Guangdong Visions: The Way Forward

In previous parts of this five-part report from southern China's Guangdong Province, the core of China's historic reform and opening up, I presented Party Secretary Wang Yang's vision of transformation. In this final installment, I describe the cities of Dongguan and Shenzhen, and Guangdong's culture.

Dongguan, on the east bank of the Pearl River between Guangzhou and Shenzhen, was hit hard by the financial crisis. One million migrant workers lost their jobs here in this sprawling amalgam of endless factories and crowded dormitories that are the center of China's low-cost manufacturing base. When I was visiting, in early 2009, no one knew where the bottom was or when it would come, and people at all levels, even wearing their best face for a foreigner with government connections, were apprehensive or scared.

I visited a medium-sized, Hong Kong-run company making substrates for semiconductor wafers. The migrant workers lived cheek-by-jowl, six to eight in cramped rooms, but they had reasonable work hours, good-quality subsidized food, recreational facilities, and 100 computers for watching movies or surfing the Internet. (As it was picked by local leaders for me to see, this factory was no doubt as good as it got, but it did demonstrate that the government at least knew what it should encourage or enforce.)

This kind of industrial development has made Dongguan rich. An obscure rural county just two decades ago, it now has 20 five-star hotels, behind only Beijing and Shanghai. Almost everything made here is for export—shoes and sweaters, toys and textiles, and every imaginable computer part (except microchips). Hence the recent devastation.

Shenzhen: National Innovation City? But, as Guangdong Secretary Wang Yang told me, there is evidence that even Dongguan is trying to reinvent itself. Its Songshan Lake Sci-Tech Industrial Park, which surrounds an 8-square-kilometer freshwater lake and features hill vegetation and ecological wetlands, is populated by hi-tech companies, including leaders in batteries and power supplies, all housed in architecturally inviting buildings.

And to the south, Shenzhen, the cradle of China's reform, is rapidly transforming itself from a city of cheap manufacturing to a modern metropolis focused on technology, innovation, and service. Shenzhen's future is more than just high technology. Local officials stress design and creativity in new products—not only hi-tech, but packaging, architecture, and printing—as the city's direction for the 21st century. With more than 6,000 design companies and 60,000 designers, Shenzhen aims to become China's "national innovation city" by 2015. In 2008, Shenzhen won the UNESCO City of Design award, the first city in China to win such a prize.

On the west bank of the Pearl River, Zhuhai (bordering Macao) is moving even further away from the cheap-labor growth model. In part this is out of necessity: Though it, like Shenzhen, was one of the first four special economic zones established in 1980, Zhuhai's growth has lagged far behind. Now the city's Party Secretary, Gan Lin, focuses on leveraging Zhuhai's magnificent coastline and favored environment of water, air, and mountains, and seeks to limit Zhuhai's population growth, reduce pollution, and upgrade industrial structure.

Export-Driven to Domestic-Focused: Not Easy Guangdong's desire to be more than just a cheap manufacturing base is palpable. My tour guide was an insightful provincial official, Liu Geli, who sought to explore with me cultural differences between China and the West. He used the example of Dafencun, a village that is home to professional artists (many of them migrant workers) who create remarkable reproductions of classic Western paintings as well as original works. The paintings are produced by teams of artists working in assembly-line fashion, with four or five artists sequentially painting each piece—one specializing, say, on faces, another on torsos, yet another on backgrounds, and so on. Liu said that while Chinese people admire such efficiencies, many Westerners are offended by the notion of "assembly-line art." He quoted one BBC reporter who was horrified at the revelation, calling it "awful" and certainly "not art."

On the other hand, Chinese people generally do not appreciate oil paintings as much as Westerners do; for displaying in their homes or offices, Chinese prefer calligraphy and sketches. One minister uses this example to explain why changing China's economy from export-driven to domestic demand is not as simple as just redirecting marketing and sales from foreign buyers to Chinese consumers. In the worldwide recession, Dafencun struggled to shift its suddenly surplus capacity to produce oil paintings for China. To sell designed-for-export products to domestic markets, they must first be tailored to local tastes or requirements.

Early on, Liu asked me, among other questions, what I perceived to be Guangdong's negatives. I made the mistake of repeating the common perception in China—one perhaps tinged with envy—that while Guangdong is advanced economically, it is weak culturally.

An Apt Metaphor From that moment on, Liu missed no opportunity to give me a crash course in Guangdong culture. It was as if I were taking sensitivity training for having uttered some politically incorrect remark. But my re-education regimen, to my surprise, turned out to be a treat. In Guangzhou, Liu took me to the Chen Clan Academy, with its classic structure, ornate carved-stone windows, and civic history. How did it survive the Cultural Revolution, which sought to destroy such relics, I asked? Liu smiled and explained that clever local officials had turned the Academy into a factory for printing Mao Zedong's works. Who would have dared to destroy Mao, he said!

Housed at the Academy is the Guangdong Folk Arts Museum. The intricate and elegant carvings in wood, ivory, and bone, massively large or minutely small, stop one's breath—they seem to defy all sense of the possible. Perhaps, I thought, this is a metaphor for Guangdong.

Before it's here, it's on the Bloomberg Terminal.