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Source: Municipal Yearbook

Walking 50% Bicycle 6% Motorbike 2% Cars 19.3% Public transport 17% Other 6% CHINA

In terms of modal split, walking is still important within the city, but for motorised transport only, private automobiles account for a high 40% of total trips, more than public transport. In recent times, however, there have been important moves by the Municipality of Shenzhen to shift the modal share away from private vehicles. These have included the expansion of the metro; a major increase in the size of the bus fleet; municipal subsidies for public transport; a quota policy limiting the number of new cars on the road each year; park-and-ride schemes; and public bicycles. METRO

The flagship for public transport is the Shenzhen Metro which opened in 2004, making the city the sixth in China to introduce a subway system. The system has six lines with a track of 230km, and substantial daily ridership of over three million people. The system is run by the Shenzhen Metro Group Co., Ltd., which is a wholly-owned subsidiary of the Shenzhen Municipality. An important development has been a move to integrate the metro with its sister system in Hong Kong. Currently lines 1 and 4 run to the border with Hong Kong, where riders can transfer to Hong Kong’s MTR East Rail Line. The travel cards for Hong Kong and Shenzhen have also been integrated.

BUS

Bus services in Shenzhen have been significantly improved. The number of buses more than dou- bled between 2000 and 2014, and there has also been an improvement in service quality. A subsidy scheme was introduced by the Shenzhen Municipality to ensure that bus operators maintain a 6% level of profit, notwithstanding fluctuations such as the price of fuel. There were plans to introduce a BRT, but these were postponed, as resources were channelled into the development of the metro system.

PLANS

In 2014 the municipality introduced a policy for the restriction of private motor vehicles. To contain the increase in vehicles to 100 000 per year, a quota system has been introduced which allocates the right to car ownership by lottery and auction – 20% for electric cars by lottery, 40% for convention- al cars by lottery, and 40% for conventional cars by auction. The major investment plan for public transport is to eventually increase the metro to 20 lines with a track of 720km, linking into the sys- tems of neighbouring cities. It remains uncertain whether the BRT will be developed.

GREEN ENERGY

The massively expanding cities in the Pearl River Delta have had the enormous task of securing electricity supply. No fewer than 34 coal-fired power stations have been built in the region, which account for around three-quarters of the electricity supply. But Shenzhen has had proportionately more opportunity for hydro production than other cities, with a profile of around 51% fossil-fuel production, 40% hydro, 2% wind and 7% other.

In 2009 a decision was taken to outlaw the development of any new coal-fired power stations, and to actively work towards diversification of supply. In the proposed mix, however, there is a strong focus on the development of nuclear power (with a proposed USD 17.8 billion investment) followed by wind (USD 3.6 billion) and solar (USD 1.6 billion).

Shenzhen has been the site of national experimentation with new models for electricity supply and transmission. In 2011, for example, Shenzhen was one of the first cities in China to introduce a carbon-trading market. In 2015, central government selected Shenzhen for a pilot programme for the introduction of independent transmission and distribution tariffs that will incentivise the connection of renewables to the grid. It would allow, for example, direct purchase of renewables by municipalities, using the state grid for transmission. While there has been strong resistance to this by the major state grid corporations, the more flexible and experimental culture in Shenzhen offers the scheme a possible site for success.

Shenzhen is the site of the world’s largest planned waste-to-energy plants. It will deal with a third of the waste produced in the city, producing electricity in the process. However, the importance of the plant lies more in terms of waste disposal than in its role in electricity production, although the plant is also designed to include 44 000m2 of solar panels.

Shenzhen is emerging as a global leader in terms of new-energy vehicles. It now has the largest fleet of electric vehicles (buses, taxis and private vehicles) in the world. The municipality is support- ing the use of energy-efficient vehicles through its increasingly stringent fuel-economy standards, financial incentives for the purchase of small-engine vehicles, annual licence charges which penalise large vehicles, permission for electric vehicles to use reserved bus lanes during peak hours, free-of- charge electric-vehicle charging poles, and active procurement of electric vehicles for the public transportation fleet.

INNOVATION-DRIVEN ECONOMY

Shenzhen developed initially on the back of low-end copycat manufacturing, drawing on reservoirs of cheap labour; but since around 2000, there have been active attempts to upgrade manufacturing and promote innovation economies. Shenzhen has achieved notable success with this strategy and is now widely cited as a new technological frontier, drawing a growing number of innovation-in- tensive firms.

Hi-tech giants such as ZTE, Huawei and Tencent are based in Shenzhen, but there are a grow- ing number of innovative small- and medium-sized enterprises (SMEs) drawn to Shenzhen by the well-established manufacturing infrastructure, financial infrastructure, and culture of relative openness and experimentation. In 2015, for example, there was a 27.6% annual increase in the number of SMEs receiving a business licence in Shenzhen. These emerging industries now account for around 40% of Shenzhen’s economic output.

There is some debate over where Shenzhen should be placed in the rankings. 2thinknow placed Shenzhen at 75th globally in the 2015 innovation rankings , after Hong Kong (20th), Shanghai (35th), and Beijing (50th). However, in the competitiveness rankings of the Chinese Academy of Social Sciences (CASS), Shenzhen was ranked first out of 294 cities in China, even higher than Hong Kong. While ‘innovation’ and ‘competitiveness’ are clearly not equivalent concepts, there are indi- cations that Shenzhen should perhaps be more highly ranked than in the 2thinknow index. There has for example been an extraordinary increase in technology-related patent applications, with Shenzhen accounting for no less than 44.6% of all patent applications in mainland China, the annu- al applications from this city having grown 15-fold in one decade. The proportion of GDP from R&D for Shenzhen is over 4%, which is twice the national average and high for a Chinese city (with the exception of Beijing, where there is massive government spending on R&D).

Hi-tech industry is the staple for innovation in Shenzhen, which has, for example, three of the five largest mobile handset companies in the world (Huawei, Lenovo and ZTE), and strengths in areas such as the design and manufacture of drones, intelligent automation, the Internet of Things and smart grids. A specific cluster of hi-tech innovation is the Shenzhen Hi-Tech Industrial Park, which was established in 1996 as one of China’s six pilot world-class Science and Technology Parks, and which is home to ZTE and Tencent. This cluster is Shenzhen’s most significant base for self-devel- oping innovation enterprise, and is now ranked first nationally for productivity in hi-tech industry. There are other areas of innovation beyond hi-tech, including for example in the logistics indus- try. China International Marine Containers is the largest container-manufacturing company in the world, and together with the Port of Shenzhen, supports innovation in logistics. Shenzhen is emerg- ing as a hub of innovation in the financial services industry, and especially in venture capital and the financing of hi-tech enterprise. There is also innovation in cultural and creative enterprises, with Shenzhen having been awarded ‘Design Capital’ status by UNESCO.

However, despite these advantages, there are challenges. The expenditure on R&D, for example, is highly concentrated in large firms; with Huawei, for example, claiming that it spends up to 15% CHINA

of income on R&D, but with many of the smaller firms struggling to find the resources for R&D. A recent survey suggests that most of these firms are simply trying to squeeze greater income and efficiency out of existing technologies. The city has also not had the time to develop leading-edge academic and research-related institutions. There are no top-ranking universities in the city, and very few nationally recognised research laboratories. This means also that the capacity does not yet exist for major research-based collaborations. The city also battles to attract and retain high-level talent, which is drawn rather to cities such as Beijing and Shanghai.

Shenzhen Municipality is determined to upgrade its innovative capacity. It is responding to the lack of high-level academic and research institutions with the creation of the Shenzhen-Hong Kong Innovation Circle, which supports resource-sharing, joint R&D, the virtual university campus, and other innovation partnerships linking enterprise in Shenzhen to high-ranking institutions across the administrative boundary. A special fund has been created to support this activity. The relatively free environment within which companies operate in Shenzhen is arguably the most important driver of local innovation, but there is also an understanding that enterprise requires an effective institutional environment, with legal protection for intellectual property, and well-regulated finan- cial institutions. The city government has therefore focused on institutional and regulatory reform, in addition to initiatives such as the establishment of common service technology platforms for identified industries; attracting talent from outside the city; funds supporting innovation; and the creation of high-level innovation teams with international partnerships.