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Trade, Economics, and Coverage Tendencies

Incessantly dubbed China’s Silicon Valley, Shenzhen is China’s fastest-growing metropolis. It’s ranked by means of the Chinese language Academy of Social Sciences because the mainland’s best metropolis for “total financial competitiveness” and is China’s premier Particular Financial Zone (SEZ) for international funding in addition to a sub-provincial category metropolis. 

Shenzhen was once declared China’s first SEZ by means of then-Communist Celebration (CCP) chairman Deng Xiaoping in 1979. Aided by means of capital flowing simply from neighboring Hong Kong, town has since reworked from a small fishing the town tobustling megacity. 

Once a year, hundreds of thousands flock to its metropolis heart as part-time or migrant employees, marketers from around the world search to take pleasure in its investment-friendly practices, and vacationers recognize its futuristic panorama. 

Situated in Guangdong province most effective 100 km (62 miles) southeast of its capital, Guangzhou, Shenzhen is strategically positioned at the Pearl River Delta that serves as a border with Hong Kong. The town heart is beneath 20 mins from Kowloon by means of rapid educate. Different within reach towns come with Zhongshan, Dongguan, and Foshan. 

2021 financial assessment 

Shenzhen is China’s third-largest metropolis by means of GDP after Shanghai and Beijing. GDP in 2021 surpassed the RMB 3 trillion mark, up 6.7 % from the former 12 months. It is a vital restoration from the three.1 % year-on-year enlargement in 2020. Shenzhen additionally has the perfect according to capita of any metropolis in China, attaining RMB 173,663 (US$25,889) in 2021. 

Shenzhen is a service-driven economic system, with the tertiary sector accounting for just about 63 % of GDP. Production however stays a very powerful mainstay trade, accounting for just about the entire ultimate value-add to GDP. 

Consistent with the Define Construction Plan for the Guangdong-Hong Kong-Macao Larger Bay Space (GBA), Shenzhen is one among 4 core towns to function the engines for building within the area. Shenzhen is ceaselessly known as upon to be the GBA’s generation and R&D hub. As of 2018, 4 % of Shenzhen’s GDP was once invested in analysis and over 11,000 high-tech enterprises known as town house. 

Shenzhen Economic Composition

Overseas business and funding  

Shenzhen is China’s biggest exporting metropolis, rating first amongst China’s major towns for 29 years in a row. The Port of Shenzhen is the fourth-largest on the earth, with annual throughput attaining 28.77 million TEUs in 2021, up 8.4 % from the former 12 months. 

In 2021, Shenzhen’s business in items grew at a fee of 16.2 % year-on-year to achieve RMB 3.54 trillion (US$528.3 billion). Exports grew 13.5 % year-on-year to achieve RMB 1.9 trillion (US$283.9 billion), whilst imports surged 19.5 %, attaining RMB 1.6 trillion (US$239 billion). 


The expansion fee of business considerably outpaced that of 2020, when business in items grew 2.4 % year-on-year, exports grew 1.5 %, and imports grew 3.6 %. The 2021 uptick in international business is mirrored in excessive business numbers national, as China benefitted from sturdy call for from out of the country customers who have been nonetheless beneath COVID-19 restrictions and a relative loss of COVID-19 restrictions at house enabling excessive charges of manufacturing. 

Shenzhen exported the perfect quantity of products to Hong Kong, with exports to the particular administrative area attaining a complete of RMB 707.5 billion (US$105.7 billion), a enlargement fee of 17.3 % year-on-year. In the meantime, Shenzhen imported the biggest quantity of products from ASEAN, with imports from the 10-country area attaining RMB 356 billion (US$53.2 billion), up 11.1 % year-on-year. 

Precise use of international capital grew 26.3 % in 2021, attaining US$11 billion. A complete of five,788 new FDI initiatives have been signed all over the 12 months. 

A complete of US$3.1 billion went to leasing and enterprise products and services, accounting for the biggest percentage – 28.7 % – of tangible use of international capital. The second one-largest sector was once knowledge transmission, device, and IT products and services, which accounted for 28 % of the full, receiving US$3 billion in precise use of international capital. 

Shenzhen FDI Inflow 2022

Trade building  

Prime-tech industries 

The generation trade is the thrashing middle of Shenzhen’s economic system and leads the rustic within the virtual economic system. One of the vital biggest names within the generation trade are headquartered in Shenzhen – Huawei, Tencent, ZTE, and DJI, to call a couple of.  

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Shenzhen’s 14th 5 Yr Plan (14th FYP), town’s major financial building plan for the length from 2021 to 2025, objectives for the “core virtual economic system industries” to achieve 31 % by means of 2025 – significantly upper than the nationwide goal of 10 %. Through the top of 2021, Shenzhen had nearly already hit this goal, with this sector accounting for 30.6 % of GDP, surpassing RMB 900 billion (US$134.5 billion) in scale. 

“Core virtual economic system industries” refers to virtual applied sciences, merchandise, products and services, infrastructure, and answers for the virtual building of industries and quite a lot of financial actions which can be utterly depending on virtual applied sciences and information components. 

The tech and virtual industries also are main employers, and town is house to a lot of extremely professional tech employees. On the finish of 2021, there have been over two million skilled technical employees, of which 617,000 held no less than a mid-level technical task identify. 

Shenzhen could also be a pioneer in growing laws for rising and high-tech industries, performing as a take a look at mattress for laws for high-tech and rising industries similar to synthetic intelligence (AI), self reliant using, and knowledge privateness.

Shenzhen Service Industry

Trade and production 

Production stays a very powerful mainstay trade in Shenzhen’s economic system. The trade recovered considerably in 2021 after a lull in 2020 as the sphere was once impacted by means of the pandemic. Prime-tech production grew at a fee of four.7 % year-on-year in 2021, up from 2.3 % in 2020. The earnings of commercial enterprises additionally rebounded in 2021, with the earnings of commercial enterprises above designated dimension (firms with the principle enterprise source of revenue of no less than RMB 20 million (US$3 million)). 

A couple of production sectors noticed explosive enlargement in 2021, together with new power automobiles (173.9 % year-on-year), commercial robots (60.5 %), smartphones (40.9 %), and three-D printing (21.2 %). 

Production accounts for the biggest trade by means of employment, with over 4 million other people hired within the sector on the finish of 2020, consistent with the 2021 Shenzhen Statistical Yearbook launched by means of the Shenzhen Municipal Bureau of Statistics. 

Main firms with a presence in Shenzhen come with electronics producer Foxconn and battery producer CATL. 


Initial statistics display that Shenzhen’s finance trade grew at a fee of seven.6 % year-on-year in 2021 to achieve a complete of RMB 473.9 billion (US$70.8 billion), accounting for 15.4 % of GDP. The 2-year reasonable enlargement fee of the trade additionally surpassed the nationwide reasonable (5.3 %), rising at a fee of 8.3 %.  

General belongings of town’s banking sector amounted to RMB 11.3 trillion (US$1.7 trillion) on the finish of 2021, a enlargement fee of seven.83 % year-on-year. In the meantime, within the insurance coverage sector, the full belongings of town’s 27 company insurance coverage firms reached RMB 5.75 trillion (US$859.3 billion).  

Main monetary establishments headquartered in Shenzhen come with Ping’an Financial institution and China Service provider’s Financial institution. HSBC, Usual Chartered, and Citibank additionally all have a presence within the metropolis. 

Shenzhen coverage traits 

On August 18, 2019, the Celebration’s main committee on reform, the Central Complete Deepening Reforms Fee (CCCDR), introduced new plans for increasing town’s function at the nationwide level. 

Benchmark dates come with: 

  • Through 2025: Shenzhen is to grow to be a world-class metropolis famend for innovation, with a unique center of attention on public products and services and environmentally sustainable building. This may entail R&D funding to be raised and “leading edge capability” to achieve the criteria of world leaders. Alongside the way in which, town’s cultural “cushy energy” will likely be massively progressed. 
  • Through 2035: Shenzhen is to grow to be China’s main world show off because the “international capital of innovation, creativity, and entrepreneurship,” appearing the sector what a “fashionable, robust, socialist Chinese language metropolis” looks as if. 
  • Through 2050: Shenzhen is to face some of the international’s best towns, a benchmark of competitiveness, innovation, and affect. 

In schooling: 

  • Upper schooling establishments will likely be granted “self-ruling rights”, to boost up the construction of world-class universities. 

In healthcare: 

  • The construction of top of the range scientific establishments by means of personal enterprises, particularly Hong Kong or Macau-funded entities will likely be extremely inspired; 
  • The construction of scientific ability coaching methods consistent with world requirements; 
  • Rules will likely be comfortable for out of the country medical doctors to apply at the mainland; 
  • Larger trialing of world state-of-the-art scientific generation. 
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Moreover, the constitution states that town will start, “Exploring the securitization of highbrow belongings rights” and “standardizing the orderly development of belongings rights buying and selling facilities for highbrow belongings and clinical and technological achievements.” 

Whilst the true steps Shenzhen will take to safe highbrow belongings (IP) have no longer been made transparent right now, the language implies a better shift by means of the rustic to conform to IP considerations from international enterprises and inspire their endured funding throughout the metropolis. 

Shenzhen key building spaces 

Shenzhen Financial Zone 

Shenzhen’s Particular Financial Zone (SEZ) was once expanded in 2010 from 4 districts to all of the metropolis. Companies throughout the Shenzhen SEZ revel in a variety of tax exemptions, grants and loans, and decreased charges. Those particularly come with: 

  • 3 to five-year tax exemptions for production and running websites by means of high-tech enterprises. 
  • Price-added tax (VAT) and tariff exemptions for imported fabrics used for completed merchandise. 
  • Equivalent residing charges for foreigners and native electorate. 
  • Immunity from state quotas or lets in for manufacturing. 
  • VAT exemption for items made and offered in the neighborhood. 

Qianhai Shenzhen-Hong Kong Trendy Carrier Trade Cooperation Zone 

Qianhai Cooperation Zone is an experimental enterprise zone to facilitate monetary, logistics, and IT products and services job between Mainland China and Hong Kong. It these days covers a space of 15 sq. kilometers at the east coast of the Pearl River Delta, masking 3 spaces, specifically Guiwan, Qianwan, and Mawan. 

In September 2021, the State Council launched the Plan to Comprehensively Deepen Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Trendy Carrier Trade Cooperation Zone (the Qianhai Plan), which lays the improvement blueprint for the realm over the following 5 years, with further long-term objectives set for the 12 months 2035. 

The Qianhai Plan will search to enlarge the realm of the cooperation zone from the present 14.92 sq. kilometers to over 120 sq. kilometers masking 4 zones. 

Shenzhen development zone

The Qianhai Plan targets to additional combine Hong Kong and Macao’s economies into the GB and calls for the zone liberalize products and services business and open the monetary sector additional, together with via supporting hyperlinks to Hong Kong’s monetary marketplace. This might permit for cross-border renminbi use, facilitating control of foreign currency echange and extra supporting cross-border safety investments. 

Incentive insurance policies for international funding in Shenzhen 

Shenzhen is one among mainland China’s maximum business-friendly towns. Corporations that search to arrange and enlarge into the realm can take pleasure in a spread of advisable insurance policies, together with decreased tax charges, rewards for contributions to key industries, ability incentives, and extra. Beneath we checklist one of the most incentive insurance policies these days to be had in Shenzhen. 

IIT subsidy for international ability within the GBA 

Overseas ability operating in Shenzhen can take pleasure in the IIT subsidy coverage to be had in all 9 mainland towns of the GBA. A success candidates can get subsidies equivalent to the portion of the IIT paid within the GBA metropolis in way over 15 % of the taxpayer’s taxable source of revenue for the former 12 months. This coverage is to be had till 2024 when packages for IIT subsidies for the 12 months 2023 will also be submitted. 

See our complete Q&A at the utility procedure for the IIT subsidy right here. 

Decreased CIT fee for certified firms in Qianhai 

From January 1, 2021 to December 31, 2025, certified enterprises engaged in inspired industries within the Qianhai Shenzhen-Hong Kong Trendy Carrier Trade Cooperation Zone (“Qianhai) are in a position to revel in a discounted CIT fee of 15 %, under China’s nationwide CIT fee of 25 %. 

“Inspired industries” refers to sectors incorporated within the 2021 model of the Catalogue for Inspired Industries Eligible for CIT Preferential Remedy. This Qianhai’s new CIT Preferential Catalogue covers 30 sectors beneath 5 vast trade classes – fashionable logistics, knowledge products and services, generation products and services, cultural and inventive industries, and industrial products and services. 

To be eligible for the decreased CIT charges, firms will have to derive no less than 60 % in their income from some of the industries within the catalogue. On June 2, 2022, the Shenzhen Municipal Executive launched a information to figuring out eligibility for the decreased CIT fee. 

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For extra at the decreased CIT fee for corporations in Qianhai, see our comparable article right here. 

Incentives for headquartering in Shenzhen 

For the status quo of headquarters of businesses (matter to the necessities of The Implementations Measures for Encouraging the Construction of Headquarters in Shenzhen), subsidies granted is also as much as RMB 20 million (US$3 million). 

For monetary enterprises headquarters, subsidies is also as much as RMB 10 million (US$1.5 million) and 50 % of enhance for relocation prices. Relating to institutions of logistics firms, those aids is also within the quantity of RMB 10 million (US$1.5 million), relying at the quantity of registered capital of the corporate in query. 

Shenzhen COVID-19 restrictions and reduction measures 

Shenzhen has skilled a chain of COVID-19 outbreaks in fresh months, which has impacted town’s financial job. In March 2022, the federal government imposed a city-wide lockdown lasting one week, which resulted in the closure of companies, together with main factories. 

On the time of writing, Shenzhen is as soon as once more implementing COVID-19 restrictions in keeping with a small outbreak, with restrictions together with locking down a district bordering Hong Kong, postponing some public delivery products and services, and implementing city-wide trying out. 

As in the remainder of China, Shenzhen imposes the stern “zero-COVID” (often known as “dynamic zero-COVID”) coverage, which takes wide-ranging measures to take care of the case depend to a minimal. This frequently leads to lockdowns of the affected neighborhoods and districts  

Alternatively, Shenzhen has been significantly extra a hit in keeping up zero-COVID than different towns in China, managing to unexpectedly prevent the unfold of small outbreaks the use of focused and localized measures. The total lockdown in March lasted just one week (even if some restrictions remained in position for longer), a lot shorter than the two-month lockdown that Shanghai underwent. This has enabled town to run at relative normalcy with much less disruption to financial job as in comparison to different areas. 

As well as, Shenzhen has rolled out a chain of reduction measures to help firms which were impacted by means of COVID-19, along with the national reduction and enhance measures. On the finish of March, Shenzhen launched a suite of 30 reduction measures to help suffering companies. Those come with: 

  • Partial aid of taxes and costs, similar to useful resource tax, city upkeep, and development tax, actual property tax, city land use tax, and stamp tasks, amongst others. 
  • Postponement or aid of social insurance coverage premiums and housing provident price range.
  • Hire discounts or waivers. 
  • Aid of application charges, similar to water, electrical energy, and gasoline. 
  • Expanding loans for small companies and lowering ensure charges. 

The measures additionally come with particular reduction insurance policies for corporations in hard-hit industries, similar to production, catering, retail, and delivery and logistics. 

See our articles on VAT rebates for more info at the tax reduction measures to be had for companies. 

This text was once in the beginning revealed on September 17, 2019 and was once ultimate up to date on July 1, 2022.

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