The second year into COVID-19 has witnessed the continued disruption of the global supply chain. Despite the challenges from international uncertainties, China has continued to support globalisation through statements and actions and further opened up its economies. In 2021, China’s total trade volume and realised foreign direct investment (FDI) reached RMB 39.1 trillion and RMB 1.15 trillion, respectively. In addition, China ratified the Regional Comprehensive Economic Partnership (RCEP) and formally applied to be a member of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP).
This ninth edition of the Annual Greater China Competitiveness report presents the latest competitiveness rankings of the 34 economies and five regions of China. In addition, it zooms into the differential development in the Greater Bay Area (GBA). We find that Guangdong and Jiangsu have been the most competitive economies since 2011. The case of Jiangsu has demonstrated the importance of balanced development. It ranks among the top six in all the sub-environments except Standard of Living, Education and Social Stability, because of its large population.
The competitiveness rankings also show persistent regional disparities. Since 2002, the Eastern Coastal Area has held the top position. North-eastern China has experienced the most significant decline from 3rd place in 2009 to 5th in 2018. It lags in Financial Deepening and Business Efficiency, Labour Market Flexibility and Productivity Performance. This highlights the urgency of industrial upgrading in this old industrial base.
Finally, the policy chapter evaluates the impact of the 2017 GBA development plan on greenfield FDI inflows to cities in the region. Using project-level data, the study finds that the Node Cities are catching up with the Core Cities in the number of FDI projects. However, larger-sized projects with more capital expenditure and more possibilities for job creation are still attracted to the Core Cities. A case study on Foshan further reveals the reasons for the boom of greenfield FDI in the retail sector: 1) urban agglomeration and 2) better physical connectivity.
By Xuyao ZHANG