Shenzhen on the brink
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Shenzhen on the brink
Author:xcd   Article source: From network  Hits:909  Add time:2009-5-28  

The 25 years of breakneck expansion that have turned a tiny border village into the modern city of Shenzhen have strained the special economic zone's economy to the point where it is going to have to undergo a profound restructuring.

With few natural resources, Shenzhen's development has relied almost entirely on favorable policies handed down by Beijing to attract foreign investment in manufacturing, mainly from Hong Kong.

But now that the SEZ has grown so large, resources such as energy, water and available land can no longer sustain the high-speed growth that drove it in the past.

Energy shortages have become endemic in recent years as rapid growth has come particularly at the expense of wastefully high consumption of energy. According to SEZ government statistics, US$1 million (HK$7.8 million) in gross domestic product in 2000 consumed energy equivalent to burning 289.9 tonnes of coal. By comparison, Hong Kong in 1997 consumed the energy equivalent of just 91.5 tonnes for US$1 million GDP.

By this yardstick, Shenzhen's energy consumption would reach the equivalent of 8.32 million tonnes of coal this year, rising to more than 25 million tonnes in 2015 as government planners try to push GDP to one trillion yuan (HK$943 billion).

The coal, of course, is being burnt to generate electricity. Shenzhen's increasingly acute power shortages serve as a warning that the current growth patterns may be reaching their limit.

Last year, GDP totaled 342.28 billion yuan with annual electricity consumption of 38 billion kilowatt-hours. Thus one kilowatt-hour of energy is being consumed for every nine yuan of GDP. If such a growth pattern doesn't change, energy consumption would skyrocket to 10 billion kilowatt-hours in 2015 if GDP indeed hits one trillion yuan.

That means Shenzhen has to triple its power supply over the next decade. This looks rather like Mission Impossible. Even if Shenzhen were to increase its energy purchases from other sources, including Hong Kong, it would still have to expand its energy grid and related facilities tremendously. But the SEZ is obviously in feverish competition with other mainland areas seeking to increase their own power supply as they face the same problems.

Shenzhen's population explosion has now increased its thirst for water to the point where it is listed among China's top seven water-short cities, with per capita available water just 470 cubic meters, only about a quarter of the country's average and a fifth of that in Guangdong province.

It might be even worse. As with other per capita figures provided by the Shenzhen government, it is not clear whether the per-capita water resource figures take into account Shenzhen's horde of migrant workers.

The government recently acknowledged that more than 10 million people (a more accurate estimate based on annual food supply puts Shenzhen's regular population at 13 million) are dwelling in Shenzhen, of whom only 1.5 million are in registered households, with another 3.5 million listed as permanent residents, while all others are migrant workers.

Thus, if Shenzhen were likened to a country, the 1.5 million people with household registrations are nationals, the 3.5 million with permanent residency are green-card holders, and the others are ``foreigners'' with work permits.

In any case, according to the Shenzhen water resources bureau, water consumption in Shenzhen in 2003 reached 1.23 billion cubic meters and is growing by 70 million cubic meters each year. So by 2010, Shenzhen will need 1.943 billion cubic meters although its maximum supply by then is projected at just 1.912 cubic meters.

Land resources are becoming equally scarce. Total land area is 1,953 square kilometers, yielding a population density of about 6,200 people per square kilometer, almost equaling Hong Kong's 6,300 per square kilometer. Certainly, Shenzhen is now the most densely populated area on the mainland. Developable land is reaching its limits. Shenzhen mayor Li Hongzhong told a party meeting in the SEZ last week that only 200 square kilometers of land are available in the city for development, most of it outside its second border.

Shenzhen must keep its economy growing at a 13 percent annual pace over the next 10 years to attain the government goal of one trillion yuan in GDP by 2015. But unless Beijing launches more special policies to help, which is very unlikely, Shenzhen must tackle its own problems.

Under these circumstances, a profound economic restructuring seems inevitable, including allowing energy-hungry manufacturing facilities to move out and to boost the development of a service economy.

In short, Shenzhen now may have to do what Hong Kong began to do from the

 late 1970s. 

Otherwise, it faces being buried by its own success.
 
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