The Shenzhen Experience:A Sequel to The Story of Spring

IN the 1990s， one of the most popular songsin China was The story of spring ， a tribute tothe country’s reform and opening-up startedin 1978 that ushered in a new “spring” ofgrowth in China. One of the decisions taken atthat time was to develop a county in southernChina into a pilot for many of the reforms to beimplemented. The county was the predecessor oftoday’s metropolis Shenzhen， a thriving industrialhub boasting many firsts.

Since 1978， the place has seen many initiatives. A"major one launched in October 2020 aims to buildShenzhen into a pioneer demonstration zone forsocialism with Chinese characteristics， giving the citymore autonomy to reform key areas.

Efficient Allocation

of Production Factors

The efficiency in using land， a factor of production，is key to economic success. With rapidly restructuringindustries， Shenzhen keeps improvingcomprehensive and flexible use of urban space.

In 2022， Shenzhen implemented a pilot programin Baolong Tech City， a robot manufacturing base. Aplot of land for general industrial， commercial andtransportation purposes was chosen for the program.While complying the rule which stipulates that nomore than 30 percent of a land plot for industrialpurpose can be used to build supporting facilities， the"pilot program enabled the building of 35，000-squaremetersupporting facilities for industries， including aneighborhood center， dormitories and a cafeteria.

To ensure smooth and orderly flow of labor， Shenzhenhas carried out a series of reform. It piloted thereform of regulation on businesses and organizationsadopting special working hours， and became the firstcity to put in place a system for qualification accreditationof those providing delivery services. The cityalso devised a mechanism for rapid mediation andsettlement of disputes arising from flexible employment.The efforts provide better protection for workersin new employment forms.

Enabling capital to better serve the real economyis an important reason for the rapid development ofShenzhen’s economy. The Shenzhen Stock Exchangehas piloted a registration-based IPO system of China’sNasdaq-style board for growth enterprises. The stock"exchange’s main board has resumed its IPO servicesafter 21 years. In 2023， trading on the stock exchangeranked first in Asia， and third in the world. By the endof 2023， Shenzhen had nearly 2，000 venture capitalinstitutions with a total of RMB 1.5 trillion fundsmanaged， ranking third in the country.

Shenzhen has also accelerated adopting hightechnology. In November 2022， the Shenzhen StockExchange Technology and IP Exchange Centeropened to explore market-based pricing and tradingmechanisms for intellectual property and scienceand technology achievements. It aims to emerge asa national comprehensive service platform connectingthe technology market and the capital market.Innovation was also made on the model of turningintellectual property into securities. From 2020 to2023， Shenzhen issued 78 intellectual property-basedsecurity products valued at RMB 17.76 billion， transformingintellectual property into assets.

Data is a new factor of production， dubbed the“oil” of the digital economy era. To mine this “oil，” theShenzhen Data Exchange was established in December2021. In June this year， Digital China， a providerof integrated information technology services， incorporatedfinancial cloud data products as data assetsinto its corporate financial statements. After beingapproved by the Shenzhen Data Exchange， DigitalChina was able to use the data to obtain a credit lineof RMB 30 million from a bank.

A Market-Oriented

Business Environment

The business environment is part of Shenzhen’spull on investors. The city ranks first among largeand medium-sized cities in China in the number ofbusiness entities. There is a surge of innovation andentrepreneurship， with millions of medium， small，and micro enterprises competing against each other，and thousands of special service providers and techcompanies coming up.

As a reform， Shenzhen has allowed small andmedium-sized enterprises to close temporarily incase of natural disasters， accidents， public health andsocial security emergencies， amid efforts to help themget through tough times.

In terms of market access， the National Developmentand Reform Commission and other authoritieshave introduced 24 special measures to relax restric-tions on market access in Shenzhen. The city hasbeen approved to expand the pilot program for openingup value-added telecommunications services tothe outside world. Shenzhen treats domestic andforeign investors equally. It has eliminated the 50-percenlimit on the proportion of foreign ownership inbusinesses dealing with Internet data， Internet accessservices， online data processing and transaction.

Shenzhen has filled a legal gap by enacting China’sfirst personal bankruptcy regulations in August 2020.It inaugurated China’s first bankruptcy managementagency， and carried out the first domestic prebankruptcycounseling program for individuals. Abankruptcy protection service platform was alsolaunched for test. In June 2023， the Shenzhen BankruptcyCourt served a civil ruling to Liang Wenjin，the debtor in China’s first personal bankruptcy case，calling him honest but unfortunate and exemptinghim from unpaid debts.

Innovating on court trial of cases involving intellectualproperty rights （IPRs）， Shenzhen hired investigatorswith IPR expertise to ensure the accuracyof technical facts in a case. As a result， the averagecase handling time has been shortened by over 40percent. Shenzhen also issued China’s first judicialguidance document on punitive compensation forIPR infringement amid efforts in creating the strictestsystem for IPR protection.

Enabling Environment for Research

Shenzhen has a dual-track scientific researchinvestment mechanism that is both non-competitiveand competitive， and has organized scientific researchprojects with different systems overseeingthem for efficiency. In 2023， total investment in Ramp;Din Shenzhen reached RMB 188.05 billion， an increaseof 11.8 percent， accounting for 5.81 percent of theregional GDP. In this， Ramp;D investment by businessesaccounted for 94.9 percent of the total， ranking firstin the country.

Shenzhen motivates researchers by giving themownership or long-term use rights of their scientificand technological achievements. The aim ofShenzhen is to attract cutting-edge talent. The 2023National Science and Technology Awards list hasaround 25 awardees and projects from scientificresearch institutions， universities， and high-tech"enterprises in Shenzhen.

For overseas professionals， especially highly-skilledand urgently needed foreign talent， Shenzhen providesan R visa that generally comes with multiple entries.It has established an international professional qualificationcertificate recognition system so that internationalprofessional who have corresponding overseasprofessional qualifications or certification can work inChina after their qualifications have been recognizedby or registered with competent authorities.

A High-Level Open Economic System

In 2021， Shenzhen was the first to be approved tocarry out a pilot cash-pool service for multinationalcompanies that integrates local and foreign currencymanagement. The goal is to help enterprises reducecosts and increase efficiency by appropriately adjustingforeign debt quotas and implementing facilitationpolicies， such as local and foreign currency fundtransfers. In 2023， Shenzhen was approved to carryout a pilot project for the centralized operation andmanagement of cross-border funds in domestic andforeign currencies of multinational companies. Theentry threshold was lowered and the scope of applicableenterprises was expanded to complement the2021 pilot policy.

Chinese sportswear and athletic apparel maker LiNing exemplifies the benefits of this pilot policy. Thecompany is steadily expanding its presence in HongKong and overseas. With the policy， Hang Seng Bankhelped Li Ning manage capital both at home and"abroad in an integrated manner.

By the end of 2023， a total of 48 multinationalcompanies in Shenzhen had participated in the pilotprogram. They included well-known companies insectors， such as new-energy vehicles making， intelligentmanufacturing and telecommunication solutions.Nearly US$ 140 billion were involved， which hascumulatively increased financial income and savedcosts for enterprises by about RMB 100 million.

Improving Medical Services

In recent years， Shenzhen has been experimentingon relaxing restrictions on the access of new internationaldrug to the Chinese market. A pilot programwas launched in November 2020. Today， four medicalinstitutions in Shenzhen have been implementing theprogram， and 39 types of imported drugs and equipmenthave been approved for market access.

To improve cross-border medical services， Shenzhencompiled and released international certificationstandards for hospital quality in 2022， which becamethe first hospital accreditation standard in the countryto be authoritatively certified by the InternationalSociety for Quality in Health Care External EvaluationAssociation （ISQua EEA）. Recently， the Shenzhen Hospitalof Southern Medical University officially passedthe international hospital accreditation certification，becoming one of the first three hospitals in the countryto get the accreditation. During the evaluationprocess， the hospital resolved differences between themainland and Hong Kong in terms of medical servicesand management， the coverage and reimbursement"of basic medical care insurance and commercialinsurance， and the management system for drugsand medical devices. In 2023， more than 20，000 HongKong， Macao and Taiwan residents and foreignerswent to the Shenzhen Hospital for treatment.

Governance of the Environment

and Urban Space

In reforming the way of funding for projects mitigatingclimate change， Shenzhen has selected 196projects since 2023. These projects are expected to reducecarbon dioxide emissions by approximately 5.91million tons per year. Shenzhen has also devised thecountry’s first system for calculating Gross EcosystemProduct amount， turning invaluable ecosystemto calculatable assets.

The low-altitude economy， a new sector as a resultof integrated development of strategically emergingindustries， has multi-trillion-yuan market potential.Shenzhen has already boasted a complete industrialchain in this field covering electronic parts productionand software platform development. The cityinnovated on its system for overseeing unmannedaerial vehicles （UAVs）， allowing test flights of microUAVs in some airspace. In 2023， the total outputof Shenzhen’s low-altitude economy reached RMB90 billion. Consumer UAVs produced in Shenzhenaccounted for 70 percent of the global market andindustrial UAVs for 50 percent.