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Guangdong’s economic aspiration is to catch up with the “four dragons” of East Asia within Àfteen to twenty years.1 Many theoretical simulations purport to show how export promotion or other strategies might enable the province to achieve this goal and attain the income and consumption standards prevailing in these regions. Such exercises may vary in econometric sophistication, but they share a bullish conÀdence based on accelerated economic growth in the province since the early 1980s. It is true that in recent years, Guangdong has outpaced virtually every other province in almost every aspect of economic performance. Many factors have contributed to this achievement. Foremost among them is the preferential treatment accorded by the central government since 1980, which has enabled the provincial authorities to retain Àscal revenue and foreign currency receipts in excess of obligatory—and Àxed remittances to the central government. This marks a sharp departure from previous conÀscatory practices.2 Such Ànancial privileges have enhanced provincial autonomy in the allocation of resources, especially in the foreign trade sector. But Guangdong’s heightened economic independence has not only strengthened allocative efÀciency within the province. It has also facilitated its increased integration into the world economy, paving the way for its competitive involvement in export and import markets, and generating improvements in productivity in indigenous manufacturing. * Reprinted from “The Àfth dragon: Economic development” (coauthored with Robert Ash), in Brian Hook (ed.), Guangdong: China’s Promised Land, Hong Kong: Oxford University Press, 1996, pp. 149–92. 4 Guangdong Province Ascending as the “Fifth Dragon”* 78 Pax Sinica The role of the Special Economic Zones (SEZs) is an important dimension of Guangdong’s economic success. Three of the four original SEZs were located in the province3 and, at least until 1988, these absorbed almost all foreign direct investment (FDI) into China—most of it coming from neighbouring Hong Kong. Such inÁows of FDI have brought in their wake fundamental changes in business attitudes and practices in Guangdong, and increasingly have acted as a catalyst in initiating structural changes in its economic system. Such are the bare bones of recent economic development in Guangdong. In what follows, we seek to highlight the salient aspects of this process against the background of institutional and policy adjustments since the early 1980s. After considering the economic signiÀcance of Guangdong vis-à-vis China and the four East Asian dragons, we will analyse the nature and impact of economic growth and structural change both within the province itself and relative to the country as a whole. We will also look at the roles of investment and foreign capital, foreign trade, and Guangdong’s links with Hong Kong. Finally, we will brieÁy assess the future prospects for the aspiring Àfth little dragon. The economic signiÀcance of Guangdong Province With a population of 65 million in 1992, Guangdong is the Àfth largest province in China, accounting for 5.5% of the national total. It is also one of the most densely populated provinces, its surface area of 0.18 million square kilometres constituting a mere 1.9% of the national Àgure. Table 4.1 shows that in terms of its population and land base, Guangdong is a much larger entity than the four East Asian dragons.4 But the economic gap between Guangdong and the other regions remains very wide.5 Unadjusted estimates of per capita gross domestic product (GDP) show the province lagging far behind—a Ànding which is not materially altered, if an adjusted “purchasing power parity” base estimate is substituted for the ofÀcial Àgure. The contrasts in terms of trade volume and intensity, which are based on original US dollar accounting and are therefore less problematic, are even more striking. This static picture conceals, however, the progress which the aspiring Chinese dragon has made since the early 1980s. The inherent difÀculties in making purchasing power parity estimates counsel caution in giving wholesale Guangdong Province Ascending as the “Fifth Dragon” 79 Table 4.1 Major Economic Measures in Guangdong Province and the Four Little Dragons Compared, 1978–1992 Population (million) Land (100 sq. km.) GDP (US$100 million) GDP/head (US$) Commodity trade volume (US$100 million) Exports Imports (1) (2) (3) (4) (5) (6) South Korea 43.66 990 2,939 6,732 752 773 Taiwan 20.75 360 2,049 9,925 815 720 Hong Kong 5.81 11 966 16,615 1,195 1,234 Singapore 2.82 6.4 460 16,331 616...


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