Pearl River Delta Case Study

Introduction

Since China opened its door in 1978, its economy has gone through tremendous change. There should be no doubt that the Reform and Opening-up Policy marked the start of China in the journey of developing into a powerful modern state. Most eminently, its GDP has risen from less than $150 billion in 1978 to $8,227 billion in 2012. During this burgeoning economic development, more than 600 million people have escaped poverty. For a state with vast territory and large population like China, these are indeed marvelous achievements. Many scholars credit these accomplishments largely to the adequate labor supply and rapid capital accumulation in China through past three decades.

This paper will firstly demonstrate China’s economic situation before 1978, when its labor supply advantage has not been explored. The second part will present the comparative advantage of China’s abundant labor supply played in helping China to establish itself in the region in these three decades. In this part, main focus will be given to the vital supportive role labor supply played in the process of Pearl River

Meanwhile, the Reform and Opening-up in China welcomes the entry of foreign investment with favorable taxes. China’s flexible policies on industrial management, border and customs control, especially the inexpensive labor and land in the Pearl River Delta strongly pull Hong Kong’s industries northward. From 1981 to 1994, industrial employment in Hong Kong fell from almost one million persons in 1981 to merely 433,672 by 1994. In 1980, the Delta already had a population of 13 million people and serves as the major source of cheap labor to Hong Kong’s labor intensive industries through both legal and illegal