Page 100 - 2024 Special Report on the State of Business in South China
P. 100
Economic Overview in South China
The economy of South China1 The most attractive region for
foreign investment
South China is a leading engine in
China’s economic growth that Despite the Covid-19 disruption, the Chinese
includes not only the provinces of Guangdong, mainland and Hong Kong remained two of the most
Fujian, Guangxi and Hainan, but also the Special attractive destinations for investment in 2022, with
Administrative Regions (SARs) of Hong Kong total foreign direct investment (FDI) inflows reached
and Macau. Thanks to the effective prevention US$189 billion and US$118 billion2 respectively. The
and control of Covid-19, the economies of these four provinces of South China, with no surprise,
regions stayed resilient and reached RMB24.1 were the most dominant recipients, absorbing
trillion in 2022, accounting for around 19.9% of 20.4% investment of the total national FDI inflows3.
national gross domestic product (GDP). In March 2023, Guangdong offered strong
subsidies to foreign high-end manufacturers amid
Forerunners in China’s economic upgrading in manufacturing industry. Priority have
reform been given to industries such as semiconductors
and integrated circuits, high-end equipment
The reform and open-door policy of China manufacturing, intelligent robots, blockchain and
began with the adoption of a new economic quantum information, cutting-edge new materials
development strategy in late 1978. No region and new energy, among others. Guangdong is
better encapsulates the success of this strategy accelerating efforts to get more of the world’s
than South China, which was at the forefront top 500 companies and leading enterprises from
of reform and opening-up initiatives and has various industries to set up regional headquarters
been quickly developed as an external facing and functional headquarters in the province.
manufacturing hub since the 1980s. In the decades
that followed, South China has been continuously Outlook of South China
moving up the industrial ladder, from labor-
intensive mass production to higher value-added The region is set to become a major powerhouse
manufacturing. Now it has been developed to a that leverages each city’s strengths in a synergistic
more diversified region with various advantages manner to drive China’s trade and economic growth,
from both manufacturing and service sectors. particularly in technology and innovation, finance,
Under the 14th Five-Year Plan, South China shipping and trade, advanced manufacturing and
is expected to become a new technology and hospitality. Meanwhile, regional connectivity and
innovation hub in the next five years, generate rising demand for an improved quality of life will
new business models/opportunities and further also support the development of modern services
drive China’s economic growth. across the region. This could thereby create a
more developed and interconnected South China
1 South China, includes Guangdong province, with the Pearl River Delta (PRD) at its center.
Fujian province, Guangxi autonomous region, Hainan
province, Hong Kong Special Administrative Region 2 World Investment Report, UNCTAD, https://
(SAR) and Macau (SAR) unctad.org/system/files/official-document/wir2023_
en.pdf
3 Government sites of provinces/regions, EY
analysis
100
The economy of South China1 The most attractive region for
foreign investment
South China is a leading engine in
China’s economic growth that Despite the Covid-19 disruption, the Chinese
includes not only the provinces of Guangdong, mainland and Hong Kong remained two of the most
Fujian, Guangxi and Hainan, but also the Special attractive destinations for investment in 2022, with
Administrative Regions (SARs) of Hong Kong total foreign direct investment (FDI) inflows reached
and Macau. Thanks to the effective prevention US$189 billion and US$118 billion2 respectively. The
and control of Covid-19, the economies of these four provinces of South China, with no surprise,
regions stayed resilient and reached RMB24.1 were the most dominant recipients, absorbing
trillion in 2022, accounting for around 19.9% of 20.4% investment of the total national FDI inflows3.
national gross domestic product (GDP). In March 2023, Guangdong offered strong
subsidies to foreign high-end manufacturers amid
Forerunners in China’s economic upgrading in manufacturing industry. Priority have
reform been given to industries such as semiconductors
and integrated circuits, high-end equipment
The reform and open-door policy of China manufacturing, intelligent robots, blockchain and
began with the adoption of a new economic quantum information, cutting-edge new materials
development strategy in late 1978. No region and new energy, among others. Guangdong is
better encapsulates the success of this strategy accelerating efforts to get more of the world’s
than South China, which was at the forefront top 500 companies and leading enterprises from
of reform and opening-up initiatives and has various industries to set up regional headquarters
been quickly developed as an external facing and functional headquarters in the province.
manufacturing hub since the 1980s. In the decades
that followed, South China has been continuously Outlook of South China
moving up the industrial ladder, from labor-
intensive mass production to higher value-added The region is set to become a major powerhouse
manufacturing. Now it has been developed to a that leverages each city’s strengths in a synergistic
more diversified region with various advantages manner to drive China’s trade and economic growth,
from both manufacturing and service sectors. particularly in technology and innovation, finance,
Under the 14th Five-Year Plan, South China shipping and trade, advanced manufacturing and
is expected to become a new technology and hospitality. Meanwhile, regional connectivity and
innovation hub in the next five years, generate rising demand for an improved quality of life will
new business models/opportunities and further also support the development of modern services
drive China’s economic growth. across the region. This could thereby create a
more developed and interconnected South China
1 South China, includes Guangdong province, with the Pearl River Delta (PRD) at its center.
Fujian province, Guangxi autonomous region, Hainan
province, Hong Kong Special Administrative Region 2 World Investment Report, UNCTAD, https://
(SAR) and Macau (SAR) unctad.org/system/files/official-document/wir2023_
en.pdf
3 Government sites of provinces/regions, EY
analysis
100
