Shenzhen, the little special economic zone that could, will very soon surpass Hong Kong in terms of overall economy size, according to one analyst.
In an interview with Bloomberg, Michael Parker, head of Asia Pacific strategy at Sanford C. Bernstein & Co., estimated that by next year, Shenzhen's gross domestic product will rise to USD350 billion (RMB2.32 trillion), narrowly beating out a projected Hong Kong GDP of USD345 billion (RMB2.28 trillion).
In 2016, Shenzhen's GDP was still lagging behind Hong Kong by a sizeable chunk. Thanks to a prodigious average annual growth rate of close to 10 percent since 2010, however, it's projected to soon overshadow its neighbor. Not bad for a city founded as an experiment less than 40 years ago.
In the meantime, growth has been slow in Hong Kong. From 2010 onwards, the GDP has expanded an average three percent each year, in part due to a fall in tourism and a wildly expensive housing market. The future doesn't look any better either – analyst estimates compiled by Bloomberg put the growth rate for the next two years at less than three percent.
But despite an imminent eclipse by its mainland neighbor, Hong Kong is expected to remain a global financial hub.
“It’s like London going through Brexit: obviously it’s not going to be the same place anymore but it will still remain the financial center," Stephen Innes, head of trading for Asia Pacific with Oanda Corp., told Bloomberg reporters.
It's thanks to Hong Kong's focus on investment banking, legal services and similar that the metropolis has maintained a much higher GDP per capita compared to its neighbor, measuring USD44,000 to Shenzhen's USD25,000 last year.
But Shenzhen, already home to headquarters of tech giants including Tencent, ZTE, Huawei, BYD and DJI, is expected to continue its impressive achievements in the area of innovation. Since 2013, SCMP reports, the city has spent a whopping 4 percent of its GDP on research and development each year, and can now lay claim to almost half of China's international patent filings.
Growth in the mainland can only help the former British colony. Dong Chen, senior Asia economist at Pictet Wealth Management, predicts that Shenzhen's growing cohort of entrepreneurs will continue looking to Hong Kong for top-notch financial services.
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[Images via Simbaxu, Bloomberg]
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