Definitions

Pearl River Delta

Pearl River Delta

The Pearl River Delta Region (PRD) in southern China occupies the low-lying areas alongside the Pearl River estuary where the Pearl River flows into the South China Sea. Since economic liberalisation was adopted by the Communist Party of China in the late 1970s, the portion of the delta in Guangdong Province has become one of the leading economic regions and a major manufacturing center of mainland China. The PRC government hopes that the manufacturing in Guangdong, combined with the financial and service economy and traditional western influence in Hong Kong will create an economic gateway attracting foreign capital throughout mainland China.

Location and demographics

The PRD covers nine prefectures of the Guangdong Province, namely Guangzhou, Shenzhen, Zhuhai, Dongguan, Zhongshan, Foshan, Huizhou (only includes Huizhou City, Huiyang, Huidong, Boluo), Jiangmen and Zhaoqing (only includes Zhaoqing City, Gaoyao and Sihui), and the SARs of Hong Kong and Macau. It had a population of 40.8 million people at the 2000 Census.

Geographically and geologically speaking, Macau and Hong Kong are not part of the PRD; however economically and culturally they are considered part of the PRD.

The eastern side of the PRD (Shenzhen, Dongguan), dominated by foreign capitals, is the most developed economically and polluted. The western areas (Foshan, Zhuhai, Zhongshan, Jiangmen), dominated by local private capitals, are open for development. New transport links between Hong Kong, Macau and Zhuhai in the PRD are expected to open up new areas for development and facilitate trade within the region. The proposed 29-kilometre Hong Kong-Zhuhai-Macau Bridge will be among the longest in the world.

Until approximately around 1985, the PRD had been mainly dominated by farms and small rural villages, but after the economy was reformed and opened, a flood of investment turned it into the mainland's economic powerhouse and one of most polluted areas in China . The PRD's startling growth was fuelled by foreign investment coming largely from Hong Kong manufacturers that moved their operations into the PRD. In 2003, Hong Kong companies employed 11 million workers in their PRD operations. Most of the workers are farmers from outside Guangdong and get only minimum wages.

Emergence of the economy

The Pearl River Delta has been the most economically dynamic region of the People's Republic of China since the launch of China’s reform programme in 1979. The region's Gross Domestic Product (GDP) grew from just over US$8 billion in 1980 to more than US$89 billion in 2000. During that period, the average real rate of GDP growth in the Pearl River Delta Economic Zone exceeded 16 percent, well above the People’s Republic of China's national figure of under 10 percent. In 1991, almost 50% of foreign investment in China was in Guangdong, and 40% in the PRD. By 2001 its GDP rose to just over US$100 billion and it was experiencing an annual growth rate more than three percentage points above the national growth rate. The abundance of employment opportunities created a pool of wealthy, middle-income, professional consumers with an annual per capita income that puts them among China's wealthiest. Since the onset of China’s reform program, the Pearl River Delta Economic Zone has been the fastest growing portion of the fastest growing province in the fastest growing large economy in the world.

According to the 2000 national Census, the Zone had a population of 40.8 million people. Per capita income has been growing substantially in recent years, as have consumer expenditures.

Although the Pearl River Delta Economic Zone encompasses only 0.4 percent of the land area and only 3.2 percent of the 2000 Census population of mainland China, it accounted for 8.7 percent of GDP, 35.8 percent of total trade, and 29.2 percent of utilised foreign capital in 2001. These figures show the remarkable level of economic development that the Pearl River Delta Economic Zone has achieved and the international orientation of the region’s economy. This orientation has attracted numerous investors from all over the world who use the Greater Pearl River Delta region as a platform for serving global and Chinese markets.

As of 2008, the Central Government has introduced new labor laws, environmental and new regulations to reduce pollution, industrial disputes, safer working conditions and protect the environment. The costs of producing low margin and commodity goods have increased. This is on top of the rising cost for energy, food, transport and the appreciation of the Reminbi against the falling US Dollar. Some manufacturers will need to cut costs by moving up the value chain or moving to lower cost destinations such as Vietnam .

Significance of manufacturing

The Pearl River Delta has become the world's workshop and is a major manufacturing base for products such as electronic products (such as watches and clocks), toys, garments and textiles, plastic products, and a range of other goods. Much of this output is invested by foreign entities and is geared for the export market. The Pearl River Delta Economic Zone accounts for approximately one third of China's trade value.

Private-owned enterprises have developed quickly in the Pearl River Delta Economic Zone and are playing an ever-growing role in the region's economy, particularly after year 2000 when the development environment for private-owned enterprises has been greatly relaxed.

Nearly five percent of the world's goods were produced in the Greater Pearl River Delta in 2001, with a total export value of US$ 289 billion. Over 70,000 Hong Kong companies have plants there .

Ties with Hong Kong

Prefectures in the Pearl River Delta have benefited from proximity to Hong Kong. Hong Kong has been the source of over 70 percent of the cumulative foreign direct investment in the region since 1978, or roughly eight times the investment of North America, Japan, and Europe combined. One reason Hong Kong has played such an important role is because it links the region with the rest of the world, handling 70 to 80 percent of its seaborne exports and an even greater percentage of its airborne exports.

Hong Kong serves a distinct role as a place for firms to access the strength of the Greater Pearl River Delta region. Many western firms also use Hong Kong as a base for their Greater Pearl River Delta region activities, with senior managers often residing in Hong Kong. Hong Kong also serves as a principal location for the buying offices for companies doing business with the Greater Pearl River Delta region. Increasingly, savvy companies are developing Hong Kong/Greater Pearl River Delta strategies with their management, finance, communication, and coordination activities based in Hong Kong and their manufacturing activities in one or more of the jurisdictions of the Pearl River Delta.

While occupying an important position in the nation's economy, the PRD has also been a pioneer in reform and openness. Two of the original four Special Economic Zones (Shenzhen and Zhuhai) are located in the PRD, which allowed it to lead the way from a planned economy to a market economy. Having this "first mover advantage" in developing private enterprise, manufacturing capabilities and foreign trade, the PRD has drawn on its proximity with Hong Kong to become the manufacturing powerhouse of China. While the PRD offers a competitive market for companies to source or manufacture goods, Hong Kong provides logistic, financial, legal, design and marketing services that allow companies to export their products to rest of the world.

Pollution

The Pearl River Delta is notoriously polluted, with sewage and industrial waste treatment facilities failing to keep pace with the growth in population and industry in the area. A large portion of the pollution is brought about by factories run by HongKong manufacturers in the area. Much of the area is frequently covered with a brown smog. This has a strong effect on the pollution levels in the delta.

Pollution is perhaps one of the greatest risks to the Chinese White Dolphins that inhabit the area.

On March 22, 2007 the World Bank approved a $96 million loan to the PRC government to reduce water pollution in the Pearl River Delta. See

See also

References

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