self-centered belief that China is the center of the earth.
Though purely a philosophical and provocative concept, no one studying modern China
can deny the fact that China currently draws more than notable attention in world affairs,
both economically and politically. As the world continues to converge into a global
village and an international market, China will increasingly play a pivotal role on the
world’s stage with Guangdong Province as a main actor.
specific literature, refer to Ezra Vogel, One Step Ahead in China, 1989 and Ezra Vogel, Canton Under Communism, 1969.
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Data Appendix
The preceding sections contain statistics and figures that support evidence
illustrating China and Guangdong’s growth and development and transformation over the
last two decades. Although much of the information needed was ultimately attainable,
there were limitations and obstacles in acquiring the data. Nearly all the analyses of
growth in Guangdong and China are based on the statistics published in the Guangdong
Provincial Statistical Yearbook (Guangdong Tongji Nianjian) and the Chinese Statistical
Yearbook (Zhonggou Tongji Nianjian). Both of these journals are difficult to obtain
outside China and Hong Kong and are only published in Chinese.1 Therefore, these
publications were not reviewed in their entirety for this thesis. However, key series from
each are available in several English sources. As a result, this thesis is based on data
gathered from English references, and contacts in Hong Kong, England and China.
Specifically, Professor David Faure of St. Anthony’s College at the University of
Oxford, Professor Reuben Mondejar of the City University of Hong Kong, Professor
Brian Hook of Leeds University, and Mr. Victor Lindsey, editor of The Shenzhen
Newsletter, were all helpful in trying to furnish data I needed or, at least, in directing me
where to search. Finally, Ph.D. student Zeng Kaisheng from Zhongshan University in
Guangdong and Ms. Tao Jin of Price Waterhouse’s China Business Development
department, assisted in guiding me to many relevant leads and sources of information.
1 The written language is the same for Cantonese and Mandarin (Chinese). The spoken language is quite different.
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The statistics presented here are the most recent obtainable. I had hoped to
support my thesis with data as recent as 1996-1997 (which I often did when addressing
China alone). Macroeconomic data pertaining to China as a whole is available from the
Journal of Commerce, the IMF, and other trade agencies. However, up-to-date
Guangdong data is much more difficult to find. One result of this constraint is that much
of the data from consulted sources did not go beyond 1989-1992, depending on the
subject. Therefore, my supporting evidence is subject to availability. I am confident that
even with more recent specific provincial data, my arguments would not change unless it
showed a dramatic shift. However, there is little indication that the new data is
significantly different.2 Similarly, since China only opened its markets with the last 20
years, figures prior to 1979 are unavailable or seriously flawed. Moreover, there is a
manuscript entitled Guangdong: Survey of a Province Undergoing Rapid Change, by
Y.M. Cheung and David K.Y. Chu, both of the City University of Hong Kong, that has
yet to be published by The Chinese University Press. I have contacted both editors, and
they advised that the book will not be ready until the year end 1998 and were unwilling
to divulge any of the Survey’s contents before publication.
I was successful in obtaining enough data to support my thesis. However, there is
still some literature that, if available, would have enhanced this study. For example, if
specific pre-reform statistics regarding China and Guangdong’s economy were available,
2 According to Professor R. Mondejar and Zeng Kaisheng growth remains fairly consistent in Guangdong and China. In 1996, the first and only year that Guangdong’s growth rate was lower than the national rate, the province’s GDP growth was still a respectable 8% while China’s growth was 9.7%; above its 15 year average.
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it would have strengthened the thesis by illustrating a stronger contrast between the two
time periods. Also, specific annual data on the breakdown of FDI by market sector in
each of the SEZs could not be attained. If I could have illustrated the change in FDI by
industry more specifically, shifting from light manufacturing to high-tech production
over the past two decades, it would have also helped support the thesis.
-75-
Following are the relevant data underlying the graphs and charts in the thesis.
Table 1 US Trade Balances with China and Japan
In $US Billions
China Japan 1980 3 -10 1982 0 -18 1984 0 -30 1986 -2 -55 1988 -4 -50 1990 -9 -42 1992 -18 -48 1994 -30 -62 1996 -38 -40
Source: Department of Commerce and ESI estimates
as summarized in Mastel 1997, p. 32
Table 2 Foreign Direct Investment in China
In $US Billions
Actual FDI Cumulative FDI1979-'82 1.77 1.77
1983 0.92 2.691984 1.42 4.111985 1.96 6.071986 1.88 7.951987 2.65 10.61988 3.19 13.791989 3.77 17.561990 3.49 21.051991 4.37 25.421992 11.01 36.431993 27.52 63.951994 33.77 97.721995 37.52 135.24
Source: Ministry of Foreign Trade and Economic Cooperation
as summarized in Mastel 1997, p. 16
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Table 3 Foreign Investment in China by Location, 1979-1991
In $US Billions
Guangdong 22.71Fujian 4.83Hebei (Beijing) 4.22Shanghai 3.46Liaoning 1.98Jiangsu 1.77Hainan 1.06
Sources: Mondejar 1994, p. 30
South China Morning Post, Sept. 27, 1992
Table 4 Sources of Foreign Direct Investment in China, 1995
Taiwan 8%Hong Kong 55%USA 8%Singapore 5%UK 2%Japan 8%Other 10%
Source: Ministry of Foreign Trade and Economic Cooperation
as summarized in Mastel 1997, p. 17
Table 5 Growth Rates in China and Guangdong
In Percent
China Guangdong1979-'85 9.39 12.07
1985 12.9 20.081986 8.5 11.321987 11.1 17.711988 11.3 15.571989 4.3 6.981990 3.9 11.331991 8 17.31992 13.2 22Mean 8.97 13.28
Source: ZGTJNJ (Chinese Statistical Yearbook), 1993
as summarized in Hook 1996, p. 154
Table 6
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Growth Rates in China and Guangdong Vs. The Asian Tigers, 1979-1992 In Percent
Guangdong China Hong Kong S. Korea Singapore Taiwan
1979-85 12.07 9.39 7.15 6.6 7.12 71986 11.32 8.5 11.1 12.4 1.84 11.61987 17.71 11.1 14.5 12.04 9.45 12.31988 15.57 11.3 8.3 11.48 11.15 7.31989 6.98 4.3 2.8 6.15 9.24 7.61990 11.33 3.9 3.2 9.15 8.34 4.91991 17.3 8 4.1 8.46 6.72 7.21992 22 13.2 5.3 4.79 5.8 6.6
Average 13.28 8.97 7.06 7.88 7.29 7.6
Source: ZGTJNJ (Chinese Statistical Yearbook), 1993 as summarized in Hook 1996, p. 154
Table 8 Total FDI from Hong Kong in Guangdong and China
In $US Millions
Total China Guangdong Guangdong Share1985 955 450 47%1986 1328 603 45%1987 1809 502 28%1988 2428 836 34%1989 2341 952 41%1990 2118 1018 48%1991 2661 1448 54%1992 7908 3162 40%
Source: ZGTJNJ (Chinese Statistical Yearbook), 1993,
GDTJNJ (Guangdong Statisitcal Yearbook), 1993 as summarized in Hook 1996, p. 180
Table 9 Hong Kong’s Share in Total Intake of FDI by China and Guangdong
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Total China Guangdong
1985 49% 87%1986 59% 93%1987 68% 84%1988 65% 91%1989 62% 82%1990 56% 70%1991 57% 79%1992 70% 89%
Mean 64% 84%
Source: ZGTJNJ (Chinese Statistical Yearbook), 1993 as summarized in Hook 1996, p. 180
Table 10 Hong Kong’s Total Exports, 1997
China 34%United States 22%European Union 15%Japan 6%Singapore 3%Taiwan 3%S. Korea 1%Others 16%
Source: Hong Kong Trade Development Council, 1998
http://www.tdc.org.hk/ Hong Kong’s External Trade Performance
Table 11 Hong Kong’s Total Imports, 1997
China 38%Japan 14%United States 8%Taiwan 8%S. Korea 5%Singapore 5%European Union 4%Others 18%
Source: Hong Kong Trade Development Council, 1998
http://www.tdc.org.hk/ Hong Kong’s External Trade Performance
Table 12 Reasons for Migration in Guangdong
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Business Reasons 60%Job Change/Job Allocation 11%Job Training 5%Join Families 8%Miscellaneous 16%
Source: Hook 1996, pp. 123-124
Table 13 Annual Income Per Head of Selected Chinese Cities, 1991
In Chinese Yuan (RMB)
Shenzhen 4,205 Guangzhou 2,906 Xiamen 2,737 Shanghai 2,334 Haikou 2,295 Beijing 2,040 Rural China Average 710
Source: ZGTJNJ (Chinese Statistical Yearbook), 1991
as summarized in Mondejar 1994, p. 59
Table 14
Real Income Growth by Province, 1985-1991 In Percent
Xinjiang 115 Guizhou 55 USA (GNP) 14Fujian 112 Gansu 55 UK (GDP) 15
Guangdong 108 Helongjiang 52 China 62Yunnan 107 Sichuan 50Guangxi 82 Hunan 50
Shandong 77 Jiangsu 49Shaanxi 68 Qinghai 48Zhejiang 67 Jilin 44Ningxia 66 Tibet 39Hebei 66 Liaoning 38
Jiangxi 59 Hubei 30Inner Mongolia 58 Shanxi 27
Henan 57 Anhui 19
Sources: ZGTJNJ (Chinese Statistical Yearbook), 1992 IMF, 1993
as summarized in Overholt 1993, p.105
Table 15 Per Capita GNP by Province, 1991
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In $US
Guizhou 164 Inner Mongolia 276Anhui 196 Hebei 290
Guangxi 197 Hubei 293Gansu 210 Qinghai 300Henan 213 Hainan 301
Yunnan 215 Jilin 317Sichuan 221 Fujian 340Jiangxi 224 Shandong 344Hunan 238 Xinjiang 377
Shaanxi 241 Helongjiang 385Tibet 254 Jiangsu 399
Ningxia 264 Zhejiang 440Shanxi 275 Liaoning 505
Guangdong 519
Sources: GDTJNJ (Guangdong Statisitcal Yearbook), 1992 as summarized in Overholt 1993, p. 103
Tables 16 and 17 Distribution of Economic Structures, 1980 & 1993
In Guangdong
1980 1993Manufacturing 45% Manufacturing 51%
Agriculture 26% Agriculture 9%Services 29% Services 40%
Source: Ming and Xiujuan 1993, p. 45
Table 18 Composition of Industrial Production by Type of Ownership in Guangdong and China
Guangdong '80 Guangdong '85 Guangdong '88 Guangdong '89 China '89
State-owned 63% 53% 41% 38% 56%Collective 27% 31% 31% 29% 36%Private 9% 12% 16% 16% 5%Joint 2% 5% 12% 18% 4%
Source: Hook 1996, p. 120
Table 19
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Extrapolating US and Chinese Growth Paths In 1990 US$ Billions
United States China
1994 6,000 2,000 1996 6,200 2,300 1998 6,600 2,800 2000 7,000 3,100 2002 7,200 3,900 2004 7,600 4,200 2006 7,900 5,100 2008 8,100 5,800 2010 8,400 7,100 2012 8,500 8,600 2014 8,800 10,000 2016 9,000 11,900
Source: IMF, 1992, The Economist, 1992
as summarized in Mastel 1997, p. 14
Table 20 US Imports from Asia, 1997
Hong Kong 26%China 19%Japan 15%Taiwan 12%S. Korea 6%Thailand 5%Indonesia 4%Malaysia 3%India 3%Philippines 2%Singapore 2%Other 4%
Source: Journal of Commerce, March 1998
Table 21 Top 10 Commodities Imported to the US from China, 1997
In Percentage of Total Imports from China
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Toys 17%Footwear 9%E-Goods 6%Apparel 5%Xmas Decs. 5%Plastic Goods 4%Furniture 4%Lighting 4%Dept. Store Merch. 4%Computers 4%
Source: Journal of Commerce, March 1998
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