The PRD Economic Zone (PRDEC), which consists of Guangzhou, Shenzhen, Dongguan, Foshan, Zhongshan, Zhuhai, Jiangmen and parts of Huizhou and Zhaoqing, has since the start of the ‘Open Door’ policy been China’s most vibrant economic region. The region is now an important industrial market for all kinds of inputs, materials, and capital goods as well as a major market for transport and transport related services. Per capita income has been growing steadily over the past thirty years, hand in hand with consumer expenditures, making cities such as Shenzhen and Guangzhou among the most prosperous in the Chinese Mainland. The region’s proximity to Hong Kong, one of the primary catalysts for the region’s early development means its consumer tastes closely follow those of the west, creating attractive markets for foreign retailers. Although the PRDEC accounts for only 0.4 percent of China’s total land mass and less than 4 percent of the nation’s population, it accounts for more than 10 percent of the country’s GDP, and attracts almost 20 percent of all inbound FDI.

1. Pearl River Delta (PRD)
General overview
The PRD Economic Zone (PRDEC), which consists of Guangzhou, Shenzhen, Dongguan, Foshan,
Zhongshan, Zhuhai, Jiangmen and parts of Huizhou and Zhaoqing, has since the start of the ‘Open
Door’ policy been China’s most vibrant economic region. The region is now an important industrial
market for all kinds of inputs, materials, and capital goods as well as a major market for transport
and transport related services.
Per capita income has been growing steadily over the past thirty years, hand in hand with consumer
expenditures, making cities such as Shenzhen and Guangzhou among the most prosperous in the
Chinese Mainland. The region’s proximity to Hong Kong, one of the primary catalysts for the region’s
early development means its consumer tastes closely follow those of the west, creating attractive
markets for foreign retailers.
Although the PRDEC accounts for only 0.4 percent of China’s total land mass and less than 4 percent
of the nation’s population, it accounts for more than 10 percent of the country’s GDP, and attracts
almost 20 percent of all inbound FDI.
The Greater and Pan-PRD Economic cooperation zone
At present Hong Kong companies employ more workers in the PRD region than the entire population
of Hong Kong. With more and more businesses in the PRD straddling the three administrative
regions of Guangdong, Hong Kong and Macao the government has established the Greater Pearl
River Delta (GPRD) Economic Cooperation Zone. The role of which is to integrate Hong Kong and
Macao into the wider Chinese economy by streamlining investment regulation across the entire
region and rationalizing and integrating logistics development in the GPRD Area.
Included in the zone are Hong Kong, Macao and nine Guangdong municipalities. The infrastructure
projects spearheading integration include improved road infrastructure, the construction of the
Guangzhou terminus of the national intermodal rail network that will incorporate 18 full
containerized rail hubs nationwide, and increased air freight integration between Hong Kong and
Guangzhou Baiyun Airport.
At present Hong Kong is still China's biggest investment conduit. In an effort to stretch the benefits
of that investment further into the southern China hinterland the government has also established
the Pan-PRD Economic Zone. With economic growth and prosperity in the coastal regions far
outstripping the west the government, and business, are keen to move production further inland.
Increasingly as Shenzhen becomes a victim of its own success and land and wage rates rise, forcing
the industrial hinterland further back into China makes sense. Integrating logistics infrastructure in
the eight provinces surrounding the GPRD is hoped to encourage investment into the wider South
China region as a whole.

2. 1.1.1 Logistical overview
As with many of China’s primary economic hubs, the PRD has traditionally been more integrated into
the global economy than into the national economy. Hong Kong is perhaps the example par
excellence in this respect – with other cities in the region following to lesser degrees.
In this vein, the logistical structures of the region have for many years been primarily focused on
binding the region into the global system of production. Following Hong Kong’s lead in the sixties
and seventies, the PRD has been quick to build high quality, internationally operated, world class
port facilities – primarily in and around the mouth of the Pearl River. Logistics services in the region
have focused primarily on integrating the region with Hong Kong and providing export services and
infrastructure for manufacturing enterprises taking advantage of the zone’s preferential economic
policies.
However, as competition between enterprises has developed, and wage and rent prices have grown
as the region prospered, regional development strategies have begun to look inland at development
of hinterland cargo generation. In part to take advantage of lower cost production bases, in part to
reap the benefits of the government’s ‘Go-West’ strategy, and in part to fill the massive export
capacity coming online in the region and the shortfall created by the global economic slowdown.
Key dynamics
 The changing role of Hong Kong – port facilities in Hong Kong are very likely to see their role in
the region diminish as infrastructure across the border increasingly rivals its more expensive
neighbour. Also, with the commencement of direct trading links with the island of Taiwan cargo
traditionally transhipped through the Special Administrative Region is likely to significantly drop
off. Added to this, transhipment business at the port is likely to be additionally affected by the
development of deep water ports in Vietnam–thereby negating much of the current need for
transhipment in Hong Kong.
 Shenzhen and Guangzhou airports – freight capacity, better facilities, improved customs
clearance environments, supporting infrastructure networks and improved services at both
Shenzhen and Guangzhou airports are likely to put increased pressure on Hong Kong airport as a
lower cost alternative. By 2015 cargo throughput at Shenzhen airport is planned to reach 2.5m
tonnes.
 Ports in the PRD are and will increasingly compete for shares of hinterland cargo by extending
their cargo draw capacity further inland through the expansion of intermodal rail facilities
nationwide and dedicated port-to-city container railways (e.g. Shekou-Changsha). Industrial
development on the western banks of the Pearl River is likely to accelerate as new port facilities
on the western shore open up the relatively underdeveloped and lower cost region to increased
access and direct investment.
 Macroeconomic policies to integrate the PRD into the wider southern and southwest regions of
China will likely increase the flow of goods through the PRD gateway to the world.

3.  Increased GDP and consumer expenditure will continue to make the region an attractive market
for international manufacturers, especially those specialising in high-value consumer goods.
 Development of the Pan-PRD regions – the Pan-PRD region is an economic cooperation zone
that includes the provinces of Sichuan, Yunnan, Guizhou, Hunan, Jiangxi, Fujian, the island and
province of Hainan and the autonomous region of Guangxi.
 The construction of a 50 km sea bridge connecting Hong Kong, Macao, and Hong Kong,
commenced in December 2009, will integrate the Pearl River Delta area to an unprecedented
degree upon its completion in 2015.