Economic transformation and transition

On home stretch now, I’m jaded after nearly 6 weeks travelling but stimulated (hard not to be in China). Another productive day thanks to the Suzhou municipal government. It’s been a great getting a better sense of how government and industry works.

These are definitely not rural locations, but 20 years ago it was and it’s amazing to see the transformation and look at different ways of doing things, what is transferable and learn more about NZ’s biggest trading partner. I heard a lot and saw a lot of economic transformation and transition today, hence the title of the blog.

Suzhou Development and Reform Commission

First up was the team at the Suzhou Development and Reform Commission who are responsible for a number of things but the most important is the mid to long term development of Suzhou and rolling out the 5 year plan. It was interesting to learn about the research undertaken to guide goal setting including overseas analysis and working closely with universities.

This is another location with strong data metrics – GDP, employment, income, including an urban vs non-urban comparison. There’s a very clear understanding of the importance of science and technology in economic transformation and getting industry to add more value. Research and development as a percentage of GDP is measured, echoing the cluster work from Harvard. As the Chinese economy opens up the role of government will move more to oversight, monitoring and creating the right market environment.

Suzhou New District (SND)

Then onto SND which has transformed from a mix of small urban area and farmland into a major technology hub. They’ve been very specific about encouraging certain industry– starting with the pillars of electronics and precision engineering, progressively building over 22 years to now include medical, renewable energy, rail transport and new digital technology. This is another great example of starting with what you have and then building on it to achieve their ambitious targets for new capital each year.

Growth has been achieved through partly through the close proximity to Shanghai (similar to the impact Auckland has on Hamilton), supply chains and labour. There’s been a lot of proactive work encouraging foreign investment, leveraging government and private partners, looking after existing businesses (who account for a large amount of annual growth) and travelling domestically and internationally for new customers. Their criteria for providing support to industry is a great way to ensure businesses don’t take advantage of initial incentives and then leave when a better offer comes up elsewhere.

SND is transitioning from the previous model of attracting companies which broadens the tax base to now focusing on high end industries, quality of life and the environment. One thing struck me as we looked around their exhibition hall: talent + innovation = growth. In the end it’s all about people.

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