The Beijing metropolitan municipality’s emphasis on fostering a business-friendly environment through the creation of two zones, including the establishment of a free trade zone, showcases a greater openness to foreign investors and is expected to boost the economic activities in the coming years. Along with it, the lifting of Zero-COVID policy and reopening of borders are set to further increase the trade and investment prospects. Against this backdrop, GlobalData, a leading data and analytics company, forecasts the Beijing economy to grow by 3.5% in 2023.
GlobalData’s latest report, “City Profiles, Beijing,” which projects the average annual growth rate of Beijing economy at 3.7% during 2023-30, reveals that despite the economic activities hampered by Zero-COVID policies, the city grew by 0.7% in 2022 supported by robust financial sector growth.
Beijing contributes 3.6% of China’s domestic product. The tertiary sector contributed the most to the municipality’s gross value added (GVA) with an 81.9% share, followed by the secondary sector (17.7%) and the primary sector (0.4%) in 2022. The financial industry is the largest pillar industry of the economy accounting for 19.6% of its domestic product in 2022, making the industry the largest contributor to Beijing’s tax revenue and economic development.
Aditi Dutta Chowdhury, Economic Research Analyst at GlobalData, comments: “Fuelled by the ‘two-zone’ construction, Beijing’s actual use of foreign capital surged by 37.9% in January to August 2022 amounting $15.24 billion. Specifically, over 90% of the total foreign investment is used in the city’s service sector. Rising investments are expected to create greater job opportunities and spur the domestic demand. GlobalData projects the household consumption expenditure in LCU terms to grow by 8.6% in 2023.”
The key reforms under the two zones development include the relaxation of foreign investment rules, tax incentives, intellectual property protection, customs clearance, financial guarantees, and talent support to foster favorable business environment for both foreign and domestic investors in Beijing municipality.
The city’s R&D intensity has been maintained at around 6% in 2021 and the number of patents granted has increased by around 13% annually. The presence of several advanced research institutes such as Beijing Academy of Quantum Information Sciences, Chinese Institute for Brain Research, Beijing Academy of Artificial Intelligence endorsed the city’s commitment to R&D.
Zhongguancun in Haidian district is a technological hub with a presence of more than 8,000 hi-tech corporations, including Microsoft, Intel, AMD, Lenovo, Sony, and Ericsson. Advanced information and communication infrastructure will further strengthen base of the digital economy.
Aditi concludes: “Despite weak external demand, innovation-led economic growth enabled the city’s economy resilient and will underpin the growth momentum in future. In addition, the influx of migrants from other areas of China and foreign countries, which led to high share of working age population, will play a key role in the strong economic growth forecast of the city.”
