Qianhai: China’s fading dream of a global financial hub

Qianhai, a special economic zone in Shenzhen, was once hailed as China’s gateway to the global financial market and a symbol of its economic miracle. But after a decade of development, the zone has failed to live up to its lofty expectations and has become a bleak reminder of the challenges and uncertainties facing China’s economy.

The zone, which covers 15 square kilometers of reclaimed land near the border with Hong Kong, was designed to attract foreign investment, talent, and innovation, and to foster cross-border cooperation and integration. It offered preferential policies, such as lower taxes, easier market access, and greater legal autonomy, to lure financial institutions, technology firms, and professional services.

Qianhai: China’s fading dream of a global financial hub
Qianhai: China’s fading dream of a global financial hub

However, the reality has been far from the vision. According to Reuters, the zone is plagued by half-empty skyscrapers and shopping malls, barely used motorways, and a lack of cultural and social amenities. Many of the projects and initiatives that were announced with fanfare have been delayed, scaled back, or scrapped altogether. The zone has also struggled to compete with other financial centers, such as Shanghai, Hong Kong, and Singapore, and to cope with the changing geopolitical and regulatory environment.

A victim of politics and policies

One of the main reasons for Qianhai’s disappointing performance is the shifting political and policy landscape in China and beyond. The zone was conceived in 2010, when China was pursuing a more open and reform-oriented economic strategy, and when the relations with Hong Kong and the West were relatively stable and cordial. Since then, however, China has adopted a more inward-looking and assertive approach, clamping down on dissent, tightening control over the private sector, and engaging in trade and diplomatic disputes with the US and other countries.

These changes have undermined Qianhai’s appeal and viability as a global financial hub. Many foreign investors and firms have become wary of the risks and uncertainties involved in doing business in China, especially in sensitive sectors such as finance and technology. Some have also faced regulatory hurdles, such as restrictions on capital flows, data transfers, and market access. Moreover, the deteriorating relations between China and Hong Kong have eroded the trust and cooperation that were essential for Qianhai’s success. The zone was supposed to leverage Hong Kong’s advantages, such as its legal system, currency, and talent pool, but the implementation of the national security law and the crackdown on the pro-democracy movement have raised doubts about Hong Kong’s autonomy and future.

A lesson for China and the world

Qianhai’s failure to fulfill its potential as a special economic zone and a global financial hub is not only a setback for Shenzhen and Guangdong, but also a lesson for China and the world. It shows that China’s economic model, which relies heavily on state intervention, top-down planning, and preferential treatment, is not conducive to fostering innovation, competition, and integration in the global market. It also shows that China’s political system, which prioritizes stability, security, and sovereignty over openness, diversity, and cooperation, is not compatible with the norms and values of the international community.

Qianhai’s fate also reflects the challenges and opportunities that China and the world face in the 21st century. As the world’s second-largest economy and a rising power, China has a significant impact and influence on the global economic and political order. How China manages its domestic and external affairs, and how the world responds and engages with China, will shape the future of humanity. Qianhai, as a microcosm of China’s ambitions and dilemmas, offers a glimpse of the possibilities and pitfalls that lie ahead.

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