Deng Xiaoping had wild dreams for Shenzhen, but it probably did not include electric taxis. Four decades after the launch of his signature opening up policies, fleets of blue e-cabs can be found on the large avenues of his brainchild city as it enters the Year of the Pig.

New York City may have invented the first e-taxi in history in 1897, a short-lived experiment, but Shenzhen turns it into a daily life reality for its 12 million population, leading the world’s electric race in the 21st century.

Almost the entire fleet of 22,000 taxis, as well as all the public buses, have gone electric. Even San Francisco and green Oslo are lagging behind China’s e-drive.

This great leap forward asserts Shenzhen’s high-tech credentials, with the ambition to challenge California’s Silicon Valley.

“The objective is to provide blue skies and white clouds to our citizens. The municipal government has requested full electrification of our fleet this year. As of October 28, we had 2,364 pure electric taxis,” said He Jingdong, the spokesperson for the Shenzhen Bus Group Pengcheng Electric Company, the largest state-owned taxi company operating in the Guangdong sprawling metropolis.

He is standing next to a charging station where 400 cars get their batteries topped up each day. Drivers are idling during the two-hour long operation in a small room protecting them from the winter sunshine.

Communist China’s top-down approach is the key driver behind this dramatic shift.

“In China, as long as the government is determined, both public and private companies will strive to achieve the task assigned by the leadership,” He told Asia Times, under the surveillance of a minder writing a careful transcript of the interview.

In Shenzhen, political will is combined with massive public expenditure, which benefits local carmaker BYD. Government subsidies cover more than 70% of the production costs, according to official data.

Challenges

Shenzhen encapsulates the strengths and ambitions, as well as the challenges, facing the world’s second-largest economy in the wake of an uncertain Year of the Pig. Trade tensions with the United States still exist while the overall economy is cooling.

In 2018, the city missed its official GDP target, growing 7.5%, instead of 8% as expected earlier by the government. While the technology hub is still booming and catching up with its arch-rival Hong Kong, it is feeling the pinch from tariffs imposed by the US.

As an export-driven economy, Shenzhen is wary of global economic headwinds. The recent US offensive against Huawei, the most iconic company in the city alongside internet giant Tencent, has also fueled anxiety, exposing the technology sector’s vulnerability.

Against this backdrop, the metropolitan government has already cut its GDP growth target for 2019 to 7%, which still above the national figure.

Concerns are palpable at Shenzhen’s Huanquiang famous electric market, where buyers from all over the world converge to purchase key spare parts for robots, computers and other high-tech devices.

“Our orders from the US have dropped by 70%. We are getting nervous,” said Li Mei, the sales manager at Szrubber, a rubber and plastics company based in Dongguan, which is the manufacturing hub in Guangdong province.

The prospects of additional US tariffs hang over these medium-sized companies if Washington and Beijing fail to clinch a deal by March 1, the deadline set by US President Donald Trump to solve the trade dispute.

Although recent statements from the White House have been encouraging, experts expect the US-China tech rivalry to intensify in the years ahead, regardless of the outcome of planned discussions between Trump and China’s President Xi Jinping.

“Even if there is an agreement, it will not cover all the issues at stake,” Jean-Pierre Cabestan, a professor at Hong Kong Baptist University, said. “The trade war will last [a] long [time].”

Often dubbed the Silicon Valley of China, the city founded in 1978 highlights one of Beijing’s key assets in this new tech Cold War era.

Western manufacturers, for example, are dependent on various Shenzhen components.

“[It] is the global hardware Mecca. All roads lead to here,” said Michael Reed, the program director of Hax, a start-up accelerator from San Francisco, which has opened a branch in the Guangdong metropolis, hosting 200 entrepreneurs from Europe, North America or Australia.

Spare parts

Manufacturers from all over the globe flock here in search of key spare parts and crafty engineers, allowing them to develop their product at lightning speed.

“Here one month’s product development shrinks to one week,” Reed said.

So far, no other city around the world can compete with this unique ecosystem, combining speed, skills, high-tech material and competitive prices. “Shenzhen will remain a global hardware hub during the upcoming decade,” Elise Tchen, the Asia chief executive of French drone maker Parrot.

The specter of US-China economic decoupling does not seem an option.

Yet, the Beijing leadership knows that Guangdong province, which has been China’s growth engine during the last decades, needs a high-tech upgrade in order to keep up with global competition.

The hardware city dreams of software creativity and is investing massively into future sectors such as biotech and artificial intelligence with the aim of draining international talent.

Last December, the central government announced a private equity fund of US$12.8 billion to invest in high-tech industries in the Greater Bay Area, which encompasses Hong Kong, Guangzhou and Shenzhen.

This region with a population of 67 million is the country’s response to San Francisco’s bay area. Beijing plans to unveil in March a “highly ambitious initiative to integrate their economies, leveraging Hong Kong’s strength in capital and services with Guangdong’s high-tech manufacturing,” said Kelsey Broderick, an associate at Eurasia Group, a political risk consultancy.

Yet, it will take more than electric taxis to attract and retain global talent, even during the Year of the Pig.

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