Beginning in the early twentieth century, Shanghai has been a magnet for foreign financial interests for almost a century – an interregnum of a few decades of staunch Stalinist policies notwithstanding. This continued interest has largely been the driving force for the development of the region over the past three decades.
In 1990s, the Chinese government opened the Pudong district of Shanghai to overseas investment, as well as additional cities along the Yangtze River valley. Since then, the Yangtze River delta has become one of China’s key economic regions. It consists mainly of 15 cities, including Shanghai, Nanjing, Suzhou, Zhenjiang and Wuxi, although its scope has recently been widened to include Taizhou City in Zhejiang Province. Yancheng, Huai’an and Ma’anshan cities in Jiangsu and Anhui provinces are also likely to join the economic grouping.
The region is home to 10 percent of China’s population and it generates just over a fifth of China’s GDP and about a third of China’s foreign trade. Pudong enjoys many privileges not yet available to other zones. In addition to reduced duties and income tax, foreign financial institutions have also been allowed to set up in the region along with a stock exchange. It has therefore become the financial centre of China with 180 Chinese and foreign-funded financial institutions.
The Chinese government has identified the development of a number of ‘pillar industries’: automotive (including components and spare parts), microelectronics and computers, household electrical appliances, pharmaceuticals, optical, mechanical, and electrical products.
High GDP per capita rates within the region continue to ensure that the area remains a major point of interest for foreign manufacturers looking to capitalise on the increasingly affluent spending habits of China’s burgeoning middle classes.
As with China’s other major economic hubs, the success of Shanghai to date has been very much dependent upon two key factors. First is its familiarity with the outside world. Second has been its ability to integrate the nation’s low cost labour base into global supply chains.
Adding to the logistical importance of the region is its proximity to supporting infrastructure such as Suzhou port, Taicang, and Ningbo-Zhoushan. This latter port, which recently merged, is tied firmly into the plans for the Shipping Centre by construction of the Hangzhou Bay Bridge, a 36 km long bridge linking the port with the city of Shanghai, thus shortening the route by 120 km.
The region’s proximity to the Yangtze River is also of significance given the increasing importance of the river as a transport artery for development of the western regions. With Wuhan, ‘China’s Detroit’, and the mega-city of Chongqing upstream the YRD has been increasingly positioning itself as the terminus of what some have dubbed ‘China’s third coast’.
The 11th Five-Year Development Plan for Modern Logistics in Jiangxi Province outlines an overall arrangement for modern logistics: to develop Nanchang, the northern, southern, eastern and western regions of Jiangxi into five major logistics regions with three-tier nodes.
- Ongoing development of the central government’s stated aim of making Shanghai the financial and commercial capital of the mainland.
- Completion of the government’s plan to develop Shanghai into a global shipping centre by 2020, with the ostensible aim of integrating and streamlining services between the disparate ports in the region could very likely see increased efficiency and throughput volumes.
- The possible introduction of a tax free port zone–similar to that which propelled Hong Kong port to world status—is likely to make the port a more attractive destination for increased logistics investment in the future.
- The development of cross straits trade with the island of Taiwan is likely to lead to a swath of new investment from the island into the YRD hinterland–the lion’s share of which is likely to be in high-tech intermediate good assembly for domestic consumption and re-export.
- Expansion of both Pudong—Shanghai’s pre-eminent international airport—and Hongqiao—the regional feeder—are likely to generate tremendous growth in airfreight in the region. This is likely to be especially true in terms of high-tech components needing to move through the supply chain extremely quickly. In this sector, growth of intermediary goods cargo from Taiwan is likely to accelerate quickly.