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1、1BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSBeyond a Mega City:Investing in Chinas Mega City ClustersA Definitive Guide to Chinas Most Investor-Friendly MegalopolisesDoing Business in China 2023 Series2BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThis guide in the Doing Bus
2、iness in China 2023 series was produced by a team of professionals atDezan Shira&Associates,with Zhou Qian and Arendse Huld as technical editors.Creative design of the guide was provided by Nguyen Hoang Linh,Miguel Enrico Anciano,and Aparajita Zadoo.2023 Dezan Shira&Associates DisclaimerThe contents
3、 of this guide are for general information only.For advice on your specific business,please contact a qualified professional advisor.Copyright 2023,Asia Briefing Ltd.No reproduction,copying or translation of materials without prior permission of the publisher is permitted.VISIT US ON FACEBOOKFOLLOW
4、US ON TWITTERDezanShiraChinaBriefingVISIT US ON LINKEDINTHE DOING BUSINESS IN ASIA GUIDES SERIESAvailable to Download Now:ASEAN Guide China Guide India Guide Indonesia Guide Hong Kong Guide Singapore Guide Vietnam Guide Dubai GuideDoing Business in China Portal-LAUNCHED NOW!Our latest online Doing B
5、usiness in China Portal consists of 100+guides,videos,publications,and tools that are practical and easy to navigate,covering:Why China,Regions to Invest,Sector Insights,How to Setup,Tax,Audit and Accounting,HR,Recruitment,PEO,and Payroll,News,Events,and more.3BEYOND A MEGA CITY:INVESTING IN CHINAS
6、MEGA CITY CLUSTERSAbout Dezan Shira&AssociatesDezan Shira&Associates is a pan-Asia,multi-disciplinary professional services firm,providing legal,tax and operational advisory to international corporate investors.Operational throughout China,India,and ASEAN,our mission is to guide foreign companies th
7、rough Asias complex regulatory environment and assist them with all aspects of establishing,maintaining,and growing their business operations in the region.With more than two decades of on-the-ground experience and a large team of lawyers,tax experts,and auditors,in addition to researchers and busin
8、ess analysts,we are your partner for growth in Asia.4BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSCONTACTDezan Shira&Associates Doing business in China has undergone significant changes in the past few years.While the country has been a magnet for foreign investment over the last three d
9、ecades and is expected to remain so in the foreseeable future,businesses operating in China now encounter mounting challenges.These challenges stem from the uneven recovery of Chinas economy,increasing geopolitical risks,and various internal and external headwinds.Given this,it is becoming increasin
10、gly crucial for executives to stay informed.Only those who align with Beijings policy priorities and can navigate Chinas increasingly complex operating environment will be able to identify risks in advance and swiftly seize new market opportunities.In other words,they will be better positioned to no
11、t only survive but also thrive in the worlds second-largest economy.Mega city clusters,also known as“megalopolises,”are the thrust of Chinas new urbanization plans and hold immense potential for foreign investment.These geographical concepts emerged in the 1980s,following Chinas reform and opening u
12、p.In the 14th Five Year Plan period(2021-2025),China made a strategic decision to prioritize the development of 19 mega city clusters across the country.Among them,four mega city clustersincluding the Yangtze River Delta,the Pearl River Delta(or the Guangdong-Hong Kong-Macao Greater Bay Area),the Be
13、ijing-Tianjin-Hebei(or Jing-Jin-Ji),and the Chengdu-Chongqing Economic Circleare of paramount importance and are receiving special attention from China for improvement.These four regions,covering just eight percent of Chinas land,contribute to over 50 percent of the countrys economic output and fore
14、ign investment.The well-established infrastructure,industrial supply chains,and coordinated development strategy of these regions are creating new investment frontiers with unparalleled convenience and advantages.Businesses with current operations in China or those considering expansion into this va
15、st market are strongly advised to thoroughly explore and understand the potential of these mega city clusters.In this guide,we offer a comprehensive introduction to the four mega city clusters,encompassing key parameters,such as economic performance,trade statistics,leading industries,preferential p
16、olicies,and Chinas developmental plans for each region.We hope this publication can enable foreign investors to gain a better understanding of the dynamics,priorities,and trends of the Chinese economy and take advantage of the opportunities presented by the next phase of Chinas urban,industrial,and
17、technological development.PrefaceALBERTO VETTORETTIManaging PartnerDezan Shira&AssociatesTable of Contents5BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSPreface04Part 1|Yangtze River Delta Region7Economic overview10Development of the YRD region12Foreign trade in the YRD region14Leading in
18、dustries of the YRD region16Preferential policies in the YRD region20Investing in Chinas most economically dynamic region23Part 2|Guangdong-Hong Kong-Macao Greater Bay Area24Economic overview26Development of the GBA28Foreign trade in the GBA30Leading industries in the GBA31Preferential policies in t
19、he GBA34Investing in the international first-class bay area36Part 3|Jing-Jin-Ji Economic Region38Economic overview40Development of the Jing-Jin-Ji region42Foreign trade in the Jing-Jin-Ji region43Leading industries in the Jing-Jin-Ji region46Preferential policies in the Jing-Jin-Ji region49Investing
20、 in the new era of the capital region50Table of Contents6BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSPart 4|Chengdu-Chongqing Twin City Circle51Economic overview53Development of the Twin City Circle55Foreign trade in the Twin City Circle55Leading industries in the Twin City Circle58Pote
21、ntial preferential policies in the Twin City Circle60Investing in western Chinas economic powerhouse62Part 5|Summary637BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSYangtze River Delta Region18BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Yangtze River Delta(YRD)region is i
22、n the lower reaches of the Yangtze River in China,bordering the Yellow Sea and the East China Sea.The YRD region includes the entire area of three provincesJiangsu,Zhejiang,and Anhui,as well as the city of Shanghaicovering an area of 358,000 square kilometers.By the end of 2022,the YRD region had a
23、permanent population of 237 million,accounting for 16.8 percent of Chinas total population.Respective areas in the region boast their own individual strengths.Shanghai is a logistics center and the Chinese Mainlands financial center;Jiangsu is a strong manufacturing base;Zhejiang has a strong privat
24、e sector and enterprises based here play an important role in the digital economy;and Anhui has an abundance of natural resources and a well-developed manufacturing ecosystem as well.As one of Chinas top-level city clusters,the YRD region is rightly considered a jewel in the crown of Chinas economic
25、 transformation.Unsurprisingly,the integration of the YRD has been elevated to a national strategy since 2018.The regional economy is advanced,innovative,and boasts of the highest degree of openness in the country.Currently,the YRD region accounts for about a quarter of Chinas total economic output,
26、one third of Chinas annual research and development(R&D)expenditure,one third of the number of invention patents in force in China,and one third of Chinas gross export,foreign direct investment(FDI),and outbound investment(ODI).Yangtze River DeltaAnhuiJiangsuShanghaiJiangsuZhejiang9BEYOND A MEGA CIT
27、Y:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Significance of the YRD Region in China3.72%35.8%1/320%58.3%26%1/31/340%29.8%25%46.2%40.1%16.8%24.0%of Chinas total sizeof Chinas total import and export in 2022of Chinas total ODIof Chinas national key laboratoriesof the scale of Chinas integrated circuit
28、 industryof Chinas annual invention patents obtainedof the scale of Chinas bioengineering and pharmaceutical industryof the scale of Chinas artificial intelligence industryof the first prize in State Science and Technology Awards of Chinas annual R&D expenses in 2021of Chinas“Double-First Class”univ
29、ersitiesof Chinas total goods import and export in 2021of Chinas total actual utilized FDI in 2022 of Chinas total populationof Chinas total GDP in 202210BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe largest city by GDP is Shanghai,with a total GDP of RMB 4.47 trillion(US$664.6 billio
30、n)in 2022,followed by Suzhou and Hangzhou,whose GDPs reached RMB 2.40 trillion(US$356.8 billion)and RMB 1.88 trillion(US$279.5 billion)in the same year,respectively.At the city level,Wuxi has the largest GDP per capita in the YRD region,reaching RMB 198,400(US$29,497)in 2022,followed by Suzhou and S
31、hanghai,at RMB 186,000(US$27,653)and RMB 180,400(US$26,820),respectively.The service sector is the largest driver of economic activity in the YRD,accounting for 55 percent of the regions GDP in 2022.That said,the YRD also has a strong secondary industry,which accounted for 41 percent of the regions
32、GDP in 2022.Economic overviewIn 2022,the GDP of the YRD region reached RMB 29.03 trillion(US$4.32 trillion),accounting for 24.0 percent of Chinas total GDP.The YRD regions total import and export amount grew by 27.7 percent in the past five years,from RMB 11 trillion(US$1.71 trillion)in 2018 to RMB
33、15.07 trillion(US$2.24 trillion)in 2022,accounting for 35.8 percent of Chinas total import and export amount.As for the FDI,in 2021,the foreign investment actually utilized reached RMB 104.26 billion(US$16.16 billion),accounting for 48.9 percent of the national total.Among the 41 prefecture-level ci
34、ties in the YRD region,27 are central-area cities,which are designed to play key roles in driving high-quality development of the region.The 27 central-area cities are:27 Central-Area Cities of the YRD RegionShanghai(1 city)Jiangsu(9 cities)Zhejiang(9 cities)Anhui(8 cities)1.Nanjing2.Suzhou3.Wuxi4.C
35、hangzhou5.Zhenjiang6.Nantong7.Yangzhou8.Yancheng9.Taizhou(泰泰)1.Hangzhou2.Ningbo3.Wenzhou4.Huzhou5.Jiaxing6.Shaoxing7.Jinhua8.Zhoushan9.Taizhou(台州)1.Hefei2.Wuhu3.Maanshan4.Tongling5.Anqing6.Chuzhou7.Chizhou8.Xuancheng11BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSYRD Region Profile 7 6108
36、24 2 94 3 1 57225232119NANTONG6GDPEXIMPOPFDIUS$169.2 BUS$54.5 B7.74 MUS$2.95 BCHUZHOU25GDPEXIMPOPFDIUS$53.7 BUS$6.3 B4.05 MUS$0.16 BTAIZHOU19GDPEXIMPOPFDIUS$89.8 BUS$41.2 B6.68 MUS$0.24 BNINGBO13GDPEXIMPOPFDIUS$233.5 BUS$188.4 B9.62 MUS$3.73 BCHANGZHOU4GDPEXIMPOPFDIUS$142.0 BUS
37、$48.0 B5.37 MUS$2.83 BTONGLING23GDPEXIMPOPFDIUS$18.0 BUS$9.9 B1.30 MUS$0.09 BJINHUA17GDPEXIMPOPFDIUS$82.7 BUS$104.4 B7.13 MUS$0.26 BTAIZHOU11GDPEXIMPOPFDIUS$95.2 BUS$2.9 B4.51 MUS$1.14 BSUZHOU5GDPEXIMPOPFDIUS$356.2 BUS$382.4 B12.91 MUS$7.42 BANQING24GDPEXIMPOPFDIUS$41.1 BUS$3.9 B4.16 MUS$0.04 BZHOUS
38、HAN18GDPEXIMPOPFDIUS$29.0 BUS$51.9 B1.17 MUS$0.27 BHANGZHOU12GDPEXIMPOPFDIUS$278.8 BUS$112.5 B12.38 MUS$7.81 BYANCHENG7GDPEXIMPOPFDIUS$105.3 BUS$3.1 B6.69 MUS$1.18 BCHIZHOU26GDPEXIMPOPFDIUS$16.0 BUS$1.7 B1.33 MUS$0.02 BHEFEI20GDPEXIMPOPFDIUS$178.6 BUS$53.7 B9.63 MUS$1.21 BJIAXING14GDPEXIMPOPFDIUS$10
39、0.2 BUS$65.4 B5.55 MUS$3.16 BSHANGHAI1GDPEXIMPOPFDIUS$663.9 BUS$623.0 B24.76 MUS$23.96 BYANGZHOU8GDPEXIMPOPFDIUS$150.6 BUS$16.4 B4.58 MUS$1.53 BXUANCHENG27GDPEXIMPOPFDIUS$28.5 BUS$3.3 B2.50 MUS$0.06 BWUHU21GDPEXIMPOPFDIUS$66.9 BUS$13.6 B3.73 MUS$0.45 BHUZHOU15GDPEXIMPOPFDIUS$57.2 BUS$24.2 B3.41 MUS$
40、1.58 BNANJING2GDPEXIMPOPFDIUS$251.4 BUS$93.5 B9.49 MUS$4.85 BShanghaiZhejiangJiangsuAnhui*Data are as of 2022.EXIM here refers to the total export and import trade amount,except for Shanghai and Hangzhou where it indicates only the total import and export amount of goods.FDI here refers to utilized
41、FDI in the current year.ZHENJIANG10GDPEXIMPOPFDIUS$74.6 BUS$2.3 B3.22 MUS$0.57 BWENZHOU28GDPEXIMPOPFDIUS$119.4 BUS$43.9 B8.32 MUS$0.61 BMAANSHAN22GDPEXIMPOPFDIUS$37.5 BUS$6.7 B2.19 MUS$0.14 BEXIMFDIUS$54.9 BUS$1.02 BSHAOXING16GDPPOP5.35 MUS$109.3 BWUXI3GDPEXIMPOPFDIUS$220.8 BUS$16.5 B7.49 MUS$3.83 B
42、Total area:358,000 kmTotal population:237 millionTotal GDP:RMB 29.03 trillion(US$4.32 trillion)Total utilized foreign capital:US$75.9 billionTotal import-export:RMB 15.07 trillion(US$2.24 trillion)12BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSDevelopment of the YRD regionThe breakneck d
43、evelopment of the YRD region has a modern history of just over 40 years.As early as in 1982,the State Council put forward the idea of establishing the YRD economic circle with Shanghai as the center,also referred to as the Shanghai Economic Area,covering 10 cities in Shanghai,Jiangsu province,and Zh
44、ejiang province.In the later few years,the Shanghai Economic Area experienced two expansions but was finally canceled in 1988.In 1990,the state Council once again put the integrated development of the YRD on the agenda.By 2003,the YRD city cluster covering 16 cities in Shanghai,Jiangsu province,and
45、Zhejiang province was formed.Then in 2016,Anhui province was added to the YRD region.In late 2018,the integration of the YRD region was officially announced as a national strategy when President Xi Jinping delivered a speech at the opening ceremony of the first China International Import Expo(CIIE)i
46、n Shanghai,now a national level trade event on the annual calendars of thousands of global firms.Finally in December 2019,the State Council rolled out the Master Plan for Integrated Regional Development of Yangtze River Delta(the YRD Master Plan),which provides a strategic roadmap to increase the re
47、gions integration level and competitiveness on a global scale by 2025.Among other priorities,the YRD Master Plan targets to foster a new pattern of coordinated development among regions by giving full play to the leading role of Shanghai,enhancing the strengths of Jiangsu,Zhejiang,and Anhui province
48、s,enhancing the integration level of metropolitan areas,and promoting the integrated development of urban and rural areas.Under this pattern,provinces and cities in the region will need to cooperate with each other and focus on their own comparative advantages so that duplication is avoided,areas co
49、mplement each other,and synergies are maximized.GDP Breakdown of the YRD Region by Industry Type,2022Province/CityPrimary industrySecondary industryTertiary industryShanghaiRMB 9.7 billionRMB 1,145.8 billionRMB 3,309.7 billionJiangsu provinceRMB 495.9 billionRMB 5,588.9 billionRMB 6,202.8 billionZhe
50、jiang provinceRMB 232.5 billionRMB 3,320.5 billionRMB 4,218.5 billionAnhui provinceRMB 351.4 billionRMB 1,858.8 billionRMB 2,294.3 billionYRD totalRMB 1,089.5 billionRMB 11,914.0 billionRMB 16,025.3 billion13BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSMeanwhile,the YRD Master Plan aims
51、to improve the regions role in the global supply chain and value chain and strive for high-quality development by building a regional innovation community,strengthening industrial division and cooperation,and further integrating industry with innovation.In particular,the YRD Master Plan targets to:B
52、uild 10 world-class manufacturing clusters,covering electronic information,biomedicine,aerospace,high-end equipment,new materials,energy conservation and environmental protection,automobile,green chemical,textile and clothing,and intelligent home appliance.Foster several internationally competitive
53、leading enterprises in 10 key areas,including integrated circuit(IC),new display,internet of things,big data,artificial intelligence(AI),new energy vehicles,life and health,large aircraft,intelligent manufacturing,and cutting-edge new materials.Layout of several future industries in 8 areas,includin
54、g quantum information,brain-like chips,third-generation semiconductors,next-generation AI,targeted drugs,immune cell therapy,stem cell therapy,and gene testing.Develop several platforms and clusters for 9 service sectors,including modern finance,modern logistics,science and technology services,softw
55、are and information services,e-commerce,cultural and creative,sports services,human resources services,and smart elderly care.Promote services,namely,R&D services,supply chain services,testing,global maintenance,general contracting,marketing,manufacturing digital services,industrial Internet,and ser
56、vices regarding energy saving.Explore new models of trans-regional cooperation in tourism and elderly care.ShanghaiZhejiangJiangsuAnhuiAdvantageAdvantageAdvantageAdvantageFunctionDevelopment pathDevelopment pathDevelopment path Chinas financial center Global logistics center Strong digital economy S
57、trong private economy Distinctive manufacturing features Abundance of natural resources Vast hinterland Strong manufacturing base Rich scientific and educational resources Promote the coordinated development of Wanjiang City Belt Construct the Hefei-Wuhu-Bengbu Independent Innovation Demonstration Z
58、one And build Anhui into a gathering place of emerging industries with important influence Develop the Shanghai-Nanjing Industrial Innovation Belt Construct the Independent Innovation Demonstration Zone in southern Jiangsu and Nanjing Jiangbei New Area Build Jiangsu into an advanced manufacturing ba
59、se with global influence Enhance Shanghais service function and core competitiveness Make Shanghai a global economic,financial,trade,shipping,and Promote the development of Hangzhou Bay Area,the Key Path,and the big metropolitan area Integrate and upgrade a number of agglomeration development platfo
60、rms Build Zhejiang into a highland of digital economy in Chinainnovation center Promote the export of Shanghais brand and management model to achieve high-quality development of the YRD High degree of openness Rich talent pool14BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSMoreover,the YR
61、D Master Plan stipulates that the cities in the region will jointly improve the regional infrastructure,deepen opening-up,improve the business environment,and establish a unified market,etc.For example,since 2019,the YRD has been starting to facilitate cross-provincial taxation for enterprises,short
62、ening the processing time of tax matters,and strengthening the sharing of taxpayers tax-related credit information among local government departments.Considering that the 14th Five Year Plan for National Economic and Social Development explicitly stipulates the YRD region as one of the five mega cit
63、y clusters to be further optimized and improved,and also emphasizes the“three historical missions”that President Xi envisions for the YRD in the dual circulation strategy of China,the integration of the YRD region is expected to be actively and continuously promoted as a top priority.Foreign trade i
64、n the YRD region As a world-class advanced manufacturing center and one of the most economically developed,open,and innovative regions in China,the YRD region plays an important role in Chinas foreign trade.In 2022,the YRD regions total import and export amount reached RMB 15.07 trillion(US$2.24 tri
65、llion),accounting for 35.8 percent of Chinas total.On the one hand,the YRD region has an active private economy,strong scientific and technological innovation vitality,and many high-end industries,so the foreign trade in the region is more resilient than others.On the other hand,the YRD region has t
66、he advantage of an industrial cluster,which can effectively reduce costs and improve product competitiveness.In addition,the advantages of logistics and ports in the YRD region have also laid the foundation for the steady growth of foreign trade in the region.Imports and Exports in the YRD Region,20
67、22Province/CityImportsExportsTotalShanghaiUS$368.2 billionUS$254.7 billionUS$623.0 billionJiangsu provinceUS$292.0 billionUS$517.6 billionUS$809.6 billionZhejiang provinceUS$186.0 billionUS$510.3 billionUS$696.3 billionAnhui provinceUS$41.1 billionUS$70.8 billionUS$112.0 billionYRD totalUS$887.4 bil
68、lionUS$1,353.5 billionUS$2,240.9 billion15BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe top 3 cities for foreign trade in the YRD region are Shanghai,Suzhou,and Ningbo.In 2022,the import and export value of these three cities reached RMB 8.0 trillion(US$1.2 trillion),accounting for 53
69、.3 percent of the YRDs total.Meanwhile,Wenzhou,the world-famous small commodities center of China,and seven other cities of the YRD saw over 20 percent growth in foreign trade in 2022.The regions major trade partners include the United States(US),the European Union(EU),ASEAN,Japan,Hong Kong,South Ko
70、rea,Russia,and countries in Africa and Latin America.YRDs Mechanical and Electronic Products Exports in 2022Province/City MEP exportsTotal exportsRatioShanghaiUS$162.0 billionUS$254.7 billion64%Jiangsu provinceUS$342.6 billionUS$517.6 billion66%Zhejiang provinceUS$227.9 billionUS$510.3 billion45%Anh
71、ui provinceUS$44.5 billionUS$70.8 billion63%YRD totalUS$777.0 billionUS$1,353.5 billion57%Top 4 Trade Partner of Shanghai in 2022Country/RegionImportsExportsTotalEUUS$76.0 billionUS$46.8 billionUS$122.8 billionUSUS$30.9 billionUS$46.8 billionUS$77.7 billionASEANUS$52.6 billionUS$31.5 billionUS$84.2
72、billionJapanUS$38.6 billionUS$20.0 billionUS$58.5 billionMechanical and electronic products(MEP)and new and high-tech products(NHP)are the YRD regions major exports,accounting for 57 percent and 27 percent of the regions total exports in 2022,respectively.Meanwhile,although the export market and cat
73、egory of the YRD cities have a high degree of homogeneity,each province/city has their own characteristics.For example,Shanghais top three MEP exports are electronic components,automatic data processing equipment and parts,and mobile phones,while Jiangsus top 3 MEP exports are electric appliance and
74、 electronic products,machinery and equipment,and transport machine,and Zhejiangs top 3 MEP exports are general mechanical equipment,electrical equipment,and auto parts.16BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSLeading industries of the YRD region With electronics,automobiles,and mod
75、ern finance being at the core,the YRD region is committed to becoming a globally influential science and innovation base and an important modern service industry and advanced manufacturing hub.Shanghai has well-established finance and education industries,Zhejiang province has mature textile,waste m
76、anagement,software,and service industries,and Jiangsu and Anhui provinces have strong advanced manufacturing industries,such as transportation equipment manufacturing and telecommunication equipment manufacturing.The YRD has also formed industrial clusters offering advantages in strategic emerging i
77、ndustries,such as IC,biomedicine,AI,and new energy vehicle industry.Key Industries in the YRD CitiesShanghaiFinance,shipping logistics,modern commerce and trade,information services,cultural creativity,tourism exhibition,automobile,electronic information,complete equipment,high-quality steel,petroch
78、emical and fine chemicals,biomedicine,IC,AI,new materialSuzhouElectronic information,equipment manufacturing(high-end equipment,aerospace,automobile and parts,new energy,etc.),biomedicine,advanced materialsNanjingElectronic information,petrochemical,automobile,steel,software and service outsourcing,
79、smart grid,wind power and photovoltaic,rail transit,IC,biomedicine,aerospace equipment,cultural industry,tourismHangzhouInternet industry,fintech,e-commerce,digital content,cloud computing,big data,visual intelligence(digital security),intelligent computing,network communication,smart home appliance
80、,intelligent equipment,modern textile,cultural industry,tourismNingboGreen petrochemical,energy-efficient and new energy vehicle,IC material and equipment,optical electronics,robot,intelligent forming equipment,high-end mould,rare earth magnetic material,intelligent household appliance,fashion cloth
81、ingJiaxingMicroelectronics,intelligent equipment,biomedicine,modern textile,new energy,new materials,automobileWuxiInternet of things,IC,biomedicine and medical devices,software and information technology service,high-end equipment,high-end textile and clothing,energy-saving and environmental protec
82、tion,automobile and auto parts,new materials(special steel,petrochemical,metal products,graphene,etc.)HefeiHousehold appliances,equipment manufacturing,panel display manufacturing,automobile and auto parts,agricultural products processing,photovoltaic,voice technology,public security,bio-manufacturi
83、ng,housing industrialization17BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSIntegrated circuits(IC)At present,the size of the IC industry in the YRD accounts for 58.3 percent of the country,among which the IC design,IC manufacturing,and IC sealing and testing account for 48.9 percent,47.2
84、 percent,and 78.4 percent of the country,respectively.Six of the top 15 cities in Chinas IC industry are located in the YRD region Shanghai,Wuxi,Hefei,Nanjing,Suzhou,and Hangzhou.In Shanghai alone,there are over 700 enterprises operating in the IC industry.Key players include Semiconductor Manufactu
85、ring International Corporation(SMIC),Huahong Group,ChangXin Memory Technologies(CXMT),JCET Group,etc.YRDs IC industry cluster accounts for 58.3%of the China totalIC designIC equipmentEDAIC materialIC manufacturingIC sealing and testing18BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSBiomed
86、ical industryThe YRD leads China in the biomedical industry.One-third of Chinas biomedical industrial parks are located in the YRD;70 percent of Chinas new drugs approved in the recent three years(2019-2021)come from the YRD;30 percent of Chinas pharmaceutical R&D enterprises are in the YRD;and seve
87、n of the top 30 institutions and universities in the field of biomedicine are in the YRD.By the end of 2020,of the 64 biomedical companies listed on the Science and Technology Innovation Board(STAR market),33 were from the YRD,accounting for more than 50 percent of the total,including 15 in Shanghai
88、.The YRD has leading enterprises in almost the whole supply chain of biomedicine in China.Key players include Fosun Pharma,United Imaging,Wuxi Pharma Tech,Tigermed,and Anke Bio,among others.Shanghai has prominent advantages in terms of the innovation chain R&D institutions,large experimental facilit
89、ies,clinical resources,innovation platforms,and international market relations,etc.,thereby forming a perfect biomedical innovation system and industrial cluster.Jiangsu offers the strongest industrialization advantages in China with local characteristics,such as innovative medicine in Suzhou,biopha
90、rmaceutical and vaccine in Taizhou(泰州),nucleic acid industry in Kunshan,gene industry in Nanjing,etc.Zhejiang has made great strides in the integration of manufacturing and the digital economy as demonstrated in the Hangzhou National Biological Industry Base and the Taizhou(台州)National Chemical Raw
91、Materials Base.Anhui also has well-respected expertise in traditional Chinese medicine.YRDs biomedical cluster accounts for 1/3 of the China totalJiangsuAnhuiZhejiangShanghai19BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSAI industryThe size of AI industry in the YRD accounts for about on
92、e-third of the country.Over 2000 YRD enterprises are engaged in the AI industry,accounting for around 30 percent of the national total.Among these enterprises,over 90 percent of them are engaged in AI applications in different scenarios;around 50 percent of them are engaged in AI technologies,such a
93、s computer vision and language processing;around 20 percent of them are engaged in AI basic technologies,such as AI chip,computer language,and AI algorithms.Key players include Sense Time,Hikvision,and iFLYTEK,among others.At the city level,Shanghai has the leading role in YRDs AI industry,accountin
94、g for over 50 percent of YRDs AI enterprises.Zhejiang and Jiangsu ranked the second and third in YRDs AI industry,accounting for 27 percent and 20 percent of the regions total,respectively.Anhuis AI industry is still at the early stage of development,accounting for only four percent of the regions t
95、otal enterprises.At the industrial application level,the AI industry in the YRD mainly focuses on finance,automobile and transportation,logistics,robotics,and other advanced manufacturing fields.Automobile industryHaving the most complete automobile production system in place,the YRD is home to one
96、of six automobile industry clusters in China.Centered in Jiangsu and Shanghai,the YRD hosts more than 100 industrial parks in the automobile sector with an annual industrial output value of more than RMB 10 billion(US$1.4 billion),including thousands of large scale enterprises,such as SAIC Motor,Gee
97、ly Group,Zotye Group,and Dongfeng Motor,etc.In 2022,the automobile output of Jiangsu,Zhejiang,Anhui,and Shanghai was 6.96 million units,accounting for 25 percent of the total vehicle production in China.In recent years,the YRD has been focusing on the development of new energy vehicles(NEVs).By far,
98、the YRD maintains the largest number of NEV production bases,producing over one-third of Chinas NEVs.Key players include Tesla,Nio,WM Motor,XPENG,etc.The YRD regions complete automobile supply chain continues to empower its auto industry.In 2022,37 of the top 100 Chinese auto parts enterprises were
99、located in the YRD region.Roughly 95 percent of Tesla Gigafactory Shanghais auto parts were sourced in China,with the YRD alone contributing over 50 percent of them.20BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSPreferential policies in the YRD regionPreferential trade and investment pol
100、icies in the free trade zonesSince 2013,China has set up 21 pilot free trade zones(FTZs)in seven batches,and the YRD has four of them.To be more specific,the Shanghai FTZ was established in September 2013 as Chinas first pilot free trade zone.Jiangsu FTZ was established in August 2019,in the sixth b
101、atch.Zhejiang FTZ and Anhui FTZ were established in September 2020,part of the seventh batch.All three YRD provinces and Shanghai have their own FTZs.Year FTZ was introduced 2001820192020HeilongjiangHebeiHenanShaanxiShandongJiangsuLiaoningZhejiangHubeiFujianGuangdongGuangxiYunnanChongqing
102、SichuanTianjinShanghaiBeijingHainanAnhuiHunanFTZs in China21BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThough the specific goals and policies of FTZs vary from one to another,in general,FTZs play an important role in modernizing Chinas business landscape and serve as areas where author
103、ities can experiment with pro-business regulation.Investment and trade policies are comparatively more preferential than non-FTZ areas.Among other advantages,FTZs have a liberalized policy for foreign investment in specific industries or industrial capabilities that are not yet widely available in C
104、hina.For example,foreign investors can invest in the field of market research and social surveys in the FTZs,while these two sectors are not open to foreign investment beyond the FTZs.Additionally,the customs clearance process is more streamlined within the FTZs,particularly regarding clearance decl
105、arations and payments.For instance,firms can declare several batches of goods on a single form and make a collective declaration for imports and exports of goods.This reduces clearance costs and increases declaration flexibility for firms.Moreover,FTZs usually have targeted tax,talent,investment,and
106、 financing policies to promote the development of the encouraged industries.For example,qualified AI,IC,biopharmaceuticals,and civil aviation enterprises in special areas of Shanghai Pudong can enjoy a reduced corporate income tax(CIT)rate of 15 percent;the Shanghai Lingang area provides a broad ran
107、ge of policy incentives for financial institutions,including various rewards and talent incentives;and Shanghai also provides incentives to foreign-funded R&D centers,including customs clearance facilitation for R&D supplies and a“green channel”for R&D talents.Supportive policies in the cross-border
108、 e-commerce comprehensive pilot zonesAs one of Chinas strongest regions in foreign trade,the YRD is always at the forefront of cross-border e-commerce(CBEC)development.It is not only home to Chinas first cross-border e-commerce comprehensive pilot zone(CBEC pilot zone),which was approved by the Stat
109、e Council to be established in Hangzhou,Zhejiang province in March 2015,but also home to 30 other CBEC pilot zones that were established during the period between 2016 and 2022.Now,the YRD region has in total 31 CBEC pilot zones,with one in Shanghai,five in Anhui,12 in Zhejiang,and 13 in Jiangsu.All
110、 prefecture-level cities in Zhejiang and Jiangsu provinces have been approved to establish their own CBEC pilot zones.The CBEC pilot zones offer advantages across all types of CBEC processing and administration,including convenient custom clearance,expedite logistics,simplified payment,and easier se
111、ttlement of foreign exchange and tax refunds.22BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSChina has provided a series of other supportive policies for CBEC pilot zones,including:The CBEC retail export enterprises in the CBEC pilot zones that meet the prescribed conditions shall be exem
112、pted from VAT and consumption tax even if they have not obtained valid purchase certificates for the goods.The export enterprises in the CBEC pilot zones that meet the prescribed conditions could be subjected to CIT collection upon verification(查账征收)and the deemed profit rate shall be at four percen
113、t.The CBEC retail export enterprises in the CBEC pilot zones that meet the prescribed conditions can apply for customs clearance facilitation policy.To improve the efficiency of customs clearance and reduce the cost of customs clearance,the customs will adopt the convenient measures of“checklist ver
114、ification,summary declaration”(清单核放,汇总申报)to carry out custom supervision.The CBEC retail imports will be subject to supervisions similar to goods imported for self-use of individuals.Traders are exempt from license,registration,or record-filing requirements for goods that are first imported in China
115、.Integrated tax services in the YRD regionOn December 4,2019,Chinas State Taxation Administration(STA)issued the Circular on the Measures Designed to Support and Serve the Development of the Regional Integration in the Yangtze River Delta(Shui Zong Han 2019 No.356).The Circular proposed 16 measures
116、to improve tax services for enterprises in the Yangtze River Delta,which include facilitating cross-provincial taxation for enterprises,shortening the processing time of tax matters,strengthening the interlocal sharing of taxpayers tax-related credit information,and boosting smart tax services with
117、the help of 5G,blockchain,and other technologies.Among the 16 measures,the first three tax measures aim to further ease the cross-provincial tax collection and management of enterprises in the delta region.Enterprises with a high tax credit rating of A or B relocating within the delta region will be
118、nefit from this as the local tax authorities of the two places within the delta region are supposed to automatically coordinate and handle the transfer of taxpayers information.The enterprise tax credit scores,end-of-period VAT credit,and other rights and interests can be retained and transferred to
119、 the relevant tax bureau in the place where the business has relocated to.In addition,taxpayers registered in one city can handle tax affairs at another city within the regions through the“electronic tax authority,”including payment of property tax and urban land use tax.23BEYOND A MEGA CITY:INVESTI
120、NG IN CHINAS MEGA CITY CLUSTERSInvesting in Chinas most economically dynamic regionThe YRD region,as one of most international and economically dynamic regions in China,has attracted over 40 percent of Chinas total FDI since“reform and opening up”in the 1980s.The YRD regions rich talent pool,advance
121、d development of science and technology,developed manufacturing sector,relatively complete supply chain network,and great market potential with a relatively dense and affluent population make it the first choice of many foreign investors who plan to invest in or sell to the China markets.Going forwa
122、rd,it will continue functioning as a key bridge for the circulation between China and the rest of the world,amid a slowing global economy and rising tensions with the US.The YRD Master Plan mentions that it will realize freedom in investment,trade,international transport,and facilitate entry and exi
123、ts for foreign talents.The key projects behind this goal would be building the Lingang New Area of Shanghai FTZ,boosting the development of Shanghai as an international financial center,and improving the business environment of the whole region to attract more multinational corporate headquarters an
124、d global talents.With YRD cities having a clearer understanding of their corresponding roles in the integrated development of the region and its industrial clusters,the YRD region will become an even more competitive and efficient investment destination for foreign investment.VIVIAN MAOPartnerShangh
125、ai Office“The Yangtze River Delta has been the first choice of many foreign investors to invest in or sell to the China markets,and will continue functioning as a key bridge between China and the rest of the world.”For professional assistance on location selection,business establishment,tax and acco
126、unting,IT,and compliance in the YRD,please email .SERVICESEXPLORE DETAILS24BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERS2Guangdong-Hong Kong-Macao Greater Bay Area25BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Guangdong-Macao-Hong Kong Greater Bay Area(GBA)is a mega city
127、cluster located in the Pearl River Delta in Chinas southern Guangdong province.The city cluster is comprised of nine cities on the Chinese mainland,including the manufacturing and technology powerhouses of Guangzhou and Shenzhen,and,as the name implies,the two special administrative regions of Hong
128、Kong and Macao.The GBA is one of Chinas largest and wealthiest city clusters,second only to the Yangtze River Delta region in eastern China.The area has been a core driver of Chinas explosive growth since the economic reform of the 1980s and 1990s.The metropolises of Guangzhou and Shenzhen have been
129、 the center of Chinas manufacturing and innovation power for decades,fostering some of Chinas biggest names in tech,real estate,manufacturing,and more.The Port of Shenzhen is the third busiest in China and fourth busiest in the world,handling around 278.4 million metric tons of cargo in 2021.Beyond
130、the skyscrapers of the megalopolises,the smaller cities of the GBA now present a myriad of new opportunities for foreign businesses and investors.Deeper integration of the area through government policy,improved transport infrastructure,and specialized capabilities and resources of the various areas
131、,means the smaller cities of the GBA are becoming increasingly attractive to foreign businesses and their staff.In addition,with one of the highest per-capita GDPs in the country,the area is home to a large and wealthy consumer base and highly educated workforce,making the cities attractive destinat
132、ions for foreign businesses to expand to the rest of the region and country.Greater Bay Area Hong Kong9 cities of GuangdongMacao26BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSEconomic overviewThe economy of the GBA has grown by RMB 2.8 trillion(US$416.3 billion)in the six years since the
133、 signing of the Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Greater Bay Area(the GBA Framework),reaching RMB 13 trillion(US$1.93 trillion)in 2022.That puts the regions GDP roughly on par with that of Canada and accounted for 11 percent of Chinas t
134、otal GDP in 2022,despite only occupying 0.6 percent of total land area.The largest city by GDP is Shenzhen,with a local GDP of RMB 3.2 trillion(US$480.8 billion)in 2022,followed by Guangzhou,which reached RMB 2.9 trillion(US$428.1 billion).The GBA also has the highest GDP per capita of any region in
135、 China,reaching US$22,585 in 2021.Greater Bay Area ProfileUS$188.5 BGDP9.55 MPOPUS$98.5 BEXIMUS$1.1 BFDIUS$53.9 BGDP4.43 MPOPUS$41.5 BEXIMUS$620 MFDIUS$2.5 BGDP4.8 MPOPUS$26.3 BEXIMUS$350 MNote:Data are as of 2022,except when otherwise indicated.EXIM refers to the export and import trade amount.FDI
136、refers to utilized FDI for mainland cities and FDI inflows for Hong Kong and Macao.FDIUS$60.1 BGDP2.47 MPOPUS$45.3 BEXIMUS$450 M(2021)FDIUS$17.9 BGDP0.67 MPOPUS$19 BEXIMUS$4.7 B(2021)FDIUS$363.4 BGDP7.3 MPOPUS$1,212.7 BEXIMUS$217.4 BFDIUS$480.8 BGDP17.7 MPOPUS$545.3 BEXIMUS$11 BFDI US$40.2 BGDP4.12
137、MPOPUS$5.7 BEXIMUS$164 MFDIUS$428.1 BGDP18.7 MPOPUS$162.5 BEXIMUS$8.6 BFDIUS$80.2 BGDP6.05 MPOPUS$45.9 BEXIMUS$1.5 BFDIUS$166.3 BGDP10.4 MPOPUS$206.7 BEXIMUS$1.2 BFDIFoshanZhongshanJiangmenZhuhaiHong KongMacaoShenzhenZhaoqingGuangzhouHuizhouDongguanTotal area:56,098 km2Total population:86.7 million(
138、2021)Total GDP:RMB 13 trillion(US$1.93 trillion)(2022)Total utilized foreign capital:US$153.74 billion(2021)Total import-export:US$3.5 trillion(2021)27BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe service sector is the single largest driver of economic activity in the GBA,accounting f
139、or 64.8 percent of the regions GDP in 2021.Broken down by city,the contribution of services to the local GDP varies greatly,however.On the upper end of the scale are Hong Kong and Macao,which derive over 90 percent of their GDP from services.Meanwhile,several cities are still heavily reliant on seco
140、ndary industries,with the manufacturing powerhouses of Dongguan,Huizhou,Zhongshan,and Foshan deriving over 50 percent of their GDP from the sector.Shenzhen and Guangzhou,which have shifted to an increasingly service-oriented economy over the last decade,also still have substantial manufacturing indu
141、stries,with secondary sectors accounting for 37 and 27.4 percent of the local GDP in 2021,respectively.Hong KongMacaoGuangzhouShenzhenZhuhaiZhongshanJiangmenFoshanDongguanZhaoqingHuizhou0%PrimarySecondaryTertiary25%50%75%100%GDP Breakdown of GBA Cities,2022Source:Municipal statistics bureaus,Macao S
142、tatistics and Census Service,Hong Kong Trade and Development Council.28BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe range of economic profiles in the GBA cities exemplifies the ultimate goal of the GBA development plans:to leverage the strengths of each area in a way that complements
143、 other regions,fostering overall regional development.For instance,in manufacturing-heavy cities,the focus will not solely be on increasing the share of services in the economy.Instead,there will be an emphasis on upgrading and modernizing secondary industries through technological innovation and de
144、velopment,in which the neighboring cities of Shenzhen and Hong Kong have excelled.For businesses,the GBA offers a diverse range of capabilities and infrastructure to tap into,creating an environment where various requirements in the supply chain can be fulfilled within the GBA itself.This includes e
145、verything from financing to R&D,manufacturing,and logistics.Development of the GBAThe GBA has a rich history of foreign investment thanks to the legacy of the Shenzhen Special Economic Zone(SEZ).The SEZ,established in 1980,was one of the first areas in China that opened up to and actively encouraged
146、 foreign investment,and marked the beginning of the wider region as a thriving international business and investment hub.The Origin of the GBAChina launched its policy of reform and opening-up under Deng Xiaoping.The NDRC promulgated the Outline of the Plan for the Reform and Development of the Pear
147、l River Delta(2008-2020)laying out the framework for the development of the Pearl River Delta.China initiated the development of the GBA as part of the countrys Belt and Road Initiative,and the Greater Bay Area entered the State lexicon for the first time.The combined GDP of the 11 cities in the PRD
148、 region was RMB 9.35 trillion(approx.US$1.38 trillion).Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Greater Bay Area signed.Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area released,providing a blueprint for the direction
149、,objectives,and action plan for the future of the GBA.5209BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSIn 2017,the National Development and Reform Commission(NDRC)signed the GBA Framework with the local governments of Guangdong,Hong Kong,and Macao.The GBA Framework
150、seeks to establish a“mutually complementary cooperation relationship”with the express goal of building upon each regions unique economic strengths.The GBA Framework lays out mechanisms for deepening economic ties between the different cities,including improving rail,air,and sea transport links,enhan
151、cing market integration,and promoting cross-regional collaboration and development.In 2019,the State Council released the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area(the GBA Development Plan),which details a strategy of shifting from intra-regional competition to coll
152、aboration through the development of productivity clusters.This plan emphasizes each citys respective industry focus and resource endowment to achieve complementary synergies.Unlike other bay areas around the world,the GBAs industrial diversification will allow it to compete in multiple sectors on a
153、 world-class level.For example,Hong Kong is known as a world financial center,Shenzhen is known as Chinas Silicon Valley because of its innovation and startup culture,Guangzhou is known for its manufacturing industry and as a logistics hub,and Macao and Zhuhai are known for leisure and tourism.The d
154、iversity of industries in the GBA region and high level of cooperation and integration between its respective regional markets thus provides a comprehensive ecosystem of infrastructure,talent,and resources required for industry and enterprise development.30BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA
155、 CITY CLUSTERSForeign trade in the GBAThe GBA is a huge trade hub,and many of the cities economies are driven by exports of locally manufactured goods.Total import-exports of the nine mainland GBA cities in 2022 reached almost US$1.2 trillion,accounting for around 95.6 percent of the total trade of
156、Guangdong province.The largest exporting city in the GBA 2022 was Hong Kong,with exports reaching US$581 billion,followed by Shenzhen with US$325.8 billion.Imports and Exports in the 11 GBA Cities,2022CityImportsExportsTotalHong KongUS$631.7 billionUS$581 billionUS$1.2 trillionShenzhenUS$219.6 billi
157、onUS$325.8 billionUS$545.3 billionDongguanUS$69.6 billionUS$137.2 billionUS$206.7 billionGuangzhouUS$70.6 billionUS$92 billionUS$162.6 billionFoshanUS$16 billionUS$82.6 billionUS$98.5 billionHuizhouUS$15.5 billionUS$30.4 billionUS$45.9 billionZhuhaiUS$16.7 billionUS$28.6 billionUS$45.3 billionZhongs
158、hanUS$7 billionUS$34.6 billionUS$41.5 billionJiangmenUS$4.8 billionUS$21.5 billionUS$26.3 billionMacaoUS$17.3 billionUS$1.7 billionUS$19 billionZhaoqingUS$1.7 billionUS$4 billionUS$5.7 billionNote:Numbers may not add up due to rounding.Source:Municipal statistics bureaus,Macao Statistics and Census
159、Service,Hong Kong Trade and Development Council.31BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSGuangdong province recorded strong trade numbers in 2022,although trade with some of its major partners fell.The top five trade partners of Guangdong in 2022 were:ASEAN,growing 9.1 percent to r
160、each RMB 1.35 trillion(US$201 billion)Hong Kong,decreasing 9.7 percent to reach RMB 1.1 trillion(US$156.2 billion)The US,growing 5.4 percent to reach RMB1 trillion(US$152 billion)The EU,growing 4.6 percent to reach RMB 965.9 billion(US$143.4 billion)Taiwan,growing 1.6 percent to reach RMB 645.3 bill
161、ion(US$95.8 billion)The bulk of Guangdongs imports and exports were mechanical and electrical products,which accounted for 67 percent of the total export value and 64.6 percent of the total import value.Among them,the value of exports of automatic data processing equipment and components thereof gre
162、w by 6.2 percent year-on-year,while the value of exports of household appliances and components decreased by 5.3 percent.Exports of integrated circuits also increased in value,up 8.8 percent year-on-year.Meanwhile,Hong Kongs largest trade partner in 2022 was the Chinese Mainland,with bilateral trade
163、 reaching HKD 4.6 trillion(US$593.6 billion).Of this,mainland exports to Hong Kong reached HKD 2.1 trillion(US$265.3 billion)and imports were HKD 2.6 trillion(US$328.3 billion).Hong Kongs other major trade partners in 2022 were:ASEAN,reaching a total of HKD 1.3 trillion(US$165.3 billion,of which imp
164、orts were HKD 934.4 billion(US$119.3 billion)and exports were HKD 351.7 billion(US$46 billion).Taiwan,reaching a total of HKD 741.6 billion(US$94.7 billion),of which imports were HKD 587.4 billion(US$75 billion)and exports were HKD 154.2 billion(US$19.7 billion).The EU,reaching HKD 523.8 billion(US$
165、66.9 billion),of which imports were HKD 211.2 billion(US$27 billion)and exports were HKD 312.6 billion(US$39.9 billion).The US,reaching HKD 502.1 billion(US$64.1 billion),of which imports were HKD 209.4 billion(US$26.7 billion)and exports were HKD 292.7 billion(US$37.4 billion).Leading industries in
166、 the GBAThe GBA boasts of one of the most dynamic and diverse industry landscapes in China.The traditional manufacturing sector,encompassing products like automobiles,electronics,and home appliances,remains robust and is rapidly undergoing modernization and automation.Concurrently,the high-tech indu
167、stry,centered in Shenzhen,stands at the forefront of global innovation and application,with segments like artificial intelligence and robotics not only upgrading traditional industries but also propelling the growth of emerging sectors.Moreover,the region possesses significant cultural capital and a
168、cts as a major attraction for tourists,contributing to the flourishing culture and entertainment industry,particularly in cities,such as Macao,Zhuhai,and Shenzhen,among others.32BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSKey Industries in the GBA CitiesHong KongFinancial services,touri
169、sm,trade and logistics,professional services,wholesale and retail,shipbuilding,electronicsMacaoGaming,tourism,electronics,light industry(textiles and garments,toys,footwear)GuangzhouAdvanced manufacturing,automobiles,electronics,petrochemicals,financial services,ships and marine engineering equipmen
170、t,nuclear power equipment,numerical control equipmentShenzhenHigh-tech,scientific R&D,artificial intelligence,financial services,electronics,automobiles,culture and exhibitions,trade and logistics,tourism,media,film and televisionFoshanWhite goods and electrical appliances,smart home appliances,adva
171、nced materials,robotics,automotives,technology,textiles,plasticsDongguanInformation technology,electronics,light industry(garment,footwear,toy,furniture manufacturing)JiangmenMotorcycles and auto parts manufacturing,textiles and garments,paper-making,shipbuilding,food,packaging materials,bathroom ac
172、cessories and sanitary hardware,printing,electromechanics.HuizhouPetrochemicals,new materials,electronics,automotive and equipment manufacturing,clean energyZhuhaiElectronic information,home appliances,electricity and energy,biopharmaceuticals and medical devices,petrochemicals,and precision machine
173、ry,tourismZhaoqingMining,modern agriculture and food production,electronic information,green petrochemicals,smart home appliances,automobiles,advanced materials,modern light industry and textilesZhongshanElectronic information,biomedicine,semiconductors,equipment manufacturing,light industry and tex
174、tiles33BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSManufacturingDespite the increase in the services sector as a proportion of GDP,manufacturing remains a mainstay industry in all nine mainland cities of the GBA.Major fields within the manufacturing industry are mechanical and electrica
175、l equipment,including home appliances,automatic data processing equipment and components,automotive and automotive components,high-end machinery,and integrated circuits,to name a few.Traditional light industries and the production of labor-intensive goods,such as toys,garments,shoes,and furniture al
176、so remain an important sector.The smaller GBA cities,such as Dongguan,Foshan,Zhongshan,Jiangmen,and Huizhou,also have strong manufacturing bases with focuses on various fields.Foshan,for instance,is home to over 3,000 electrical appliance factories,of which about half are foreign-owned,and produce a
177、bout 20 percent of the output of Chinas electrical appliance industry,while Jiangmen has large auto part,textiles,paper,and shipbuilding industries.TechnologyThe GBA is home to some of Chinas most innovative and successful technology companies,many of which are at the cutting edge of their respectiv
178、e fields.The center of the technology industry in the region is Shenzhen,often dubbed the Silicon Valley of China.The city has fostered some of Chinas most famous technology giants,such as Tencent,Huawei,and DJI,to name a few.Local governments in the GBA actively encourage the development of innovat
179、ive technology companies by providing preferential tax and investment incentives in certain development zones,as well as incentives to attract tech talent to the region and to foster the establishment of start-ups.FinanceThe GBA is home to a thriving financial industry,which today expands far beyond
180、 the financial hub of Hong Kong.The financial services industry in the nine mainland cities has grown significantly over the last couple of decades,and in 2021,the added value of Guangdongs financial industry exceeded RMB 1 trillion(US$143.8 billion)for the first time.The region also acts as a test
181、bed for the further opening of the financial industry to outside investors and for the internationalization of the RMB.The China-Hong Kong stock connect program was extended to incorporate the Shenzhen Stock Exchange in 2016,enabling investors from the mainland to buy shares from companies listed in
182、 Hong Kong and providing streamlined access for Hong Kong and international investors to invest in Chinese A-shares listed on the mainland.34BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSIn October 2021,the GBA launched the Wealth Management Connect,the first two-way investment mechanism
183、for individual investors in the region.Under the scheme,mainland residents of the nine Guangdong cities in the GBA are allowed to invest in certain products sold by banks in Hong Kong and Macao via the“southbound link”.Meanwhile,Hong Kong and Macao residents can invest in eligible products distribut
184、ed by mainland banks in the GBA via the“northbound link”.Furthermore,on May 15,2023,following an announcement from Hong Kong and Mainland Chinese authorities,the northbound leg of the Swap Connect was officially launched.The Swap Connect,which is the name given to the“mutual access between the Hong
185、Kong and Mainland Chinese interest rate swap markets”,is a mechanism that allows overseas investors to participate in the Mainland Chinese interest rate swap market,providing an important tool to hedge against interest rate risks.Preferential policies in the GBAThere are a range of preferential tax
186、and investment policies available to foreign investors in the GBA,including both region-wide policies and local incentives.Preferential IIT policiesTo attract global talent to the region,the nine mainland GBA cities have introduced preferential individual income tax(IIT)policy to lower the effective
187、 IIT rate to 15 percent.The policy is in place until 2023,during which time,the portion of the IIT that exceeds 15 percent of the taxable income paid by qualified and in-demand overseas talent will be refunded as fiscal subsidies.As there is no official nation-wide definition for“qualified”and“in-de
188、mand”overseas talent,eligibility is determined by each city to better meet local needs.Currently,the IIT system of the Chinese Mainland adopts a seven-level progressive rate,ranging from three percent to 45 percent,which is much higher than Hong Kongs salary tax and personal assessment,which is at a
189、 five-level progressive rate,ranging from two percent to 17 percent or a standard rate of 15 percent.This policy therefore seeks to lower the IIT rate and offset the difference with Hong Kong.Certain areas in the GBA have also extended this IIT policy for a longer duration and have implemented their
190、 own eligibility criteria for the foreign talent.HengqinIn January 2022,the Hengqin Guangdong-Macao Deep Cooperation Zone released details on the implementation of a reduced IIT policy for talent in the Hengqin Cooperation Zone.Both domestic and foreign high-end talent that is in demand in the Hengq
191、in Cooperation Zone are eligible for an IIT waiver for the portion of the tax burden on over 15 percent of their income.The policy will be implemented retroactively from January 1,2021 until December 31,2025.35BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe in-demand talent includes ski
192、lled talent working in the tech R&D and high-end manufacturing industries,core and management roles in culture,sports,tourism,exhibitions,business,and trade,the modern financial industry,among others.Preferential CIT policiesSeveral cities in the GBA have implemented a reduced corporate income tax(C
193、IT)rate for companies operating in“encouraged”industries.Chinas national CIT rate is 25 percent,and for industries operating in encouraged industries in certain areas of the GBA,the rate is typically reduced to 15 percent.The industries eligible for the reduced CIT rates also differ slightly from re
194、gion to region,but typically cover technology,high-end manufacturing,and modern services and finance industries.QianhaiQualified enterprises engaged in encouraged industries in the Shenzhen Qianhai Area can enjoy a reduced CIT rate of 15 percent from January 1,2021 to December 31,2025.Foreign-invest
195、ed enterprises(FIEs)can refer to the 2021 Version of the Catalogue for Encouraged Industries Eligible for CIT Preferential Treatment to check whether they are engaged in the encouraged industries.This catalogue covers 30 sectors under five broad industry categories modern logistics,information servi
196、ces,technology services,cultural and creative industries,and commercial services.To be eligible for the reduced CIT rates,companies must derive at least 60 percent of their revenue from one of the industries in the catalogue.On June 2,2022,the Shenzhen Municipal Government released a guide to determ
197、ining eligibility for the reduced CIT rate.HengqinQualified industrial companies located in the Hengqin Cooperation Zone can enjoy a reduced 15 percent CIT rate.To be eligible for this policy,the company must derive at least 60 percent of its main business income from one of the industries in the Gu
198、angdong-Macao In-Depth Cooperation Zone in Hengqin Corporate Income Tax Preferential Catalogue(2021 Edition).The catalogue includes 150 sectors across high-tech,science and education R&D,traditional Chinese medicine,tourism,modern services,finance,and more.They must also carry out a“substantive oper
199、ation”,which means that the actual management of the enterprise is located in the Hengqin Cooperation Zone and implements substantive and comprehensive management and control over the production and operation,personnel,accounting,property,and other aspects of the company.36BEYOND A MEGA CITY:INVESTI
200、NG IN CHINAS MEGA CITY CLUSTERSFor companies that are headquartered in the Hengqin Cooperation Zone,the 15 percent preferential CIT policy only applies to the income derived by the headquarters and any eligible subsidiaries that are also located within the zone.For companies that are headquartered e
201、lsewhere,the preferential CIT policy only applies to the eligible subsidiaries that are located within the zone.NanshaIn June 2022,the State Council issued a new plan for deepening cooperation between Guangdong,Hong Kong,and Macao,which includes a reduced CIT rate of 15 percent for companies engaged
202、 in encouraged industries.The reduced CIT rate will be applicable for companies situated in the Nansha area of the Guangdong FTZ,specifically Nansha Bay,the Qingsheng Hub,and the Nansha Hub.As in the other areas,to be eligible for the CIT rate,companies must derive at least 60 percent of its main bu
203、siness income from industries in the encouraged industries catalogue the Nansha Guangzhou Preferential Corporate Income Tax Catalogue(2022 Edition).They must also carry out substantial operations within the area,which means meeting certain requirements for their production,operation,personnel,accoun
204、ts,property,and so in the Nansha area of the Guangdong FTZ.Preferential policies for headquartering in the GBASeveral areas of the GBA offer incentives for multinationals to headquarter in the respective city or development zone.ShenzhenFor the establishment of headquarters of companies(subject to t
205、he requirements of The Implementations Measures for Encouraging the Development of Headquarters in Shenzhen),subsidies granted may be up to RMB 20 million(US$3 million).For financial enterprises headquarters,subsidies may be up to RMB 10 million(US$1.5 million)and 50 percent of support for relocatio
206、n costs.In the case of establishments of logistics companies,such aid may be around RMB 10 million(US$1.5 million),depending on the amount of registered capital of the company in question.Investing in the international first-class bay areaThe GBA is one of Chinas most investor-friendly areas with a
207、long history of foreign engagement.Its dynamic and comprehensive industry landscape offers an attractive base for companies seeking to streamline production and supply chains.37BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe allure of the GBA stems not only from its mature industries bu
208、t also from its wide and diverse talent pool.The regions capacity to attract highly skilled talent is expected to further improve as enhanced infrastructure allows for rapid commutes between cities,and talent policies facilitate seamless recruitment and relocation of employees across the region.Than
209、ks to the GBAs favorable policies,the region serves as an ideal destination for companies aiming to contribute to the development of key industries,especially high-tech sectors,and create new and innovative products and services.Additionally,the presence of a large and affluent local consumer base m
210、akes it an attractive point of entry to the Chinese market in its own right.CATHY GONGPartnerShenzhen Office“The GBA presents new opportunities for foreign investors as local jurisdictions roll out incentive policies for the development of various industries.”For professional assistance on location
211、selection,business establishment,tax and accounting,IT,and compliance in the GBA,please email .SERVICESEXPLORE DETAILS38BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSJing-Jin-Ji Economic Region339BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Beijing-Tianjin-Hebei Economic R
212、egion,known as the Jing-Jin-Ji Economic Region,is an economic city cluster comprised of the municipalities of Beijing and Tianjin and 11 cities in the surrounding Hebei province.The region,which is home to around 109 million people,is the center of economic activity in northern China and an area of
213、rapid industry growth and development.Each area within the Jing-Jin-Ji region has its own economic strengths in specific areas.Beijing is known as the political,educational,cultural,and R&D center of the region and China.Meanwhile,Tianjin acts as one of northern Chinas major logistics centers and tr
214、ade hubs,with one of the busiest ports in the world.The surrounding Hebei province has historically been known for its heavy industries,in particular steel production,but is now transforming into a hub for high-end manufacturing and technological innovation.Jing-Jin-Ji RegionHebeiTianjinBeijing40BEY
215、OND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSEconomic overviewIn 2022,the GDP of the Jing-Jin-Ji Region reached RMB 10 trillion(US$1.5 trillion),constituting approximately 8.2 percent of Chinas total GDP.Within the region,Beijing alone contributed 41.6 percent of this figure,achieving a GDP
216、 of RMB 4.2 trillion(US$617.7 billion)in the same year.Following closely,Tianjin accounted for 16.3 percent of the regions GDP,while Tangshan accounted for 8.9 percent.ZhangjiakouChengdeQinhuangdaoTangshanCangzhouLangfangHengshuiHandanXingtaiBaodingShijiazhuangTianjinBeijingPOP GDPEXIMFDIPOP GDPEXIM
217、FDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDIPOP GDPEXIMFDI4.1 MUS$26.4 BUS$815 MUS$74.2 M3.3 MUS$26.4 BUS$329.5 MUS$19.2 M3.1 MUS$28.3 BUS$6.7 BUS$92.1 M7.7 MUS$132.1 BUS$22.9 BUS$262.2 M7.3 MUS$65.2 B
218、US$7.2 BUS$48.3 M5.0 MUS$53 BUS$8 BUS$563.3 M2.3 MUS$26.7 BUS$3.9 BUS$25.2 M9.3 MUS$64.5 BUS$5 BUS$130 M7.0 MUS$37.8 BUS$3.3 BUS$75.7 M9.1 MUS$57.6 BUS$6.6 BUS$41.7 M11.2 MUS$105.4 BUS$18.3 BUS$294 M13.6 MUS$242.1 BUS$125.4 BUS$6.0 B21.8 MUS$617.7 BUS$541 BUS$17.4 BJing-Jin-Ji Economic Region Profil
219、eBeijing*Data are as of 2022.EXIM refers to the export and import trade amount.FDI refers to utilized FDI in the current year.TianjinHebeiTotal area:217,156 kmTotal population:108.6 millionTotal GDP:RMB 10 trillion(US$1.5 trillion)Total utilized foreign capital:US$32.4 billion(2021)Total import-expo
220、rt:RMB 5.05 trillion(US$749.6 billion)41BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe region as a whole is still heavily dependent on secondary industries,although this dependence is not equally distributed across the different cities.In addition,the services sector has continued to i
221、ncrease in proportion over the last decade.In 2022,services accounted for 83.9 percent of Beijings local GDP.By contrast,in Tangshan,secondary industries accounted for 55.4 percent of the local GDP,while services accounted for 37.5 percent.Actual use of foreign capital in the Jing-Jin-Ji region reac
222、hed US$25 billion1 in 2022,of which around 70 percent(US$17.4 billion)was poured into Beijing.The second largest recipient was Tianjin with US$6 billion,followed by Langfang with US$563.3 million.1.In 2022,some cities of the Jing-Jin-Ji region,such as Tangshan,revised its statistic method for foreig
223、n investment,so that the 2022 actual use of foreign capital data is not directly comparable to the previous years data.PrimarySecondaryTertiaryBeijingTianjinShijiazhuangBaodingXingtaiHandanHengshuiZhangjiakouChengdeQinhuangdaoTangshanLangfangCangzhou0%25%50%75%100%GDP Breakdown of Cities in Jing-Jin
224、-Ji,2022Source:Municipal statistics bureaus.42BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSDevelopment of the Jing-Jin-Ji regionThe National Development and Reform Commission(NDRC),Chinas macroeconomic planner,first proposed the Jing-Jin-Ji project over a decade ago,and the concept later
225、 appeared in the 12th Five Year Plan(2011-2015).Recent years have seen accelerated integration plans as the region seeks to leverage and integrate the advantages of the various city to create a synergistic relationship,improve development and productivity,avoid redundancy.The Jing-Jin-Ji project see
226、ks to rebalance resources within the region to create more optimal production and even development.This includes optimizing industries where there is overcapacity and adapting different areas according to their current strengths.The region is also one of the core drivers of Chinas next stage of econ
227、omic development:moving up the value chain.For Hebei province,a key task under the project is to move away from heavy polluting industries by upgrading and modernizing its industrial base.For Tianjin,it is in the process of becoming an R&D center for manufacturing and a pilot area for financial inno
228、vation and reform.Tianjins FTZ will benefit from policy pilot programs and looser restrictions.Meanwhile,Beijing has already begun transferring some non-essential industries that do not enjoy a comparative advantage,including factories and wholesale markets,to Tianjin and Hebei.The decision to trans
229、fer non-essential resources out of Beijing is in part also to alleviate the“urban diseases”the city is facing,such as congestion and air pollution.Due to its legacy of heavy industries,cities in Hebei have been some of the most polluted in China.To improve the air quality and make the wider regions
230、economic development more sustainable,Hebei province was designated as an important ecological protection area,with national and forest parks surrounding the capital.To this end,President Xi Jinping announced the creation of the Xiongan New Area in 2017,a new development zone in Hebeis Baoding city,
231、which is set to host many of Beijings“non-capital functions”.According to the Xiongan government,more than 240 key projects completed a cumulative investment of over RMB 510 billion(US$75.7 billion)in 2022.A significant number of projects for the new region were launched in February of the same year
232、.These include three industrial park projects intended to serve Chinas three major telecom operators,namely China Telecom,China Mobile,and China Unicom,as well as the first batch of projects functional to Chinas centrally administered state-owned enterprises(SOEs).These examples can all be considere
233、d as part of the greater plan to shift Beijings functions not necessary to its role as the capital to Xiongan New Area.Another one of the roles of Xiongan is to transform into an eco-friendly smart area.To work towards greater sustainability,the region has coordinated its environmental management wi
234、th the wider region,including with the Jing-Jin-Ji Plan for Prevention and Control of Air Pollution.China also recently announced that it aims for Xiongan to run on 100 percent renewable energy.43BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Jing-Jin-Ji project also aims to foster mor
235、e inclusive and equitable economic development in the region.Social and public services,such as hospitals and education facilities,will be developed outside of Beijing,focusing on areas that are generally less affluent than the capital city.In the case of Hebei,the development of these services will
236、 contribute to the provinces industrial upgrading and modernization efforts.These new urban centers outside of Beijing will act as“urbanization demonstration areas”,opening up opportunities for businesses that are able to offer innovation in improving social and public services and easing urban tran
237、sitions.Foreign trade in the Jing-Jin-Ji regionThe Jing-Jin-Ji region is the largest trade hub in northern China,home to four ports Port of Tianjin,Port of Tangshan,Port of Qinhuangdao,and Port of Huanghua near Cangzhou.The Port of Tianjin is the largest in northern China and ninth biggest in the wo
238、rld,handling around 549 million metric tons of cargo in 2022.Overall trade in the Jing-Jin-Ji region reached RMB 5.05 trillion(US$749.6 billion)in 2022,a year-on-year increase of 13.7 percent.This growth rate outpaced the national average by six percentage points and accounted for 12 percent of Chin
239、as total trade that year.Total imports to the region reached US$555 billion while exports reached US$194 billion.Imports to the region accounted for 32 percent of the countrys total in 2022.The Port of Tianjin is the main maritime export port for the city of Beijing,which is the largest city by trad
240、e in the region.Beijings imports and exports reached RMB 3.6 trillion(US$541 billion)in 2022,an increase of 19.7 percent from the previous year.Tianjin was the second largest city in the region by trade,with imports and exports totaling RMB 844.9 billion(US$125.4 billion)in 2022,decreasing 1.4 perce
241、nt year-on-year.Tangshan,also a major trading city thanks to its strong manufacturing industry and access to the port,was the third largest city by trade volume in the region,with total trade volume valued at RMB 154 billion(US$22.9 billion),showing a year-on-year growth rate of 8 percent.44BEYOND A
242、 MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSImports-Exports of Cities in the Jing-Jin-Ji Region,2022CityImportsExportsTotalBeijingUS$453.6 billionUS$87.4 billionUS$541 billionTianjinUS$69 billionUS$56.5 billionUS$125.4 billionShijiazhuangUS$6.4 billionUS$11.9 billionUS$18.3 billionBaodingUS$592
243、.3 millionUS$6 billionUS$6.6 billionXingtaiUS$313.2 millionUS$3 billionUS$3.3 billionHandanUS$1.1 billionUS$3.9 billionUS$5 billionHengshuiUS$206.3 million)US$3.7 billionUS$3.9 billionZhangjiakouUS$130.6 millionUS$684.3 millionUS$815 millionChengdeUS$68.3 millionUS$261.3 millionUS$329.5 millionQinhu
244、angdaoUS$2.6 billionUS$4.1 billionUS$6.7 billionTangshanUS$13.7 billion)US$9.1 billionUS$22.9 billionLangfangUS$4.9 billionUS$3.1 billionUS$8 billionCangzhouUS$2.8 billionUS$4.4 billionUS$7.2 billionNote:Numbers may not add up due to rounding.Source:Municipal statistics bureaus.45BEYOND A MEGA CITY:
245、INVESTING IN CHINAS MEGA CITY CLUSTERSMain traded commoditiesIn 2021,crude oil,metal ores and mineral sands,automobiles,natural gas,and grains ranked among the top five imported commodities in the Jing-Jin-Ji region.These commodities saw a significant increase in import value compared to the previou
246、s year,with the import of crude oil,metal ores and ore sand,and natural gas together boosting the growth rate of the regions overall import value by 15.6 percentage points over the same period.The growth is attributed in part to the rise in commodity prices globally.Meanwhile,refined oil,pharmaceuti
247、cals,steel,mobile phones and electronic components were among the top five export commodities,with the export of these goods increasing by 10.4 percentage points in value in 2021.In Tianjin alone,the export of medical materials and medicine increased by a whopping 136.9 percent,indicating increasing
248、 competitiveness in the citys biopharma space.In Beijing,the main export commodities by value in 2022 were refined oil,electronics,and high-end technology products,which reached a total export value of US$4.9 billion,US$3.1 billion,and US$1.7 billion,respectively.Meanwhile,Beijings main imports incl
249、uded crude oil(US$17.1 billion),electronics(US$6 billion),natural gas(US$3.3 billion),and agricultural products(US$2.6 billion).Tianjins main import and export commodities were mechanical and electrical products.In 2022,Tianjin Port exported a total of RMB 421.6 billion(US$62.6 billion)in mechanical
250、 and electrical products,accounting for 39.8 percent of the total export value from the port that year.The port is also the countrys largest exporter of steel,with steel exports growing 37.6 percent year-on-year to reach RMB 232.8 billion(US$34.6 billion)in 2022.The city imported a total of 280,000
251、automobiles in 2022.This makes the city the second-largest importer of automobiles by volume in the country,and largest by value,with a total import value of RMB 119.1 billion(US$17.7 billion).Imports of agricultural products broke through the RMB 200 billion mark,reaching RMB 209.8 billion(US$31.1
252、billion),an increase of 34.4 percent year-on-year.Main trade partnersIn recent years,the trade of the Jing-Jin-Ji region with its top three trade partners has continued to grow.The EU stands as the regions largest trade partner,with imports and exports contributing to approximately 14 percent of the
253、 total trade value.Simultaneously,ASEAN accounted for approximately 10 percent of the overall trade,and the US accounted for around 10 percent as well.Notably,trade with the US experienced significant growth of 37.8 percent year-on-year in 2021,representing the most substantial increase among major
254、trade partners.The main trade partners remain mostly consistent across the region.Both Tianjin and Beijings largest trade partners were the EU,US,and ASEAN.Other major trade partners include Australia,South Korea,Japan,and countries along the“Belt and Road”,which cover a broad range of countries,inc
255、luding 16 in western Asia,nine in southern Asia,and five in central Asia.46BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSLeading industries in the Jing-Jin-Ji regionThe Jing-Jin-Ji region is home to a diverse array of industries,and the overall composition is rapidly diversifying and mode
256、rnizing.Key Industries in the Jing-Jin-Ji CitiesBeijingTechnology,software services,financial services,petrochemical,pharmaceutical,R&D,new energy vehicles,education,tourism,professional servicesTianjinAutomobile manufacturing,machinery manufacturing,aviation,electronics,light industry,alcohol,touri
257、sm,professional servicesShijiazhuangNew generation information technology,new energy vehicles,biopharmaceuticals,finance,LED,probiotics,paper products,textiles,aluminum and ironBaodingHigh-end equipment manufacturing,petrochemical(biogas),hydrogen energy,new energy,auto components manufacturing,e-co
258、mmerce,general aviation,eco-tourismXingtaiNew materials,dairy,medical equipment,advanced energy conservation technology,smart logistics,new energy vehicles and connected vehiclesHandanHigh-end white goods,hydrogen energy equipment,equipment manufacturing(automatic packaging machines,white goods,trac
259、tors),OLED,petrochemical,biopharmaceuticalHengshuiEquipment manufacturing(energy storage equipment,robots,smart AFS systems,etc.),prefab building materials,new material biopharmaceutical,e-commerce,petrochemical,textilesZhangjiakouNew energy and smart grid,high-end manufacturing,modern logistics,cer
260、amics,modern agriculture,mineral waterChengdeNew steel materials and components thereof,clean new energy,new energy vehicles and components,engine manufacturing,culture tourismQinhuangdaoBiopharmaceutical,new energy and smart grid,equipment manufacturing,food and beverage,building materials,steel,te
261、xtiles and garmentsTangshanEquipment manufacturing,information technology,new energy and smart grid,new materials,advanced energy conservationLangfangHigh-end manufacturing(robots,smart equipment),modern services(headquarters,business services),new generation information technology(internet+,cloud c
262、omputing),smart home furnishings and appliances,aviationCangzhouMetal 3D printing,food and beverage,biopharmaceutical,petrochemicals,new energy vehicles and connected vehicles,rail transit equipment manufacturing,auto components,aerospace engines47BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLU
263、STERSHigh-end manufacturingManufacturing remains a significant and vital industry in the Jing-Jin-Ji region,particularly in the Hebei area.The industry has experienced rapid modernization,primarily due to a focused effort on innovation and increased investment in technological capabilities.Notably,d
264、uring the period of the 13th Five Year Plan(2016 to 2020),the provinces investment in R&D of manufacturing enterprises above designated size grew by an average of 11.9 percent annually.Currently,the region places emphasis on high-end,intelligent,and green manufacturing.Industrial technology and equi
265、pment continue to improve,leading to substantial enhancements in productivity.The proportion of added value of high-tech industries in the overall added value of industries above designated size has risen from 16 percent in 2015 to 19.4 percent in 2020.Furthermore,the proportion of production capaci
266、ty of the top 15 iron and steel enterprises in the province has increased from 54.2 percent in 2015 to 76 percent in 2020.Among the manufacturing sectors,the automobile manufacturing industry has become the largest in the regions equipment manufacturing sector,while products like industrial robots a
267、nd wind turbines have witnessed notable growth.The density of industrial robots in key industries has reached 120 units per 10,000 people.Technology and innovationBeijing is the center of the regions technology industry and has rapidly developed into a technological superpower.Supported by an excell
268、ent higher education system and research credentials,as well as active government backing,the city has become a world leader in AI and advanced manufacturing.Beijing frequently appears in the top tier of rankings for innovation ecosystems.It boasts of a mature start-up ecosystem and has become a key
269、 incubator for tech unicorns,which numbered 98 at the end of 2022,according to start-up database IT Juzi.There are currently well over a thousand AI-focused businesses in Beijing.Zhongguancun Science Park,located the citys northwest district of Haidian,is the center of most of these technological in
270、novation activities,both in terms of start-up growth and corporate research and development.Some of the citys most well-known tech accelerators and incubators are based in this area,including Innovation Works,Legend Star,Tsinghua University Science Park,and Microsoft Accelerator.Moreover,to help Chi
271、na become the worlds leading AI power in the near future,the regional Beijing administration has invested US$2.1 billion in building an AI innovation park in Zhonggcuancun.The center will be able to house up to 400 AI start-ups once constructed.The project will be finalized by 2024.48BEYOND A MEGA C
272、ITY:INVESTING IN CHINAS MEGA CITY CLUSTERSUnder the Jing-Jin-Ji regions development plan,Tianjin will act as the center of R&D and innovation.The city is among the worlds top 25 cities for scientific research output as tracked by the Nature Index and ranks third in China by R&D expenditure after Bei
273、jing and Shanghai.It is home to multiple notable institutes of higher education in northern China,including Tianjin University,Nankai University,and Tianjin University of Technology.In 2014,the total turnover of technology contracts exported from Beijing to Tianjin and Hebei was RMB 8.32 billion(US$
274、1.2 billion),which increased to RMB 35.04 billion(US$5 billion)in 2021,an average annual growth rate of 22.8 percent.Aviation industryThe Jing-Jin-Ji region stands as Chinas northern aviation powerhouse,and part of its development plan involves creating a“world-class airport cluster”by integrating t
275、he services and capabilities of various airports in the region.There are several major airports in the region,including the newly completed Beijing Daxing International Airport,Tianjin Binhai International Airport,and Shijiazhuang Zhengding International Airport.Through this integration,they have op
276、timized the use of resources.For example,the Civil Aviation Beijing Terminal Control Center now coordinates and commands the operation of mid-and low-altitude flights at Beijing Capital Airport,Beijing Daxing International Airport,and Tianjin Binhai International Airport.In the future,it will also o
277、versee Shijiazhuang Zhengding International Airport.Tianjin serves as the center of the regions aviation industry,boasting significant production,assembly,R&D,and service capabilities.In the first five months of 2022,the industrial output of Tianjins aviation production chain reached RMB 5.79 billio
278、n(US$831.7 million),marking a 15.4 percent increase from the same period the previous year.Additionally,Airbus,the European aircraft manufacturer,commenced the assembly of its A321 single-aisle aircraft at its final assembly line in Tianjin in 2022.Furthermore,Tianjin is becoming the regions logisti
279、cs hub.In 2021,the Tianjin branch of China Post Group signed a strategic cooperation agreement with Tianjin Binhai International Airport to expand the scale of international mail transit through the airport.This move aims to allow the airport in Tianjin to share some of Beijings freight load and con
280、tribute to Chinas international aviation logistics capacity.Pharmaceuticals and biotechnologyAs mentioned above,the region is a major exporter of medical materials and pharmaceuticals,with Tianjin experiencing rapid growth in the sector.The citys pharma industry is centered in the Tianjin Economic a
281、nd Technological Development Zone in the Binhai New Area.In 2021,the annual output value of the pharmaceutical industry in the development zone reached RMB 40.46 billion(US$5.8 billion),contributing more than 50 percent to the industrial growth of the development zone.The zone is home to over 400 49
282、BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSbiopharmaceutical companies which form a complete industrial system covering biopharmaceuticals,digital medicine,traditional Chinese medicine and natural medicines,cellular medicines and genetic diagnostics,and biological materials.However,Tia
283、njin is not the only city with a thriving biomedicine industry.The Beijing-Cangzhou Bohai New Area Biomedical Industrial Park,first approved in 2016,is situated in the Bohai New Area of Cangzhou city.The park has signed 160 projects with a total investment of RMB 48.7 billion(US$7 billion).These pro
284、jects include 13 listed companies,61 high-tech enterprises,seven foreign-invested enterprises.It has also signed 98 Beijing projects with a total investment of RMB 27.4 billion(US$3.9 billion).Well-known pharmaceutical companies in the park include the wholly US-owned FibroGen,the Sino-Japanese join
285、t venture Beijing Continent Pharmaceuticals,Tianjin Pharmaceutical Group,and CR Double Crane.In the future,the park will focus on the development of high-end raw materials,pharmaceutical preparations,modern Chinese medicine,and the general health industry,among others.Preferential policies in the Ji
286、ng-Jin-Ji regionThe Jing-Jin-Ji region offers a range of incentive policies for companies that make contributions to the regions industrial and economic development.These incentives are usually available only in specific development zones,and are often geared toward industries that the authorities a
287、re seeking to grow,such as technology and digitalization.Below we list a few of the incentives available for companies in the region.Incentives for technology and digital companies in the Xiongan New AreaIn order to boost technological development and innovation,the Xiongan New Area has rolled out a
288、 range of incentive policies for companies.In 2022,the areas local government launched a series of measures to promote the development of“specialized,unique,and new”companies and core industries in the digital economy.The measures include discounts on loans,subsidies for the leasing of office spaces
289、,and even one-time rewards for companies that meet the eligibility criteria and move to the area.There are a wide range of subsidies and benefits available and include up to RMB 50,000(US$7181.84)in subsidies for office leases and rewards of up to RMB 6 million(US$861,821)for economic contributions
290、to the area.To be eligible,the company needs to be established in the area and generally must meet certain funding,R&D expenditure,and talent requirements.Incentives in the Beijing Economic and Technological Development ZoneIn January 2022,the Beijing Economic and Technological Development Zone in Y
291、izhuang district of Beijing introduced a new set of measures aimed at promoting the development of an“international science and technology innovation center”within the zone.50BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThese measures encompass financing incentives for companies undertak
292、ing projects that facilitate the relocation of industries from Beijing.Specifically,companies engaging in such projects will receive 50 percent financing for their R&D expenditure.Additionally,certain new“little giant”companies will receive 20 percent financing for their R&D expenditure.Moreover,one
293、-time financial rewards are available for specific companies and innovation and R&D centers.For national-level innovation centers,laboratories,and engineering research centers that have newly entered the development zone,the reward is RMB 10 million(US$1,436,368).New“Beijing-level”technology innovat
294、ion centers,scientific research and development institutions,and engineering research centers will receive a reward of RMB 1 million(US$143,636).Investing in the new era of the capital regionThe Jing-Jin-Ji region offers an optimal location for companies that are looking to be located in the proximi
295、ty of Chinas political and economic center without having to pay the higher labor and rent costs of the city.The strong logistics infrastructure in the form of airports,seaports,and dense train networks greatly facilitates the sourcing and transport of commodities,as well as exports.In addition,the
296、comprehensive industry structures and mature supply chains for many sectors mean that much of the sourcing and production can be carried out in the same region,helping to increase productivity and better utilize resources.The rapid growth of new industries in the region and upgrading of traditional
297、sectors also presents a range of new opportunities for investors seeking to enter China.With the widespread restructuring and reform that the region is undergoing,there are a host of opportunities for companies that will contribute to the regions development.HANNAH FENGPartnerBeijing Office“The Jing
298、-Jin-Ji region offers an optimal location for companies that are looking to be located in the proximity of Chinas political and economic center.The rapid growth of new industries in the region and upgrading of traditional sectors also presents a range of new opportunities.”For professional assistanc
299、e on location selection,business establishment,tax and accounting,IT,and compliance in the Jing-Jin-Ji region,please email .SERVICESEXPLORE DETAILS51BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSChengdu-Chongqing Twin City Circle452BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERS
300、The new Chengdu-Chongqing Twin City Circle(Twin City Circle)is the fourth economic city cluster to be built in China and the first in the west of the country.The Twin City Circle covers an area of 185,000 square meters and is divided into the Chongqing and Sichuan areas.The Chongqing area includes a
301、ll nine districts of the Chongqing city center and a further 20 suburban districts and counties.Meanwhile,the Sichuan area covers the provincial capital of Chengdu and 14 sub-provincial cities in Sichuan,including Mianyang,the second-largest city in the province and an emerging technology hub,and th
302、e major manufacturing cities of Nanchong and Deyang.This region has had a pivotal role in the development of western and southwestern China and is the center of western Chinas economic activity.In 2019,the Twin City Circle was officially given an economic cluster designation on par with the Guangdon
303、g-Hong Kong-Macao Greater Bay Area,the Beijing-Tianjin-Hebei Metropolitan Region,and the Yangtze River Delta Economic Zone.The project aims to address developmental imbalances by integrating two of the most economically active cities in western China Chongqing and Chengdu into a mega city cluster,fo
304、cusing on developing key infrastructure and industries.If successful,the Twin City Circle will help to cultivate new opportunities for an area with considerable developmental potential,while greatly facilitating the movement of people and goods across the region.It will also help create an economic
305、corridor to access more remote and isolated parts of China,such as Tibet and northwestern China,and act as a trade hub for the region with Central Asia,Europe,and South Asia.ChongqingChengduChongqing-Chengdu Twin City Circle53BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSChongqing-Chengdu
306、 Twin City Circle ProfileCHINAChongqingChengduTotal Area:185,000 km2Total Population:97 millionTotal GDP:RMB 7.76 trillion(US$1.2 trillion)Chongqing areaGDP:RMB 2.6 trillion(US$370.9 billion)(2021)City districts:Yuzhong,Jiangbei,Nanan,Jiulongpo,Shapingba,Dadukou,Beibei,Yubei,Banan Suburban counties
307、and districts Wanzhou,Fuling,Qijiang,Dazu,Qianjiang,Changshou,Jiangjin,Hechuan,Yongchuan,Nanchuan,Bishan,Tongliang,Tongnan,Rongchang,Liangping,Fengdu,Dianjiang,Zhong,Kaizhou(partial),Yunyang(partial)Sichuan area GDP:RMB 4.8 trillion(US$689.4 billion)(2021)Cities:Chengdu,Zigong,Luzhou,Deyang,Mianyang
308、(excluding Pingwu and Beichuan counties),Suining,Neijiang,Leshan,Nanchong,Meishan,Yibin,Guangan,Dazhou(excluding Wanyuan city),Yaan(excluding Tianquan and Baoxing counties),ZiyangEconomic overviewThe combined GDP of the Twin City Circle reached RMB 7.76 trillion(US$1.2 trillion)in 2022,growing 3 per
309、cent year-on-year,according to the Chongqing and Sichuan statistics bureaus.This accounted for 6.4 percent of the countrys total GDP and 30.2 percent of Western Chinas GDP that year.Total retail sales of consumer goods:RMB 3.4 trillion(US$511.5 billion)Total import-exports:RMB 1.7 trillion(US$249.2
310、billion)(2021)Note:Data are as of 2022,except when otherwise indicated.54BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSIn 2022,industrial enterprises with a main annual business income of over RMB 20 million(US$3 million)in the Twin City Circle achieved an operating income of RMB 7.7 tril
311、lion(US$1.1 trillion),an increase of 3.9 percent over the previous year.Total profits of these companies also grew 6.3 percent year-on-year to reach RMB 591.7 billion(US$87.2 billion),10.3 percentage points higher than the national level.Secondary industries still make up the bulk of economic activi
312、ty in the region,but the service sector is growing rapidly.In Chongqing,tertiary sectors accounted for 52 percent of GDP in 2022,growing 1.9 percent year-on-year.Secondary industries,however,outpaced this growth,increasing 3.3 percent year-on-year.In Chengdu,the service sector accounted for 66.4 per
313、cent of GDP and grew 1.5 percent year-on-year.However,manufacturing was the largest contributor to the citys GDP in 2022,accounting for 59.6 percent of GDP growth despite only making up 30.8 percent of the overall GDP.GDP Breakdown of Main Twin City Circle Cities and Districts,2022S:Sichuan;C:Chongq
314、ing.*The GDP numbers of the Chongqing districts and counties are included in the total Chongqing figure.Source:Municipal statistics bureaus.PrimarySecondaryTertiaryChongqing(total)*Chengdu(S)Miangyan(S)Yibin(S)Deyang(S)Nanchong(S)Yubei district(C)Luzhou(S)Dazhou(S)Leshan(S)Jiulongpo district(C)Yuzho
315、ng district(C)0%25%50%75%100%55BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSDevelopment of the Twin City CircleOn October 21,2021,the Central Committee of the Communist Party of China(CCCPC)and the State Council jointly issued the Plan Outline for the Construction of the Chengdu-Chongqin
316、g Twin City Circle(the construction plan),an extensive document detailing a new plan to create a new city cluster in Chinas western regions.The construction plan provides a blueprint for further integrating the industries and infrastructures of the two regions and developing their respective economi
317、es.These include plans to expand the transport network to better connect various cities and counties,both within the region and beyond,as well as upgrading and expanding key infrastructures,such as telecom and utilities.In addition,the construction plan provides a vision for the development and expa
318、nsion of key industries,most notably manufacturing,modern services,and high-end technology.The construction plan also proposes specific goals to achieve by 2025.These include:Reaching a 66 percent urbanization rate of the permanent population.Building an intercity railway enabling one-hour travel be
319、tween Chongqing and Chengdu.Expanding the railway network to cover 9,000 km in total and connect all cities with a population of over 200,000.Building a shipping and logistics center for the upper reaches of the Yangtze River.Expanding 5G coverage to cities,towns,and key settings.Investing approxima
320、tely 2.5 percent of GDP in R&D.Foreign trade in the Twin City CircleGiven its strategic position in the center of China,the Twin City Circle is an important trade corridor,with inter-provincial railways carrying goods to southern and western China.It also has overland rail links to Central Asia and
321、Europe,carrying goods,such as electronics,machinery,automobiles and auto parts,and medicines.In 2021,over 4,800 freight trains ran from Europe to Chengdu and Chongqing,trading a total of 400,000 twenty-foot equivalent units(TEU)of cargo.Chengdu was the largest trading city in the region,with imports
322、 and exports totaling RMB 834.6 billion(US$123.9 billion)in 2022,at a year-on-year growth rate of 1.6 percent.This accounted for 82.8 percent of the total trade of Sichuan province that year.Meanwhile,Chongqings total trade in 2022 reached RMB 815.8 billion(US$121.1 billion),growing 2 percent year-o
323、n-year.56BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERS Import-Exports of Main Cities in Twin City Circle,2022CityImportsExportsTotalChongqing(total)US$43.2 billionUS$77.8 billionUS$121.1 billionChengdu(S)US$50 billionUS$74.3 billionUS$123.9 billionMianyang(S)US$1.4 billionUS$2.6 billionU
324、S$4 billionYibin(S)US$1.7 billionUS$3 billionUS$4.7 billionDeyang(S)US$862.5 millionUS$1.9 billionUS$2.7 billionNanchong(S)US$66.8 millionUS$840.2 millionUS$906.9 millionYubei district(C)US$7.7 billionUS$20.8 billionUS$28.6 billionLuzhou(S)US$1.2 billionUS$1.7 billionUS$2.9 billionDazhou(S)US$87.52
325、millionUS$1 billionUS$1.08 billionLeshan(S)US$224.9 millionUS$1.4 billionUS$1.6 billionJiulongpo district(C)US$309.9 millionUS$2.3 billionUS$2.6 billionYuzhong district(C)US$826.8 millionUS$705.1 millionUS$1.5 billionS:Sichuan;C:Chongqing.Note:The trade numbers of the Chongqing districts and countie
326、s are included in the total Chongqing figure.Numbers may not add up due to rounding.Source:Municipal statistics bureaus.57BEYOND A MEGA CITY:INVESTING IN CHINAS MEGA CITY CLUSTERSThe Twin City Circles major trade partners include the US,ASEAN,the EU,and countries in southern and central Asia.In 2021
327、,Chengdus top three trade partners were as follows:1.The US,with trade reaching RMB 188.4 billion(US$27.1 billion),accounting for 22.9 percent of the total trade volume.2.ASEAN,with trade reaching RMB 166.5 billion(US$23.9 billion),accounting for 20.3 percent of the total trade.3.The EU,with trade r
328、eaching RMB 162.2 billion(US$23.3 billion),accounting for 19.7 percent of the total trade.Meanwhile,31.6 percent of the trade was conducted with countries along the“Belt and Road,”encompassing a broad range of countries,including 16 in western Asia,nine in southern Asia,and five in central Asia.The
329、top three trade partners among these Belt and Road countries were Vietnam,Malaysia,and Israel.In 2021,Chengdus exports were primarily composed of mechanical and electrical products,accounting for 87.7 percent of the total exports.The total imports and exports grew by 12 percent,reaching RMB 424.8 bi
330、llion(US$61.1 billion).Notably,Chengdu exported:RMB 130.06 billion in laptop computers,representing a 16.5 percent year-on-year increase.RMB 99.28 billion in integrated circuits,showing a 3.1 percent year-on-year increase.RMB 75.94 billion in tablet computers,experiencing a decrease of 3.4 percent y
331、ear-on-year.Additionally,the export of labor-intensive products from Chengdu,such as toys and garments,surged by 98.7 percent year-on-year,reaching RMB 28.32 billion and accounting for 5.9 percent of total exports.In 2021,Chengdu imported RMB 305.31 billion(US$43.9 billion)worth of mechanical and el
332、ectrical products,demonstrating a 6.5 percent year-on-year increase and accounting for 90.3 percent of the total value of Sichuans foreign trade imports.Among these imports,Chengdu acquired RMB 229.74 billion(US$33 billion)worth of integrated circuits,representing a year-on-year increase of 5.9 perc
333、ent.Additionally,the import of agricultural products reached RMB 4.51 billion(US$648.2 million),showing a year-on-year increase of 34.3 percent.On its part,Chongqings top three trade partners in 2021 were:1.ASEAN,with trade amounting to RMB 129.2 billion(US$18.6 billion),accounting for 16.2 percent of the total trade.2.The EU,with trade amounting to RMB 124 billion(US$17.8 billion),accounting for