Future prospects for the Pearl River Delta area

The economic recession has curbed the growth that the Pearl River Delta has been experiencing for over two decades. The Guangdong province has failed to meet economic growth targets since 2010, and the growth forecast for 2013 gives figures of just 8 per cent. In order to reverse this trend, the local government has plans to push even further the implementation of the economic reform programs that fall within China's ambitious 12th five-year plan.

In the meantime, the industries based in the Pearl River Delta are being encouraged to move towards an information technology-based infrastructure and to modernise the existing factories and plants in industries like petrochemicals and automotive. The future prospects for the delta can be summed up in the words of a top Guangdong government official, who claimed that the local economy will have to “keep the cage but replace the bird”.

The manufacturing industry in the area is also facing increased competition from other Asian countries, mainly Bangladesh, Vietnam, and Indonesia.These countries offer lower labour and overhead costs, and a significant number of enterprises have already decided to relocate or to outsource their processes outside of the Pearl River Delta due to this reason.

The development of infrastructure in the Pearl River Delta has resulted in an extensive network of motorways, as well as other air, sea, and road transportation links. This means that in the near future, other cities in the Pearl River Delta could become major economic players in the region. This is the case of Zhanjiang, which is expected to double its GDP output within the next five years, thanks to the development of large road and rail transportation projects and to the building of one of the largest petrochemical plants in the world.

It is believed that the increased transport connectivity in the area will make of the Pearl River Delta one of the world's largest mega-cities, as more and more large metropolis are linked by a complex network of roads and their boundaries merge. City planners have mentioned their intentions to develop a plan to link nine major cities, turning them into a 100-million people mega-city which would be twenty-six times larger than London.

Another interesting prospect for the future of this area is the possibility of turning the yuan into a fully-liberalised and fully-convertible currency by 2020. However, the current levels of financial control imposed by the central government make this move difficult to implement for the time being. As a possible step towards that goal, the top financial institutions in Guangdong plan to offer fully convertible capital accounts, which will be exempt from foreign exchange controls. Likewise, there are plans to create a large knowledge city in Guangzhou in cooperation with Singapore.

The massive development of the Pearl River Delta is also cause for serious environmental concerns. The area is very densely populated (in some cities up to 8 times the national average), but it can only sustain 1 per cent of the population out of its own water resources. The pressure put on energy production by an increasing population, together with the proliferation of factories and plants is equally worrying. It remains to be seen whether or not the Pearl River Delta can continue its pace of urban and economic development without becoming unsustainable in the long term, as the future success and competitivity of this region depend largely on its ability to do so.

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