The Banking Executive Magazine - May 2021

A National Success Story the BANKING EXECUTIVE 44 ISSUE 149 MAY 2021 ONE COUNTRY, TWO CITIES, A NATIONAL SUCCESS STORY By recognizing and investing in the strengths of pioneering cities and re- gions, China has developed a pow- erful mechanism for organizing and advancing its economic transforma- tion. Judging by the tremendous suc- cess of Shenzhen and Shanghai, it seems clear that China will continue to reap the rewards of this approach for decades to come. On October 14, Chinese President Xi Jinping visited the southern city of Shenzhen, where he delivered a speech celebrating 40 years of progress since the special economic zone (SEZ) was established there and set a path for the future. A month later, Xi headed to Shanghai’s Pudong district – which was desig- nated China’s first “new area” 30 years earlier – for the same purpose. The centrality of Shenzhen and Shanghai to China’s future develop- ment could not be clearer. When China first created the Shen- zhen SEZ, some questioned its judg- ment. For example, as a postgraduate student at the University of Cam- bridge in the 1980s, James Kai-sing Kung, now of the University of Hong Kong, asked why the government would choose an unknown village like Shenzhen, rather than an eco- nomic center like Shanghai or Tian- jin, to serve as an incubator for Deng Xiaoping’s “reform and opening up” strategy. The decision must, Kung concluded, be politically motivated; China’s gov- ernment must have been preparing for the return of neighboring Hong Kong, which was already a global fi- nancial center. But, while it is true that sovereignty over Hong Kong was formally transferred back to China in 1997, Hong Kong’s impact on Shen- zhen’s development was rooted less in sovereignty than in proximity. If presented with an aerial view of Shenzhen’s Futian District and Hong Kong’s New Territories today, the lat- ter areas, south of the Shenzhen River, would appear desolate. Mean- while, Shenzhen, with its bustling ports and glittering skyline, is clearly populated and prosperous. This is not to say that other areas of Hong Kong aren’t flourishing. In fact,