SFC Markets and Finance | Navigating Economic Cycle: How to view Guangdong's Economy in 2024?

南方财经全媒体记者杨雨莱 李依农 广州、上海报道

Editor's note:

Guangdong has long been recognized as a key pillar of China’s economy, accounting for about one-tenth of the country's GDP. Meanwhile, Guangdong is ramping up efforts to construct an end-to-end innovation chain, aiming to become a globally influential innovation base. However, Guangdong’s economy is facing some challenges as global economic growth stagnated. Going forward, how can Guangdong remain resilient and sustainable growth? SFC Markets and Finance's special coverage "Navigating Economic Cycle" will try to find answers.

Resilience: Guangdong's Economy Takes the Lead

Climbing mountains, shouldering the weight, Guangdong is the beating heart of China's economy. With GDP hit 9.99 trillion yuan in the first three quarters of 2024, Guangdong accounts for over one-tenth of the national total. In 2024, Guangdong's factories embraced cloud services at scale, the low-altitude economy prepared for "high flight," and Guangdong’s autonomous driving brands set the pace for global innovation...The numbers and facts speak for themselves, but what’s behind such sustained leadership? Let’s hear from Zhang Jianping, deputy director of the Academic Committee at the Chinese Academy of International Trade and Economic Cooperation. 

Guangdong's economy is highly internationalized

Zhang Jianping: Guangdong is China's most populous province, and also the leading economic province in China. In the process of reform and opening up, Guangdong has always been at the forefront. Over the more than forty years of reform and opening up, Guangdong has continuously liberated its thinking and improved the business environment, striving to create an international, rule-of-law-based, and market-oriented business environment which has made Guangdong's economy highly internationalized.  

In terms of foreign trade and two-way investment, that is the capital we attract and the capital we send out, and in the process of actively participating in the global supply chain and value chain cooperation, Guangdong has excellent performance. Currently, Guangdong's foreign trade volume accounts for one-fourth of the country's total. It is particularly noteworthy that in the process of opening up to the world, Guangdong has been accelerating the transformation of its foreign trade development model, striving to move from being a major trading country to building a strong trading country.

In this process, by encouraging independent innovation, and the growth of Chinese multinational companies with independent intellectual property rights and their own brands, Guangdong has been continuously creating new quality productive forces. In this process, the Greater Bay Area (GBA) has already ranked second in the world’s scientific and technological innovation clusters.  

Enterprises become the backbone

Zhang Jianping: From the current development trend, China now has the most competitive Internet platform enterprises in the world, as well as leading enterprises in the new generation of electronic information industry with brand reputation, international competitiveness, and market share globally, including leading enterprises in new energy and new materials, which have grown strong in the GBA.  

Moreover, in driving the high-quality development of the GBA, radiating the Belt and Road Initiative, and implementing the dual circulation strategy globally, these groups of enterprises have become the backbone of China. We are also pleased to see that in Guangdong, a number of new forces and new business forms are growing rapidly, mainly reflected in the fields of low-altitude economy, silver economy, and debut economy. New enterprises are growing and strengthening, and new business forms, new models, and new momentum are leading Guangdong to the forefront of China's innovative and open development. I think this is important support for Guangdong to maintain stable and rapid growth while having the largest economic scale in the country.

Progress: International Competitiveness Steadily Improves

At the cross-border e-commerce warehouses in Guangzhou Baiyun Airport’s Comprehensive Bonded Area, packages are stacked high, ready to be shipped worldwide. The Guangzhou port has attracted over 1,000 cross-border e-commerce enterprises. In 2024, Guangdong maintained its foreign trade scale, with imports and exports expected to surpass 9 trillion yuan. Automobile exports and cross-border e-commerce are emerging as new growth engines, fueling "Chinese confidence" in the global economy. How do we assess Guangdong's foreign trade performance in 2024? Why are automobile exports and cross-border e-commerce so crucial, and can they continue to forge ahead in 2025? Wang Haifeng, director of the international trade and investment under the Institute for International Economic Research of the Chinese Academy of Macroeconomic Research provided his thoughts. 

Three key characteristics of Guangdong’s foreign trade 

Wang Haifeng: Overall, whether looking at individual quarters or the cumulative performance such as over the first three quarters or the first ten months, China's foreign trade has performed better than the global average. Guangdong's foreign trade has topped the national performance. This has played a key role in keep foreign trade, foreign investments, confidence, and expectations stable in our country. Guangdong's foreign trade made the contribution to national foreign trade growth of around 40%, which is a remarkable achievement.

Guangdong's economy has three key characteristics worth noting. First, the resilience of Guangdong's economy is very strong. This is evident in its new economy, new industries, and new business models, which are unique and especially reflected in foreign trade and foreign investment.

Second, Guangdong's, and particularly in the Pearl River Delta, business environment has been recognized as one of the best in China and also holds strong international competitiveness. This environment allows domestic, foreign, and private enterprises to fully showcase their competitiveness, making these three sectors stand out in the global competition, including among the Fortune Global 500, such as the "new three", the low-altitude economy, Guangdong has notable highlights in these emerging industries.

Third, Guangdong focuses on grassroots, counties, cities, and districts. The local governments in Guangdong have a good grasp of the relationship between the market and the government, allowing the market to fully play its role. This year, Guangdong introduced the "five-external linkage", which is another example of good policy.

Trade frictions are nothing to fear 

Wang Haifeng: The automotive industry is one of Guangzhou's key strengths, with are being a standout in the "new three". In terms of new business models, cross-border e-commerce is a notable point. These highlights are the result of Guangdong's efforts over the past decade, what we might call "a decade of sharpening the sword."

Looking ahead, I believe this "sword" will become even sharper and brighter, with Guangdong's competitive advantages growing stronger. Whether in boosting Guangzhou's foreign trade, economy, or contributing to the nation, we have every reason to stay confident.

Over the past decade, we have faced various external pressures, including trade and economic frictions. However, as long as we strengthen our internal capabilities, develop our economy, and protect our enterprises, enabling them to truly demonstrate their competitiveness, I believe trade frictions are nothing to fear. 

Vitality: Capital Flows, Economy Grows Smoother

In 2024, Guangdong continued to lead the nation in the number of listed companies. By December 31, the total had reached 1205, including 875 A-share firms, maintaining its top position. The market value of Guangdong enterprises also grew steadily, with A-share companies reaching 15.1 trillion yuan, a year-on-year increase of 15.64%. What makes Guangdong so dynamic in the capital market? And what are the advantages of its business environment? We have Peng Peng, executive chairman of the Guangdong Society of Economic Reform joining our discussion.

Three advantages for listed companies in Guangdong

Peng Peng: One basic factor that comes to mind is that Guangdong is China's largest economic province. Its economic total is evident. Accordingly, the number of enterprises here is quite large. This creates a strong foundation for listed companies. Moreover, Guangdong is a major manufacturing hub. Many of Guangdong's current policies are focused on the real economy. These enterprises are based in Guangdong, which have developed at the forefront of reform and opening up for many years, so the accumulated base of these enterprises is huge. I believe this is the most important factor.

Secondly, Guangdong's market economy is well-developed and relatively mature. Many enterprises tend to adopt standardized operations and develop along market-oriented lines, which helps facilitate the approval process for going public. I believe the enterprises here are more likely to become standardized.

Thirdly, Guangdong established the Shenzhen Stock Exchange, which has a vast investment market. Whether it's private equity, venture capital, or investment banks, they are all gathered here. This makes it easier to uncover potential listing resources and provide effective listing guidance. Of course, it's also because Guangdong has such favorable conditions and a favorable business environment that many companies with listing potential are eager to develop in the Greater Bay Area. So in my opinion, high-quality enterprises, a high-quality business environment, and convenient listing channels have allowed Guangdong's listed companies to lead the nation.

Listed companies should foster new quality productive forces 

Peng Peng: We have seen that since the pandemic, the performance of our enterprises has been influenced by the environment, and the economic recovery is still not solid, so we are facing some challenges. However, on the other hand, Guangdong is fully committed to driving innovation, and many emerging and future industries are growing. I believe this is also an important resource for our listed companies and a key focus for them in nurturing new industries. In this regard, from the 12th Five-Year Plan to the 13th and 14th, we’ve been promoting transformation and upgrading for a long time, and we have remained resolute in our efforts.

Although we have encountered difficulties, the direction of our upgrade has remained unchanged. Moreover, Guangdong has been severely impacted by trade protectionism and the suppression of technological decoupling. As a result, these enterprises are adjusting to international pressures. At the same time, the government is working on strengthening and supplementing the industrial and supply chains. I believe that many specialized, refined, differential, and innovative enterprises have emerged, as well as "little giants" and unicorn enterprises. These are the backup forces for our large listed companies. So, the listed companies must cultivate emerging industries and foster new quality productive forces. As long as we remain committed to this direction, prioritizing manufacturing, continuing to foster new quality productive forces, and tackling critical technologies head-on, I believe that in the number of listed companies, Guangdong will continue to be at the forefront of the country. 

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