What exactly makes the Yangtze River Delta so powerful?

How powerful is the Yangtze River Delta?

Comprising one municipality and three provinces - Shanghai, Jiangsu, Zhejiang, and Anhui - the Yangtze River Delta, with only about 4% of the country's land area, contributes nearly a quarter of the national economic aggregate.

If the Yangtze River Delta were an independent economy, its GDP would reach a staggering $4.86 trillion, even surpassing that of established developed countries like the UK, France, and Canada, and it could rank among the top five in the world.

Why is the Yangtze River Delta so strong? And given its strength, why is there a special initiative for "Yangtze River Delta integration"?

01

Many people think that the Yangtze River Delta is an economic concept planned by the state in recent years. In fact, it's not just that. The Yangtze River Delta wasn't only shaped by planning; before that, it was formed by water.

Let's take a look at the map. The Yangtze River rushes from the west and empties into the sea here; the Qiantang River water system opens up Hangzhou Bay from the southern flank; in the middle lies Lake Tai, the third - largest freshwater lake in China; and the Beijing - Hangzhou Grand Canal stretches all the way from the north to Hangzhou. The entire region of southern China is not just about one river but a dense water network.

This water network determines three things.

First, the transportation cost is extremely low. In ancient times, for transporting large - volume goods, water transportation was usually much cheaper and could carry larger volumes than land transportation. So, those areas close to water had an easier time doing business. And in southern China, it's not just about one river but an entire network - you step out and there's water, and wherever the water reaches, business can be done.

Second, this area became China's "treasury" very early on. Since the Sui and Tang Dynasties, the development of southern China accelerated; after the Song Dynasty, the economic center had basically shifted southward, and the saying "When the crops in Suzhou and Huzhou are ripe, the whole country is well - fed" began to spread. In the Ming and Qing Dynasties, the broader area of southern China / South Zhili was one of the most important fiscal revenue areas in the country. In the early Qing Dynasty, the tax revenue of Jiangnan Province once accounted for about one - third of the national total.

Third, the water network naturally connected the cities in this area. Cities like Suzhou, Hangzhou, Jiaxing, Huzhou, Wuxi, Changzhou, and Yangzhou... Since more than a thousand years ago, they were not isolated islands but nodes on a network. When doing business, they never just focused on their own small areas but on the whole network.

So, today's high - speed railways, highways, and industrial chains are essentially a continuation of this water network. The carrier has changed from boats to today's complex transportation systems, but the framework of regional cooperation has never changed.

The "triangle" of the Yangtze River Delta is both the result of forty years of market forces and top - level design, and also determined by geography and grown out of history.

02

Everyone knows that the Yangtze River Delta has strong economic strength, but GDP is just an external manifestation. What's more remarkable is that the county - level economies in this region show a highly balanced and prosperous development trend.

In China's top 100 counties ranking, Jiangsu, Zhejiang, and Anhui have long occupied nearly half of the list. It is precisely because of these conditions that there is fertile ground for integration.

In my opinion, the truly remarkable thing about the Yangtze River Delta is that it has absolute pricing power and industrial chain dominance in emerging industries that are crucial for future competitiveness.

What are strategic emerging industries? They are the industries that will determine a country's core competitiveness in the next ten or twenty years - such as semiconductors, biomedicine, artificial intelligence, and new - energy vehicles.

The integrated circuit industry in the Yangtze River Delta accounts for 60% of the national total. The biomedicine and artificial intelligence industries each account for one - third of the national total, and the production of new - energy vehicles, representing the peak of new manufacturing, accounts for about two - fifths of the national total.

What does this mean? The Yangtze River Delta holds most of China's most important cards for the next decade.

It can be said that the core moat of the Yangtze River Delta is its irreplaceable scientific and technological R & D. The Yangtze River Delta region has the most concentrated universities and top - level scientific research institutions in the country. In 2023, the research and experimental development (R & D) funds in the Yangtze River Delta region exceeded one trillion yuan, accounting for 30.5% of the national total.

It is precisely this high - density investment of capital and intelligence that has translated into cutting - edge technological breakthroughs and the rise of emerging enterprises.

It's no exaggeration to say that the Yangtze River Delta is an absolute high - ground for strategic science and technology and R & D funds.

So, the Yangtze River Delta is not only "rich" but also far - sighted.

03

The key is that these industries are not isolated.

Let's take new - energy vehicles as an example.

For a new - energy vehicle, the chips and advanced software systems, which are like the brain, are supplied locally in Shanghai.

About 200 kilometers west in Changzhou, Jiangsu, it can provide world - class power battery components.

More than 200 kilometers south in Ningbo, Zhejiang, it can continuously supply high - end heavy equipment such as large - scale integrated die - casting machines.

This means that a new - energy vehicle factory can solve the supply of all necessary supporting parts within a highway logistics radius of just 4 hours.

This is the real weapon of the Yangtze River Delta: efficient industrial cooperation.

Compared with other urban agglomerations in the world driven by a single core, dual cores, or multiple cores, the Yangtze River Delta is more like a network - based urban agglomeration.

Obviously, Shanghai is the leading city in the Yangtze River Delta, but the development of the Yangtze River Delta is not a model where Shanghai takes the lead and a group of smaller cities follow suit.

Suzhou, Hangzhou, Nanjing, Ningbo, Wuxi, and Hefei all have their own strong industries and external connections. Hangzhou is not just a city that emerged from Shanghai's industrial transfer; Suzhou is not just a processing factory for Shanghai; Ningbo is not just a subordinate port of Shanghai; and in recent years, Hefei has also had independent growth lines in new energy, display panels, automobiles, and quantum information.

Shanghai is a super - node, but not the only engine.

This is why the Yangtze River Delta is difficult to replicate. Industries can be planned, but it's hard to create a network out of thin air. It is the result of the water network, towns, industrial chains, transportation lines, and more than a thousand years of trading habits.

04

Since the Yangtze River Delta is already so strong, why is there a need for integration?

Economically speaking, this is to eliminate the barriers to the flow of factors caused by administrative boundaries, pursue the agglomeration economy effect, scope economy effect, and collaborative sharing effect of division of labor and cooperation, maximize the efficiency of resource allocation, and ultimately achieve a collaborative output of 1 + 1+1 + 1>4.

That is, when Shanghai, Jiangsu, Zhejiang, and Anhui, four independent provincial - level administrative units, work together, the output is not 4 but far greater than 4.

But to achieve an output greater than 4, the prerequisite is that people, goods, money, information, and technology must be able to flow frictionlessly among these four provinces.

But what's the reality? The reality is administrative barriers. Each province has its own tax policies and plans. For the same thing, once you cross the provincial border, you have to go through the process all over again.

Let me give you a few examples.

Previously, when people from Suzhou went to Shanghai to see a doctor, they couldn't directly settle their medical insurance and had to go back to Suzhou to handle the procedures. When a company in Jiaxing wanted to open a branch in Shanghai, it had to go through the business license application process all over again. The ETC for cross - provincial highways didn't work properly, electronic certificates weren't mutually recognized, and no one took charge of cross - provincial project approvals...

Individually, these things may seem minor, but together they cause huge internal friction. A network that was originally connected has become clogged.

Integration is to solve these problems.

In the past decade or so, medical insurance has been connected, business licenses can be processed "through one - net service", and electronic certificates are mutually recognized among the three provinces and one municipality.

Another example: Who is responsible for the management of cross - provincial water?

The Yangtze River Delta is a water - rich area, and rivers and lakes flow across provincial boundaries. For a river, the upper reaches are in Jiangsu, the middle reaches are in Shanghai, and the lower reaches are in Zhejiang - so if it gets polluted, who is responsible? Who pays? Who supervises?

For the past few decades, "collaborative water management" has been a persistent problem for local governments. Each province manages its own section, and no one takes care of the middle part. As a result, the upper reaches pollute, the lower reaches suffer, and everyone blames each other, and no one can solve the problem.

It was not until the integration was deeply promoted that a solution was found - the joint river - chief system.

What is the joint river - chief system? It means that for a cross - provincial river, officials from several places serve as "river chiefs" together. They patrol the river together, enforce the law together, and take responsibility together. The most typical example is the Taipu River, which crosses Qingpu in Shanghai, Jiashan in Zhejiang, and Wujiang in Jiangsu. In the past, each place managed its own part, but now the three places manage it jointly.

A river has brought the "river chiefs" from three provinces to the same table.

This is also the significance of the Yangtze River Delta Integration Demonstration Zone in Qingpu.

In 2019, the state creatively demarcated a large area at the junction of Qingpu, Jiashan, and Wujiang, where the Taipu River flows, and let it "operate ahead of the existing system".

This demonstration zone covers a total area of about 2,413 square kilometers - larger than the entire Shenzhen. In this area, the three provinces and one municipality jointly manage, approve, and plan. Policies that couldn't be implemented before are implemented here first; cross - provincial projects that couldn't be carried out before are launched here first.

It is not an ordinary development zone. It is China's first real cross - provincial collaborative experimental field - the mechanisms that work here will be replicated across the entire Yangtze River Delta and even the whole country in the future.

It is setting an example for the collaborative development of Chinese urban agglomerations in the next decade.

So, why is the Yangtze River Delta so strong?

Because it is a network determined by geography, nourished by history, and bound by industrial chains.

Today's Yangtze River Delta integration, today's demonstration zone, and today's Qingpu - they are all doing the same thing:

To make this network operate seamlessly.

This article is from the WeChat official account "IC Laboratory" (ID: InsightPlusClub). Author: IC Laboratory. Republished by 36Kr with permission.