Produced by | Huabo Business Review

Recently, many provinces have released their GDP data for the first three quarters of this year. The competition between Guangdong and Jiangsu, the two largest economies in China, has attracted particular attention.

Guangdong's GDP for the first three quarters approached 10 trillion yuan, continuing to lead the country, while Jiangsu continued to follow closely behind Guangdong, firmly occupying second place. It is noteworthy that despite Guangdong's continued lead, Jiangsu surpassed Guangdong in GDP growth. Jiangsu's nominal and real growth rates were both higher than Guangdong's, and its GDP increment was over 78 billion yuan higher than Guangdong's, narrowing the GDP gap between Jiangsu and Guangdong by more than 78 billion yuan.

Based on the first three quarters' data, the GDP gap between Jiangsu and Guangdong this year may further narrow to around 300 billion yuan. If this trend continues, Jiangsu may narrow the GDP gap with Guangdong to just 100 billion yuan this year, or even surpass Guangdong.

Guangdong has held the throne as China's top economic province for 35 years. Can Jiangsu, the second-placed province for decades, finally "usurp" Guangdong's position?

01

The Competition Between Jiangsu and Guangdong

Before the reform and opening-up, Jiangsu held a strong second place in China's GDP rankings, just behind Shanghai, due to its robust economic strength. However, after entering the 1990s, Guangdong, particularly the Guangzhou and Shenzhen regions of the Pearl River Delta, emerged as a formidable force with rapid economic growth. In 1989, Guangdong officially surpassed Jiangsu to become the leader of China's economy, a position it has maintained to this day.

Although Jiangsu retreated to second place, it never gave up on catching up with Guangdong. Over the past 35 years, while Guangdong gradually widened the gap with Jiangsu for most of the time, there were also years when the gap narrowed slightly. Especially since 2020, the GDP gap between Jiangsu and Guangdong has narrowed significantly, with the difference between the two last year reduced to 624.298 billion yuan, about one-third less than in 2019.

In the first half of this year, Jiangsu once again surpassed Guangdong in GDP increment, narrowing the gap to less than 200 billion yuan, specifically 191.62 billion yuan. However, in the first three quarters, although Jiangsu's GDP increment remained higher than Guangdong's, the gap widened again to over 200 billion yuan, reaching 219.488 billion yuan. Considering that both provinces' GDP scales are around 13 trillion yuan, such a gap can still be considered negligible.

From the breakdown data for the first three quarters, Jiangsu outperformed Guangdong in multiple economic indicators. For example, in terms of industrial added value above a designated size, Guangdong grew by 4.7%, while Jiangsu achieved a growth rate of 7.9%. In fixed asset investment, Guangdong declined by 3.4%, while Jiangsu grew by 2.4%. In total retail sales of consumer goods, Guangdong grew by 0.7%, while Jiangsu grew by 4.5%.

It is worth noting that the main reason for the decline in fixed asset investment in Guangdong is the sharp drop in real estate investment. In the first three quarters, Guangdong's real estate development investment fell by 17.2% year-on-year, with commercial residential investment dropping by 19.5%. In contrast, although Jiangsu's real estate investment also declined, the decline was significantly smaller.

Of course, Guangdong also has its bright spots. For example, in foreign trade, Guangdong continues to maintain a strong growth momentum. According to the Guangdong Sub-Administration of General Administration of Customs, Guangdong's total foreign trade import and export reached 6.75 trillion yuan in the first three quarters of this year, an increase of 11.1% year-on-year, far exceeding the national average growth rate of 5.3% and contributing 41.5% to the country's foreign trade growth. Guangdong has ranked first in China's foreign trade scale for 38 consecutive years.

In addition, Guangdong's investment structure is quietly changing. While real estate development investment has declined significantly, industrial investment in Guangdong has achieved a growth rate of 9.1%, accounting for 36.9% of total investment and setting a new high since 2007.

02

Guangdong, multiple firsts

This year, Jiangsu has performed impressively, but this does not mean it can easily surpass Guangdong, whose 35-year reign as the "top dog" should not be underestimated.

First, Guangdong is the province with the largest permanent resident population. As of the end of 2023, Guangdong's permanent resident population was approximately 127 million, compared to only 85.26 million in Jiangsu. Guangdong Provincial Party Secretary Huang Kunming pointed out that this vast population base brings vitality and prosperity to Guangdong.

Second, Guangdong has a relatively low degree of population aging. According to 2023 population aging data, Guangdong's aging rate was 14.2%, higher only than Xinjiang and Tibet but far lower than Jiangsu's 24.5%. Cities such as Nantong, Taizhou, Yancheng, and Yangzhou in Jiangsu have even entered a state of severe aging, which to some extent limits their future labor supply and consumption potential.

In terms of tax revenue, Guangdong also ranks first in the country. In 2023, Guangdong's domestic tax revenue reached 2,163.77 billion yuan, accounting for 15.95% of its GDP and ranking second nationally. In contrast, Jiangsu's domestic tax revenue was 1,558.68 billion yuan, only 72% of Guangdong's. From the perspective of individual income tax, Guangdong's individual income tax revenue last year was 236.53 billion yuan, also ranking first in the country, while Jiangsu's individual income tax revenue was only 126.25 billion yuan, less than half of Guangdong's.

Furthermore, Guangdong has a significant advantage in industrial strength. Last year, Guangdong's above-scale industrial revenue reached 18.58 trillion yuan, while Jiangsu's was 16.85 trillion yuan, with Jiangsu's industrial revenue accounting for about 90.6% of Guangdong's.

More crucially, Guangdong leads the country in scientific and technological innovation. As the second-largest technological cluster globally and the largest in China, Guangdong boasts the highest number of national high-tech enterprises and has led the country in scientific and technological R&D investment for eight consecutive years, ranking first in China's technological innovation for seven consecutive years.

With so many firsts under its belt, it's no wonder Jiangsu hasn't been able to "usurp" Guangdong's position in 35 years. The economic competition between the two provinces will only intensify in the future, and it remains to be seen who will ultimately emerge victorious.