Shenzhen took first place in the Milken Institute’s ranking of Asia-Pacific’s most dynamic cities, beating out major regional hubs such as Singapore, Shanghai and Hong Kong.
To an extent, Shenzhen’s top ranking reflects its outstanding rise during the past thirty years, when it has grown from a small-scale fishing village into the heartbeat of China’s manufacturing colossus.
However, Shenzhen’s top ranking also stems from its attempts to evolve away from the low-cost manufacturing base of times past and towards a more high-tech, services-driven economic model.
The city has acted as an incubator region for companies, such as BYD, that have grown to be major players in China’s high-tech sector. Also, other major tech players such as Tencent and ZTE are based in the city and surrounding regions.
In part, this has stemmed from major government support to help companies in the services industry. The local government has targeted six strategic industries—biotechnology, information technology, new energy, new materials, telecommunications, and the cultural and creative industry— for support and the estimated gain of 19.8 percent in 2013.
Also, the launch of the Qianhai project - a plan to develop a new financial sector in the border region close to Hong Kong – has attracted a lot of investment from firms looking to set up in China and position themselves for reforms in the country’s financial sector.
This has delivered solid results across all macro measures, with the city seeing the second fastest growth in jobs between 2008 and 2013, and rapid growth in incomes and high-value added industry growth.
Source: Milken Institute: Best Performing Cities, Asia (2014)
In sum, the positioning of Shenzhen is a testament to the city’s spectacular growth in previous years, but also to forward-looking thinking on the part of legislators and political leaders. Too often, a lack of government transparency and clear guidance about future business strategy can turn off investors and this is one area - among many - where Shenzhen is clearly leading.