1050x300-XG-ZYS-Issue Brief-The Growth of Foshan-A Tale of State and Market

Issue Brief: The Growth of Foshan: A Tale of State and Market

Author(s): Geng Xiao, Zhang Yansheng

Date: Nov 29, 2013

Theme(s): China

Publications: Project Documents

Foshan challenges the idea that China's growth has been government-led, export-driven, supplied by cheap land and labor, and with little innovation.

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In 2010, China surpassed Japan as the world’s second largest economy. Per capita GDP in 2012, however, was only US$6,156, firmly within the World Bank’s upper middle income threshold. Two contrasting growth paths potentially lie ahead for China:

  • Middle-Income Trap  Scenario: unbalanced, uncoordinated and unsustainable growth or
  • New Growth Order Scenario: inclusive, innovative and sustainable growth

Our study suggests that as China’s growth model evolves, there is a path for cities like Foshan, and for China more broadly, to avoid becoming mired in the middle-income trap and to move towards a new growth order, with inclusivity, innovation and sustainability as defining characteristics.

The city of Foshan is located at the heart of the Pearl River Delta, with direct access to major ports and global shipping routes. For centuries, the people of the region have had ties with international trade partners and an active international diaspora. As an economic powerhouse with more than seven million inhabitants, Foshan is representative of many of the achievements in the development of markets, as well as the challenges in dealing with structural imbalances that are common to China’s emerging metropolises.

Today, Foshan is challenging conventional wisdom about China’s economy, which generally purports that the country’s growth has been government-led, export-driven, supplied by cheap land and labor, and with little innovation. Our research demonstrates that this conventional thinking may only be half true, and that evolving state-market dynamics play a key role in Foshan’s growth story.

 

Disclaimer: The views expressed in this report are those of the authors and do not necessarily reflect those of the Fung Global Institute. The authors are solely responsible for any errors or omissions.