Shenzhen was where China's market reforms began 40 years ago and it has since become a hi-tech powerhouse, so it is natural that Beijing should be looking to the city for inspiration to propel the nation to the next stage of development. President Xi Jinping and other top leaders have given it special status, allowing it to trial innovative ideas for growth that if successful, could be a model for others to follow. The approach comes at a testing time, with China locked in a trade war with the United States, Chinese economic growth slowing and neighbouring Hong Kong mired in a political crisis. But given a proven track record of effective policymaking, there is no better place to experiment with and perfect new schemes and strategies.
The plan was recently announced with little fanfare after being given the go-ahead by the nation's top body overseeing economic and administrative reforms. The boraod idea is that Shenzhen will be given space to experiment to enable it to boost its "innovation-focused development strategy". Beijing's policies have traditionally been top-down, but the new approach is a bottom-up initiative.
It is natural that Shenzhen should be chosen, its evolution from a small fishing village to a thriving metropolis of 12 million people in just four decades making it a symbol of China's phenomenal growth. The city is the designated hi-tech hub of Beijing's Greater Bay Area development plan that brings together Hong Kong, Macau and southern China's nine other major cities with the aim of creating a Silicon Valley-like driver for development. Some of the nation's leading technology firms are based there, among them Huawei, Tencent, ZTE, Foxcon and drone-maker DJI. It is also home to the nation's second stock exchange, has a deep water port and is a fast-growing transport centre.
The new strategy is bound to heighten competition with Hong Kong, which is facing challenges from weeks of mass protests, some of them violent. Shenzhen recently announced tax incentives to attract talent in hi-tech industries, offering a rate lower than Hong Kong. Innovative ideas for growth could include focusing on fintech, legal reforms and easing up on restrictions on the free flow of capital and information, all of which would cut into Hong Kong's advantages. But Shenzhen's tech companies face difficulties of their own as a result of the trade war, which is affecting supply of essential parts and components and disrupting overseas markets.
Bold thinking and innovative ideas will help China weather the trade war and Shenzhen has been given the go-ahead to take the initiative. What it comes up with and Beijing approves could well shape the nation's direction of growth and development.
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