Boom times around the delta
It will take something extraordinary to beat last year's achievements in the greater Pearl River Delta. Guangdong's economy had been officially forecast to grow at 12.5 per cent, but who knows what the final figure will be when the State Statistical Bureau releases the full details of its calculations (2005 was the year the bureau took over responsibility for releasing provincial gross domestic product statistics).
Hong Kong, whose economy is roughly the same size as the delta region's nine main cities combined, grew 8.2 per cent year on year in the third quarter, and was expected to record 7 per cent growth for the full year - nearly double what had been forecast at the beginning of the year. And Macau, with a tiny population of less than half a million, looked set to push its economy to near the US$12 billion mark, giving it a per-capita GDP almost on a par with Hong Kong's HK$24,000.
You might say that 2004 was more remarkable. But remember that its year-on-year growth rates were compared with the depths of the Sars crisis in 2003. Last year's was growth after a good year.
Now that US Federal Reserve chairman Allan Greenspan has sent the markets into a frenzy by commenting on the likelihood of fewer interest-rate rises in the near future, heaven only knows what this year holds in store for China's richest region. Indeed, barring the appearance of a serious pandemic, it is hard to see what could end this party in the foreseeable future.
Could property bubbles be popped? Interest-rate rises have yet to accomplish that in Hong Kong, while Shenzhen and Guangzhou seem to be in no danger, as there is plenty of supply in the pipeline, disposable incomes are soaring, and banks' bad debts are being cleaned up by cash-flush government backers.
How about a slowdown in external trade? Guangdong's exports were expected to hit US$225 billion last year, up nearly a third on 2004, the result of continuing heavy foreign investment and rapidly growing domestic investment by the private sector. The latter accounted for a quarter of exports in the first half of the year, up by more than two-thirds over 2004.
True, growth in imports was expected to slow, leaving Guangdong with a surplus of roughly US$40 billion, nearly half of the mainland's total. But again, this seems to be more a result of companies shifting production lines to the workshop of the world than it is a dependence on the economic fortunes of developed economies. Scraps with the United States and the European Union over textile quotas seem to have made barely a dent in the trade figures.
Energy and water shortages? Tightening labour markets? Infrastructure bottlenecks? These are all continuing problems, but none has so far posed a serious restraint on growth. And they are all improving: an extra 15,000MW of generating capacity is coming online in Guangdong each year over the next three years; minimum wages are rising to attract more migrant workers; and the Western Crossing opens early this year. That will make it significantly easier and faster to move goods and people from Dongguan and Shenzhen down to Kwai Chung and Chek Lap Kok. Then work is expected to start on a cross-delta bridge linking with Hong Kong.
Politically, the region has never looked in better shape. Last year, Chief Executive Donald Tsang Yam-kuen met his Guangdong counterpart, Governor Huang Huahua , not only in Guangzhou - he also appeared with him on a delta promotional tour of the US, Canada and Mexico. The Legislative Council sent members of its Transport Committee to the provincial capital on a fact-finding mission.
If there is a dark cloud somewhere on the horizon, I would appreciate it if someone could point it out.
Anthony Lawrance is a Hong Kong-based publisher
