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China's Pearl River Delta invites comparisons to America's Silicon Valley in economic importance

Not so long ago, what a lady bought in shops from Montreal to Melbourne, from Cape Town to Cologne likely came from the largest urbanised centre in the world, a conurbation of dozens of interlocking cities and towns from Hong Kong 70 miles to Guangzhou.

If that boast is no longer true, it is because what is mostly bought in shops touches the human body, namely clothes. While clothing was once made along the banks of the Pearl River, these factories have since moved inland in search of affordable labour or to other regions like Indo-China and Indonesia where such can still be found.

While rising standards of living along Pearl have gradually priced its inhabitants out of low-end markets, they have come to dominate a high-end mass market in the manufacture of electronics and the now globally ubiquitous smart phones.

There are streets in Guangzhou that specialise in selling electronic components to the manufacturers of electric and electronic goods, which include watches, clocks and toys as well as infrastructure for devices in everything from computers to land planes at airports to running computer games. Hence, the more recent comparisons of the Pearl River Delta (PDR) to California's Silicon Valley south of San Francisco.

Much of this output is invested by foreign entities and is geared for the export market. The Pearl River Delta Economic Zone accounts for one third of China's trade value.

Privately-owned enterprises have developed quickly in the zone and are playing a growing role in the region's economy, particularly after the environment for privately-owned enterprises had been relaxed.

The delta, also officially known as the Guangdong-Hong Kong-Macao Greater Bay Area, is a megalopolis, expected to become a single metropolitan area. Today, it runs along the southern coast of China, which includes Chaoshan, Zhangzhou-Xiamen, Quanzhou-Putian and Fuzhou.

The nine largest cities of the delta had a combined population of 57.15 million at the end of 2013, comprising 53.69 per cent of the provincial population. According to the World Bank, it has become the largest urban area in the world in both area and population.

This region was also the source of much Chinese emigration from the 19th to the mid 20th centuries, including to the Western world, where they formed many Chinatowns. Today, much of the Chinese diaspora in the US, Canada, Australia, Latin America, and much of Southeast Asia traces their ancestry to this region.

The eastern side of the Delta, from Shenzhen, adjacent to Hong Kong to Dongguan next to Guangzhou, is dominated by foreign capital, is the most economically developed.

The western banks of the Pearl from Zhuhai, next to Macau, runs to Jiangmen and Foshan, adjacent to Guangzhou on its western side. This area is invested mostly by domestic private capital. New transport links are expected to open up the underdeveloped western side of the river with the recent opening of the spectacular 50-kilometre (31-mile) Hong Kong-Zhuhai-Macau Bridge, expected to further integrate the cities, and facilitate trade within the region.

Until 1985, the banks 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 an economic powerhouse.

While Europe and the US lead the world in innovation and Singapore, Japan and Korea continue to lead in Asia, there is a game of catch-up being played at a micro level in the Pearl River Delta.

Shenzhen-Hong Kong is now recognised as the world’s No 2 science and technology cluster, behind Tokyo but ahead of Seoul (No 3) and Silicon Valley (No 4). But China’s top two regions have only two such technology clusters between them (one each) while the two US counterparts collectively have six, or three each.

In the US, these technology hubs within the same region are geographically dispersed - one needs to fly from San Francisco to Los Angeles, from Boston to New York. In contrast, the Pearl River Delta is unique - a mega region which is at the same time a metro area. Distance is compressed by high-speed train and a mega bridge. Such infrastructure connects three mega cities and nearby urban areas into a single metropolitan area of close to 70 million people. Such unparalleled concentration of economic activities facilitates growth and innovation.

Herein lies China’s hope to ascend global league tables to top economic regions. Each Chinese city alone is no match for New York. But the Pearl River Delta - through its connected infrastructure - is China’s New York, San Jose and Los Angeles combined. This combination can unleash its full power if each city plays to its complementary strengths in concert with its counterparts.

Thus, as long as wayward politics does not affect what seems to be developing naturally, then the Pearl River Delta is the area to watch for high-tech product development internationally.

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