Hong Kong economy surpassed by neighbour Shenzhen for first time in 2018 as China’s hi-tech hub soars

Shenzhen’s economy surpassed Hong Kong’s for the first time in 2018 after the city played an instrumental role in helping transform its neighbour and once rural backwater into China’s hi-tech hub.

Economic growth in Hong Kong rose by just 3 per cent to HK$2.85 trillion (US$363.09 billion) last year, hurt by the effects of the US-China trade war particularly in the last quarter of the year, according to the annual budget revealed by Hong Kong finance chief Paul Chan Mo-po on Wednesday.

Shenzhen’s gross domestic product (GDP) last year, announced early this month, grew by 7.6 per cent to 2.42 trillion yuan (US$361.24 billion), or HK$2.87 trillion based on the 2018 official exchange rate from Hong Kong’s Census and Statistics Department.

The southern Chinese city previously said that its GDP in 2017 was larger than Hong Kong’s, but was forced to withdraw the claim after taking into account the exchange rates.

The comparison between the two economies also showed how the hi-tech sector has become the engine driver for growth, underscoring Hong Kong’s challenge to further embrace technology, which has helped Shenzhen thrive and expand.

Hong Hao, managing director and head of research at Bocom International, said the different economic structures of the two cities would decide that Shenzhen’s economy will remain ahead of Hong Kong’s in the coming years, even though by per capita terms, it lags behind.

“Hong Kong is heavily reliant on traditional industries such as finance and real estate, which covers about 70 per cent of the economy. Shenzhen’s economy is mainly supported by manufacturing and technology, which contributes about 70 per cent,” Hong said.